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What changed in American Airlines Group Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of American Airlines Group Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+578 added−654 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in American Airlines Group Inc.'s 2023 10-K

578 paragraphs added · 654 removed · 446 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

97 edited+29 added−96 removed47 unchanged
Biggest changeLabor relations in the air transportation industry are regulated under the Railway Labor Act (RLA), which vests in the National Mediation Board (NMB) certain functions with respect to disputes between airlines and labor unions relating to union representation and CBAs. 13 Table of Contents The following table shows our domestic airline employee groups that are represented by unions: Union Class or Craft Employees (1) Contract Amendable Date Mainline: Allied Pilots Association (APA) Pilots 13,450 2020 Association of Professional Flight Attendants (APFA) Flight Attendants 23,200 2019 Airline Customer Service Employee Association – Communications Workers of America and International Brotherhood of Teamsters (CWA-IBT) Passenger Service 14,650 2020 Transport Workers Union and International Association of Machinists & Aerospace Workers (TWU-IAM Association) Mechanics and Related 11,850 2025 TWU-IAM Association Fleet Service 18,700 2025 TWU-IAM Association Stock Clerks 1,950 2025 TWU-IAM Association Flight Simulator Engineers 140 2025 TWU-IAM Association Maintenance Control Technicians 180 2025 TWU-IAM Association Maintenance Training Instructors 100 2025 Professional Airline Flight Control Association (PAFCA) Dispatchers 560 2025 Transport Workers Union (TWU) Flight Crew Training Instructors 390 2025 Envoy: Air Line Pilots Associations (ALPA) Pilots 1,850 2029 Association of Flight Attendants-CWA (AFA) Flight Attendants 1,800 2026 TWU Ground School Instructors 10 2027 TWU Mechanics and Related 1,150 2021 TWU Stock Clerks 120 2021 TWU Simulator Instructors 20 2026 TWU Fleet Service 3,950 2026 TWU Dispatchers 70 2025 Communications Workers of America (CWA) Passenger Service 6,500 2026 Piedmont: ALPA Pilots 740 2029 AFA Flight Attendants 310 2026 International Brotherhood of Teamsters (IBT) Mechanics and Related 400 2026 IBT Stock Clerks 60 2026 CWA Fleet and Passenger Service 6,300 2023 IBT Dispatchers 30 2025 ALPA Flight Crew Training Instructors 70 2029 PSA: ALPA Pilots 1,550 2028 AFA Flight Attendants 1,200 2023 International Association of Machinists & Aerospace Workers (IAM) Mechanics and Related 620 2022 TWU Dispatchers 50 2024 ALPA Flight Crew Training Instructors 120 2028 (1) Represents approximate number of active employees as of December 31, 2022. 14 Table of Contents CBAs covering our mainline pilots, flight attendants and passenger service are now amendable and negotiations involving these workgroups continue.
Biggest changeThe following table shows our domestic airline employee groups that are represented by unions: Union Class or Craft Employees (1) Contract Amendable Date Mainline: Allied Pilots Association (APA) Pilots 14,500 2027 Association of Professional Flight Attendants (APFA) Flight Attendants 24,950 2019 Airline Customer Service Employee Association – Communications Workers of America and International Brotherhood of Teamsters (CWA-IBT) Passenger Service 14,650 2029 Transport Workers Union and International Association of Machinists & Aerospace Workers (TWU-IAM Association) Mechanics and Related 12,350 2025 TWU-IAM Association Fleet Service 19,100 2025 TWU-IAM Association Stock Clerks 2,000 2025 TWU-IAM Association Flight Simulator Engineers 150 2025 TWU-IAM Association Maintenance Control Technicians 190 2025 TWU-IAM Association Maintenance Training Instructors 100 2025 Professional Airline Flight Control Association (PAFCA) Dispatchers 570 2025 Transport Workers Union (TWU) Flight Crew Training Instructors 390 2025 14 Table of Contents Union Class or Craft Employees (1) Contract Amendable Date Envoy: Air Line Pilots Associations (ALPA) Pilots 2,070 2029 Association of Flight Attendants-CWA (AFA) Flight Attendants 1,850 2026 TWU Ground School Instructors 10 2027 TWU Mechanics and Related 1,200 2027 TWU Stock Clerks 130 2027 TWU Simulator Instructors 20 2026 TWU Fleet Service 4,020 2026 TWU Dispatchers 70 2025 Communications Workers of America (CWA) Passenger Service 7,000 2026 Piedmont: ALPA Pilots 640 2029 AFA Flight Attendants 310 2026 International Brotherhood of Teamsters (IBT) Mechanics and Related 470 2026 IBT Stock Clerks 60 2026 CWA Fleet and Passenger Service 6,650 2023 IBT Dispatchers 40 2025 ALPA Flight Crew Training Instructors 70 2029 PSA: ALPA Pilots 1,500 2028 AFA Flight Attendants 1,190 2023 International Association of Machinists & Aerospace Workers (IAM) Mechanics and Related 680 2027 TWU Dispatchers 40 2024 ALPA Flight Crew Training Instructors 80 2028 (1) Represents approximate number of active employees as of December 31, 2023.
In providing international air transportation, we compete with other U.S. airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines. Competition has also been increasing from low-cost airlines executing international long-haul expansion strategies, a trend we also expect to continue, in particular with the planned introduction of long-range narrowbody aircraft in the coming years.
In providing international air transportation, we compete with other U.S. airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines. Competition has also been increasing from low-cost airlines executing international long-haul expansion strategies, a trend we expect to continue, in particular with the planned introduction of long-range narrowbody aircraft in the coming years.
The Safety Risk Management (SRM) element of our SMS provides a decision-making process for identifying hazards and mitigating risk based on a thorough understanding of our systems and their operating environment. We employ SRM whenever there is a significant change to our operations, such as delivery of new aircraft.
The Safety Risk Management (SRM) element of our SMS provides a decision-making process for identifying hazards and mitigating risk based on a thorough understanding of our systems and their operating environment. We employ SRM whenever there is a significant change to our operations, such as the delivery of new aircraft.
The SMS is comprised of four components: Safety Policy, Safety Assurance, Safety Risk Management and Safety Promotion. Our Safety Policy sets safety objectives while striving to comply with applicable regulatory requirements and laws in the countries where we operate and establishing standards for acceptable operational behaviors.
Each SMS is comprised of four components: Safety Policy, Safety Assurance, Safety Risk Management and Safety Promotion. Our Safety Policy sets safety objectives while striving to comply with applicable regulatory requirements and laws in the countries where we operate and establishing standards for acceptable operational behaviors.
Regional Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include our wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest), Mesa Airlines, Inc. (Mesa) and Air Wisconsin Airlines LLC (Air Wisconsin).
Regional Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include our wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest) and Air Wisconsin Airlines LLC (Air Wisconsin).
U.S. federal laws that have a particular impact on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental Response, Compensation and Liability Act (Superfund Act). The U.S.
U.S. federal laws that have a particular impact on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental Response, Compensation and Liability Act. The U.S.
General economic conditions, fears of terrorism or war, fare initiatives, fluctuations in fuel prices, labor actions, weather, natural disasters, outbreaks of disease and other factors could impact this seasonal pattern.
General economic conditions, fears of terrorism or war, fare initiatives, fluctuations in fuel prices, labor actions, weather, natural disasters, outbreaks of disease, geopolitical factors and other factors could impact this seasonal pattern.
Risk Factors – “ Evolving data security and privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of personal information about individuals) 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,” “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,” “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,” “The airline industry is heavily taxed, ” “We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, including increased regulation of our CO 2 emissions, changing consumer preferences and the potential increased impacts of severe weather events on our operations and infrastructure.” Available Information Use of Websites to Disclose Information Our website is located at www.aa.com .
Risk Factors – “ Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or data 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,” “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,” “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,” “The airline industry is heavily taxed, ” “We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, including increased regulation of our GHG emissions, changing consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure.” Available Information Use of Websites to Disclose Information Our website is located at www.aa.com .
Status members can enjoy additional travel benefits of the AAdvantage program, including complimentary upgrades, checked bags, and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery when traveling on American, any one world Alliance airline or other partner airlines.
Status members can enjoy additional travel benefits of the AAdvantage program, including complimentary upgrades, checked bags, and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery when traveling on American, any one world Alliance airline or select partner airlines.
Our current policy is not to enter into transactions to hedge our fuel consumption, although we review that policy from time to time based on market conditions and other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in aircraft fuel prices.
Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in aircraft fuel prices.
We have made and expect in the future to make public disclosures to investors and the general public of information regarding AAG and its subsidiaries by means of the investor relations section of our website as well as through the use of our social media sites, including Facebook and Twitter.
We have made, and expect in the future to make, public disclosures to investors and the general public of information regarding AAG and its subsidiaries by means of the investor relations section of our website as well as through the use of our social media sites, including Facebook and X.
In order to receive notifications regarding new postings to our website, investors are encouraged to enroll on our website to receive automatic email alerts (see https://americanairlines.gcs-web.com/email-alerts ), “follow” American (@AmericanAir) on Twitter and “like” American on our Facebook page ( www.facebook.com/AmericanAirlines ).
In order to receive notifications regarding new postings to our website, investors are encouraged to enroll on our website to receive automatic email alerts (see https://americanairlines.gcs-web.com/email-alerts ), “follow” American (@AmericanAir) on X and “like” American on our Facebook page ( www.facebook.com/AmericanAirlines ).
If we are forced to surrender slots, we may be unable to provide our desired level of service to or from certain destinations in the future. For more discussion, see Part I, Item 1A.
If we are forced to surrender slots or other rights, we may be unable to provide our desired level of service to or from certain destinations in the future. For more discussion, see Part I, Item 1A.
Environmental Protection Agency (EPA) and other federal agencies have been authorized to promulgate regulations that have an impact on our operations. In addition to these federal activities, various states have been delegated certain authorities under the aforementioned federal statutes. Many state and local governments have adopted environmental laws and regulations which are similar to or stricter than federal requirements.
Environmental Protection Agency (EPA) and other federal agencies may promulgate regulations that have an impact on our operations. In addition to these federal activities, various states have been delegated certain authorities under the aforementioned federal statutes. Many state and local governments have adopted environmental laws and regulations that are similar to or stricter than federal requirements.
In January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine GHG emission standards. Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines already on in-service aircraft.
Emissions Standards for Aircraft Engines In January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine GHG emission standards. Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines on in-service aircraft.
During 2022, our members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise. Approximately 7% of our 2022 total revenue passenger miles flown were from award travel. See Part II, Item 7.
During 2023, our members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise. Approximately 8% of our 2023 total revenue passenger miles flown were from award travel. See Part II, Item 7.
In addition, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit 10 Table of Contents Airlines, which compete in many of the markets in which we operate, with competition from these carriers increasing and new entrants regularly announcing their intention to start up new ultra-low-cost carriers.
In addition, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which compete in many of the markets in which we operate, with competition from these carriers increasing and new entrants regularly announcing their intention to start up new ultra-low-cost carriers.
We continued to rigorously measure and track customer satisfaction through passenger surveys in 2022, efforts that led to further improvements in our operations and the services we provide.
We continued to rigorously measure and track customer satisfaction through passenger surveys in 2023, efforts that led to further improvements in our operations and the services we provide.
The DOT is also expected to finalize rules requiring refunds for cancellations and significant delays and rules mandating the display of ancillary fees during the initial itinerary search. International International air transportation is subject to extensive government regulation, including aviation agreements between the U.S. and other countries or governmental authorities, such as the EU.
The DOT has also proposed rules requiring refunds for cancellations and significant delays and rules mandating the display of ancillary fees during the initial itinerary search. International International air transportation is subject to extensive government regulation, including aviation agreements between the U.S. and other countries or governmental authorities, such as the EU.
Mileage credits can be redeemed for free or upgraded travel on American and participating airlines, membership to our Admirals Club ® or for other non-flight awards, such as car rentals and hotels, from our program partners. Travel awards are available on all flights operated by American and at times are subject to capacity-controlled seating on flights operated by our partners.
Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to our Admirals Club ® , or for other non-flight awards, such as car rentals and hotels, from our program partners. Travel awards are available on all flights operated by American and, subject to capacity-controlled seating, on flights operated by our partners.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2022 Financial Overview,” “AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and operating performance.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2023 Financial Overview,” “AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and operating performance.
Each slot represents the authorization to land at or take off from the particular airport during a specified time period.
Each slot represents the authorization to land at and take off from the particular airport during a specified time period.
Moreover, our alliances with international carriers may be subject to the jurisdiction and regulations of various foreign agencies. The U.S. government has negotiated “open skies” agreements with 131 trading partners, which allow unrestricted route authority access between the U.S. and the foreign markets.
Moreover, our alliances with international carriers may be subject to the jurisdiction and regulations of various foreign agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading partners, which allow unrestricted route authority access between the U.S. and the foreign markets.
Under our agreements with AAdvantage members and program partners, we reserve the right to change the terms of the AAdvantage program at any time and without notice, and may end the program with six months’ notice. Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to change.
Under our agreements with AAdvantage members and program partners, we reserve the right to change the terms of the AAdvantage program at any time and without notice. Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to change.
See Part I, Item 2. Properties for further discussion of our mainline and regional aircraft and “Regional” below for further discussion of our regional operations. American is a founding member of the one world ® Alliance, which brings together a global network of 13 world-class member airlines and their affiliates, working together to provide a superior and seamless travel experience.
Properties for further discussion of our mainline and regional aircraft and “Regional” below for further discussion of our regional operations. American is a founding member of the one world ® Alliance, which brings together a global network of 13 world-class member airlines and their affiliates, working together to provide a superior and seamless travel experience.
Lastly, the Safety Promotion component includes training and raising awareness among team members so that they can spot potential safety events. Customers We fly to more than 300 destinations in the United States and internationally, and we are committed to providing our customers with a world-class travel experience.
Lastly, the Safety Promotion component includes training and raising awareness among team members so that they can spot potential safety events. Customers We fly to close to 350 destinations in the United States and internationally, and we are committed to providing our customers with a world-class travel experience.
In certain circumstances, such as during the COVID-19 pandemic, regulators may issue slot waivers which temporarily suspend or amend slot usage requirements, and we have used slot waivers at times to reduce flying levels given limited demand for travel.
In certain circumstances, such as during the COVID-19 pandemic, regulators may issue slot waivers which temporarily suspend or amend slot usage requirements, and we have used slot waivers at times to reduce flying levels during periods of reduced demand for travel.
These taxes and fees are subject to increase from time to time. 16 Table of Contents DOT Passenger Protection Rules The DOT regulates airline interactions with passengers through the ticketing process, at the airport and onboard the aircraft.
These taxes and fees are subject to increase from time to time. DOT Passenger Protection Rules The DOT regulates airline interactions with passengers through the ticketing process, at the airport and onboard the aircraft.
Operations at three major domestic airports we serve (JFK and LGA in New York City, and DCA near Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations of slots or similar regulatory mechanisms that limit the rights of carriers to conduct operations at those airports.
Operations at three major domestic airports we serve (JFK and LGA in New York City, and Ronald Reagan Washington National Airport (DCA) near Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations of slots or similar regulatory mechanisms 16 Table of Contents that limit the rights of carriers to conduct operations at those airports.
As of December 31, 2022, we had approximately 129,700 active full-time equivalent employees, approximately 87% of whom were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) governing their compensation and job duties, among other things.
As of December 31, 2023, we had approximately 132,100 active full-time equivalent employees, approximately 87% of whom were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) governing their compensation and job duties, among other things.
Cooperation and Joint Business Agreements American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business with Japan Airlines and a joint business relating to Australia and New Zealand with Qantas.
Joint Business Agreements and Other Cooperation Agreements American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business with Japan Airlines and a joint business covering Australia and New Zealand with Qantas.
Risk Factors – “ 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.” Our ability to provide service can also be impaired at airports, such as Chicago O’Hare International Airport (ORD) and LAX, where the airport gate and other facilities are currently inadequate to accommodate all of the service that we would like to provide, or airports such as Dallas Love Field Airport where we have no access to gates at all.
Risk Factors – “ 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.” Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to accommodate all of the service that we would like to provide, or where we have no access to gates at all.
The Antitrust Division of the DOJ, along with the DOT in certain instances, have jurisdiction over airline antitrust matters. 15 Table of Contents The FAA similarly exercises safety oversight and regulates most operational matters of our business, including how we operate and maintain our aircraft.
The Antitrust Division of the Department of Justice, along with the DOT in certain instances, have jurisdiction over airline antitrust matters. The FAA similarly exercises safety oversight and regulates most operational matters of our business, including how we operate and maintain our aircraft.
Our regional carriers are an integral component of our operating network. We rely heavily on regional carriers to drive feeder traffic to our hubs from low-density markets that are not economical for us to serve with larger, mainline aircraft. In addition, regional carriers offer complementary service in many of our mainline markets.
Our regional carriers are an integral component of our operating network. We rely heavily on regional carriers to serve small markets and also to drive connecting traffic to our hubs from markets that are not economical for us to serve with larger, mainline aircraft. In addition, regional carriers offer complementary service in many of our mainline markets.
We continue to fully cooperate with the CMA and, in September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of the uncertainty and other impacts resulting from the COVID-19 pandemic.
In September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of the uncertainty and other impacts resulting from the COVID-19 pandemic.
Distribution and Marketing Agreements Passengers can purchase tickets for travel on American through several distribution channels, including our website ( www.aa.com ), our mobile app, our reservations centers and third-party distribution channels, including those provided by or through global distribution systems (e.g., Amadeus, Sabre and Travelport), conventional travel agents, travel management companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline).
Distribution and Marketing Agreements Passengers can purchase tickets for travel on American through several distribution channels, including our website ( www.aa.com ), our mobile app, our reservations centers and third-party distribution channels, including conventional travel agents, travel management companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline).
For more information on our approach to ESG issues, see our 2021 ESG Report at our website www . aa.com under “Environmental, Social and Governance.” None of the information or contents of our 2021 ESG Report are incorporated into this Annual Report on Form 10-K. 18 Table of Contents Impact of Regulatory Requirements on Our Business Regulatory requirements, including but not limited to those discussed above, affect operations and increase operating costs for the airline industry, including our airline subsidiaries, and future regulatory developments may continue to do the same.
For more information on our approach to climate change, see our 2022 Sustainability Report on our website www . aa.com available under “Environmental, Social and Governance.” None of the information or contents under our “Environmental, Social and Governance” page, 2022 Sustainability Report, or our website are incorporated into this Annual Report on Form 10-K. 19 Table of Contents Impact of Regulatory Requirements on Our Business Regulatory requirements, including but not limited to those discussed above, affect operations and increase operating costs for the airline industry, including our airline subsidiaries, and future regulatory developments may continue to do the same.
In October 2018, in anticipation of the exit of the United Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United Kingdom Competition and Markets Authority (CMA) opened an investigation into the transatlantic joint business.
The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United Kingdom Competition and Markets Authority (CMA), in October 2018, opened an investigation into the transatlantic joint business.
We are conducting investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance bases. We presently anticipate that the ongoing costs of such activities will not have a material impact on our operations.
The environmental laws include those related to responsibility for potential soil and groundwater contamination. We are conducting investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance bases. We presently anticipate that the ongoing costs of such activities will not have a material impact on our operations.
Fiji Airways is a one world connect partner and Oman Air is expected to join the one world Alliance in 2024.
Oman Air is expected to join the one world Alliance in 2024, and Fiji Airways is a one world connect partner offering select alliance benefits to one world frequent flyers.
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 .” Seasonality and Other Factors Due to the greater demand for air travel during the summer months, revenues in the airline industry in the second and third quarters of the year tend to be greater than revenues in the first and fourth quarters of the year.
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 .” Seasonality and Other Factors Due to the greater demand for air travel during the summer months, revenues in the airline industry exhibit seasonal patterns based on the peak travel periods.
All such climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to reduce our emissions before cost-effective emissions reduction technologies are available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase carbon offset credits or otherwise incur additional costs related to our emissions.
Global and Domestic Regulation Related to Climate Change Climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to adapt to rapidly evolving domestic and international regulation and to achieve emission reductions before cost-effective technologies are available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase carbon offset credits or otherwise incur additional costs related to our emissions.
In addition, foreign countries impose passenger protection rules, which are analogous to, and often meet or exceed the requirements of, the DOT passenger protection rules discussed above. In cases where these foreign requirements exceed the DOT rules, we may bear additional burdens and liabilities. Further, various foreign airport authorities impose noise and curfew restrictions at their local airports.
In addition, foreign countries impose passenger protection rules, which are analogous to, and often meet or exceed the requirements of, the DOT passenger protection rules discussed above. In cases where these foreign requirements exceed the DOT rules, we may bear additional burdens and liabilities.
As of December 31, 2022, American had codeshare, marketing and/or loyalty program relationships with Aer Lingus, Air Tahiti Nui, Alaska Airlines, British Airways, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, Finnair, GOL Linhas Aéreas Inteligentes S.A.
As of December 31, 2023, in addition to the relationships described above, American had codeshare, marketing and/or loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A.
Year Gallons Average Price per Gallon Aircraft Fuel Expense Percent of Total Operating Expenses 2022 3,901 $3.54 $13,791 29% 2021 3,324 $2.04 $6,792 22% As of December 31, 2022, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption.
Year Gallons Average Price per Gallon Aircraft Fuel Expense Percent of Total Operating Expenses 2023 4,140 $2.96 $12,257 25% 2022 3,901 $3.54 $13,791 29% As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption.
In 2023, the DOT is expected to propose or implement a number of new disability regulations that will impact us, including rules for accessible lavatories on single-aisle aircraft, penalties for wheelchair loss or damage and prompt wheelchair assistance.
In 2023, the DOT finalized rules for accessible lavatories on single-aisle aircraft and has continued to work through proposals for a number of disability regulations that will impact us, including penalties for wheelchair loss or damage and prompt wheelchair assistance.
Risk Factors – “ Union disputes, employee strikes and other labor-related disruptions, or our inability to otherwise maintain labor costs at competitive levels and hire and retain a sufficient number of employees may adversely affect our operations and financial performance .” Aircraft Fuel Our operations and financial results are materially affected by the availability and price of aircraft fuel, which represents one of the largest single cost items in our business.
Risk Factors – “ Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial performance .” Aircraft Fuel Our operations and financial results are materially affected by the availability and price of aircraft fuel, which represents one of the largest single cost items in our business.
See “ Distribution and Marketing Agreements ” above for further discussion. Sustainability Our purpose is to care for people on life’s journey. Conducting our business with a view towards operating a sustainable business that has the ability to serve our stakeholders over the long-term is an important part of this purpose.
See “ Distribution and Marketing Agreements ” above for further discussion. Sustainability Operating a sustainable business that has the ability to serve our stakeholders over the long-term is an important part of our strategy.
Additionally, compliance with updated federal and state regulations governing fire extinguishing foams are expected to require modification to fire suppression systems that we operate, as well as those maintained by airports. We are evaluating the costs and potential impacts to our business of complying with these new regulations.
Additionally, compliance with updated federal and state regulations governing fire extinguishing foams are expected to require modification to fire suppression systems that we operate, as well as those maintained by airports.
We are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our own progress. Our Board and Corporate Governance, Public Responsibility and Safety Committee receive updates on our climate strategy, progress and key risks regularly.
Achieving our ambitious goals will require significant action and investments by governments, manufacturers and other stakeholders. We are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our own progress. Our Board and Corporate Governance and Public Responsibility Committee receive updates on our climate strategy, progress and key risks regularly.
AAdvantage members earn mileage credits for flying on American, any one world Alliance airline or other partner airlines. For every dollar spent by flying on American, members earn mileage credits, and Gold, Platinum, Platinum Pro and Executive Platinum status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively.
For every dollar spent by flying on an eligible American ticket, members earn mileage credits, and AAdvantage Gold ® , AAdvantage Platinum ® , AAdvantage Platinum Pro ® and AAdvantage Executive Platinum ® status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively.
The operational complexity of our business requires a diverse team of personnel trained and experienced in a variety of technical areas such as flight operations, ground operations, safety and maintenance, customer service and airline scheduling and planning.
The operational complexity of our business requires a diverse team of personnel trained and experienced in a variety of technical areas such as flight operations, ground operations, safety and maintenance, customer service and airline scheduling and planning. Fostering a culture where our team members feel supported to take care of our customers is critical to our success.
The vast majority of our direct GHG emissions comes from the use of jet fuel in our operations. Our current strategy for reaching net zero emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, powered by low-carbon fuel.
Our current strategy for reaching net zero GHG emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, powered by low-carbon fuel.
In addition, these agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability insurance.
In addition, these agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability insurance. In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name.
The capacity purchase agreements provide that all revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to us. We control marketing, scheduling, ticketing, pricing and seat inventories. In return, we agree to pay predetermined fees to these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board.
We control marketing, scheduling, ticketing, pricing and seat inventories. In return, we agree to pay predetermined fees to these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board.
And, in 2022, we formally assigned responsibility for oversight of our climate change strategy at the management level to our Chief Executive Officer. Safety The safety of our customers and team members is a top priority. Our approach to safety is guided by our Safety Management System (SMS), an organization-wide approach to identifying and managing risk.
Our Chief Executive Officer is responsible for oversight of our climate change strategy. 12 Table of Contents Safety The safety of our customers and team members is a top priority. Our approach to safety is guided by our FAA-approved safety management systems (SMS), an organization-wide approach to identifying and managing risk.
Member of oneworld Alliance American is a founding member of the one world Alliance, which currently includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan Airlines.
Risk Factors – “ We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels .” Member of oneworld Alliance American is a founding member of the one world Alliance, which currently includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan Airlines.
Based on our 2023 forecasted mainline and regional fuel consumption, we estimate that a one cent per gallon increase in the price of aircraft fuel would increase our 2023 annual fuel expense by approximately $40 million.
Based on our 2024 forecasted mainline and regional fuel consumption, we estimate that a one cent per gallon increase in the price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. 15 Table of Contents The following table shows annual aircraft fuel consumption and costs, including taxes, for our mainline and regional operations for 2023 and 2022 (gallons and aircraft fuel expense in millions).
Among our wholly-owned regional subsidiaries, the Envoy mechanics and related, Envoy stock clerks and PSA mechanics and related have agreements that are now amendable and are engaged in traditional RLA negotiations. For more discussion, see Part I, Item 1A.
Among our wholly-owned regional subsidiaries, Piedmont fleet and passenger service and PSA flight attendants have agreements that are now amendable and are engaged in negotiations. For more discussion, see Part I, Item 1A.
We are implementing a multiyear strategy focused on embedding DEI throughout our company by: 12 Table of Contents • Hiring, engaging and retaining talent for growth; • Delivering excellence in our operations to serve and expand our global markets; • Striving to have our teams reflect the diversity of our global customer base; and • Driving innovation to build competitive advantages.
We are implementing a multiyear strategy focused on embedding DEI throughout our company by: • Hiring, engaging and retaining talent for growth; • Delivering excellence in our operations to serve and expand our global markets; • Striving to have our teams effectively serve the communities we represent; and • Driving innovation to build competitive advantages. 13 Table of Contents In 2023, we received a perfect score on the Disability Equality Index for the eighth consecutive year and were named one of the best places to work for disability inclusion.
Members also earn mileage credits by using the services of more than 1,000 non-flight partners, such as our co-branded credit cards, and certain hotel and car rental companies. The AAdvantage program in general, and our co-branded credit cards in particular, are significant assets of our business and have become increasingly important to our company over time.
Members also earn mileage credits by using the services of more than 1,000 non-flight partners, such as our co-branded credit cards, certain hotel and car rental companies and shopping and dining partners.
We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time performance, type of equipment, cabin configuration, amenities provided to passengers, loyalty programs, the automation of travel agent reservation systems, onboard products, health and safety, sustainability initiatives and other services.
We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time performance, type of equipment, cabin configuration, amenities provided to passengers, loyalty programs, the automation of travel agent reservation systems, onboard products, health and safety, sustainability initiatives and other services. 11 Table of Contents International In addition to our extensive domestic service, we provide international service to Canada, Mexico, the Caribbean, Central and South America, Europe, Qatar, China, Japan, Korea, India, Australia and New Zealand.
This rating is based on verified customer feedback on the overall travel experience. Our People The airline business is labor intensive, and our team members are critical to delivering for our customers.
Additionally in 2023, we were recognized for the sixth consecutive year with the prestigious Five Star rating in The APEX Official Airline Ratings – Global Airline category. This rating is based on verified customer feedback on the overall travel experience. Our People The airline business is labor intensive, and our team members are critical to delivering for our customers.
These marketing agreements are intended to provide enhanced customer choice by means of an expanded network with reciprocal loyalty program participation and joint sales cooperation.
These marketing agreements vary in scope and are intended to provide enhanced customer choice by means of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as our joint businesses or strategic alliances.
On all of our routes, pricing decisions are affected, in large part, by the need to meet competition from other airlines. Price competition occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and loyalty program initiatives.
Price competition occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and loyalty program initiatives.
We have increased our focus over time on a number of elements that we view as important to build a more sustainable company, including those described below. Climate We recognize the challenge of climate change and have set ambitious goals to transition to operating a low-carbon airline over time.
We have increased our focus over time on a number of elements that we view as important to build a more sustainable company, including those described below. We have received recognition for our progress toward our sustainability goals.
The CMA plans to complete its investigation before the scheduled expiration of the interim measures in March 2026. 8 Table of Contents Marketing Relationships To improve access to each other’s markets, various U.S. and foreign air carriers, including American, have established marketing agreements with other airlines.
Marketing Relationships To improve access to each other’s markets, various U.S. and foreign air carriers, including American, have established marketing agreements with other airlines.
Requirements include flight deck security; carriage of federal air marshals at no charge; enhanced security screening of passengers, baggage, cargo, mail, employees and vendors; fingerprint-based background checks of all employees and vendor employees with access to secure areas of airports; and the provision of certain passenger data to the federal government and other international border security authorities, for security and immigration controls.
The TSA is responsible for the security of the nation’s transportation systems. The TSA’s requirements for aviation security include, among other things, screening of passengers, baggage, cargo, mail, employees and vendors; carriage of federal air marshals at no charge; and continuous background checks of all employees and vendor employees with access to secure areas of airports.
Aircraft Emissions and Climate Change Requirements American is subject to the requirements of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), an international, market-based emissions reduction program adopted by the International Civil Aviation Organization (ICAO) in 2016.
Such trends may also impact us indirectly by increasing our operating costs, including fuel costs. 18 Table of Contents The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) We are subject to the requirements of the CORSIA, an international, market-based emissions reduction program adopted by the International Civil Aviation Organization (ICAO) in 2016.
In 2022, our team members were recognized by customers, peers and company leaders over two million times and hundreds of team members were nominated for the annual Chairman’s Award, the highest honor that we bestow upon our team members.
In 2023, our team members were recognized by customers, peers and company leaders approximately three million times and more than 1,600 peer nominations were submitted for the annual Circle of Excellence, the highest honor that we bestow upon our team members for their career achievements.
Security Substantially all aspects of civil aviation security in the U.S. or affecting U.S. carriers are controlled or regulated by the federal government through the Transportation Security Administration (TSA).
Further, various foreign airport authorities impose noise and curfew restrictions at their local airports. 17 Table of Contents Security All aspects of civil aviation and border security in the U.S. affecting U.S. carriers are controlled or regulated by the federal government through the Transportation Security Administration (TSA) and the U.S. Customs and Border Protection (CBP).
We cannot guarantee that such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior levels of flying to destinations where we have operated a reduced service.
Moreover, on multiple occasions in 2023, the FAA issued slot waivers for New York City area airports as a result of operational challenges arising from air traffic control staffing shortages; those waivers expire in October 2024, and we cannot guarantee that such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior levels of flying to destinations where we have operated a reduced service.
We believe that if we create an environment where our team members feel supported, they will take care of our customers and thereby support the success of our business. To do this, we must continue to build a diverse and inclusive environment, helping all team members reach their full potential and providing them with the right resources and support.
To do this, we must continue to build a diverse and inclusive environment, helping all team members reach their full potential and providing them with the right resources and support. In 2023, mainline and regional salaries, wages and benefits were our largest expense and represented 34% of our total operating expenses.
All American Eagle carriers use logos, service marks, aircraft paint schemes and uniforms similar to those of our mainline operations. In 2022, 48 million passengers boarded our regional flights, approximately 44% of whom connected to or from our mainline flights. Our regional carrier arrangements are in the form of capacity purchase agreements.
All American Eagle carriers use logos, service marks, aircraft paint schemes and uniforms similar to those of our mainline operations.
In 2022, we served more than 20,000 unique origin and destination pairs, transporting over 890 million pounds of time-sensitive freight and mail across our network. Also in 2022, we were named Best Cargo Airline from the Americas by Air Cargo News .
Cargo Our cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. In 2023, we served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail across our network.
Starting in 2022, AAdvantage members have more pathways to status and only one metric to track: Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit cards.
AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by earning 10 Table of Contents Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit cards.
On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions standards but would seek more for ambitious new aircraft GHG emission standards within the ICAO process. The outcome of the legal challenge and whether there will be any development of new aircraft GHG emissions standards cannot be predicted at this time.
On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process. Since then, the EPA and ICAO’s Committee on Aviation Environmental Protection have had several meetings on this issue, but no further progress has been made.
To remain competitive, we will need to manage our distribution costs and rights effectively, increase our distribution flexibility and improve the functionality of our proprietary and third-party distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part I, Item 1A.
NDC technology provides customers access to enhanced content and functionality, providing a simplified booking experience, and enabling us to provide more relevant, tailored offers to customers. To remain competitive, we will need to successfully manage our distribution costs and rights, increase our distribution flexibility and improve the functionality of our distribution channels, while maintaining an industry-competitive cost structure.
In some cases, however, foreign governments limit U.S. air carriers’ rights to transport passengers beyond designated gateway cities in foreign countries. In order to improve access to domestic and foreign markets, we have arrangements with other airlines including through the one world Alliance, other cooperation agreements, joint business agreements and marketing relationships, as further discussed below.
In order to improve access to domestic and foreign markets, we have arrangements with other airlines including through the one world Alliance, other cooperation agreements, joint business agreements and marketing relationships, as further discussed herein. On all of our routes, pricing decisions are affected, in large part, by the need to meet competition from other airlines.
Our future costs of CORSIA compliance are uncertain because of the difficulty in estimating the return of demand for international air travel in the recovery from the COVID-19 pandemic and the uncertainty with respect to the future supply and price of carbon offset credits and lower-carbon aircraft fuels.
Our future costs of CORSIA compliance are uncertain due to the uncertainty with respect to the future growth of covered GHG emissions, the supply and price of CORSIA-eligible carbon offset credits and development of the market for eligible renewable fuels.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFinally, the potential acute and chronic physical effects of climate change, such as increased frequency and severity of storms, floods, fires, sea-level rise, excessive heat, longer-term changes in weather patterns and other climate-related events, could affect our operations, infrastructure and financial results. Operational impacts, such as more frequent or widespread flight cancellations, could result in loss of revenue.
Biggest changeAdditionally, we face risks associated with allegations or similar claims that our public statements concerning our sustainability efforts and achievements are exaggerated or unsubstantiated, sometimes referred to as “greenwashing,” and could be subject to litigation or regulatory enforcement actions challenging the basis for such statements which could be costly and disruptive, whether or not meritorious. 38 Table of Contents Finally, the potential acute and chronic physical effects of climate change, such as increased frequency and severity of storms, floods, fires, sea-level rise, excessive heat, longer-term changes in weather patterns and other climate-related events, could affect our operations, infrastructure and financial results as well as the safety of our team members.
In addition, our reliance upon others to provide essential services on behalf of our operations may result in our relative inability to control the efficiency and timeliness of contract services.
In addition, our reliance upon others to provide essential services on our behalf in our operations may result in our relative inability to control the efficiency and timeliness of contract services.
Future impairment of goodwill or other long-lived assets could be recorded in results of operations as a result of changes in assumptions, estimates, or circumstances, some of which are beyond our control. There can be no assurance that a material impairment charge of goodwill or tangible or intangible assets will be avoided.
Future impairment of goodwill, intangible assets or other long-lived assets could be recorded in results of operations as a result of changes in assumptions, estimates, or circumstances, some of which are beyond our control. There can be no assurance that a material impairment charge of goodwill or tangible or intangible assets will be avoided.
Additionally, our AAdvantage loyalty program, which is an important element of our sales and marketing programs, faces significant and increasing competition from the loyalty programs offered by other travel companies, as well as from similar loyalty benefits offered by banks and other financial services companies.
Additionally, our AAdvantage program, which is an important element of our sales and marketing programs, faces significant and increasing competition from the loyalty programs offered by other travel companies, as well as from similar loyalty benefits offered by banks and other financial services companies.
We face risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom.
We face risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom.
The EU-UK Trade and Cooperation Agreement includes provisions in relation to commercial air service that we expect to be sufficient to sustain our current services under the transatlantic joint business.
The EU-UK Trade and Cooperation Agreement includes provisions in relation to commercial air service that we expect to be sufficient to sustain our current services under the transatlantic joint business.
Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we can offer no assurance that we may be able to increase our fares, impose surcharges or otherwise increase revenues or decrease other operating costs sufficiently to offset our costs of meeting obligations under CORSIA.
Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we can offer no assurance that we may be able to increase our fares, impose surcharges or otherwise increase revenues or decrease other operating costs sufficiently to offset the costs of meeting our obligations under CORSIA.
If we do decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so or that such a capital deployment program will enhance long-term stockholder value.
If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so or that such a capital deployment program will enhance long-term stockholder value.
If we issue additional shares of our common stock or rights to acquire shares of our common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such issuances or sales may occur, then the trading price of our common stock and Convertible Notes could decline substantially.
If we issue additional shares of our common stock or rights to acquire shares of our common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such issuances or sales may occur, then the trading price of our common stock and the Convertible Notes could decline substantially.
If needed, it may be difficult for us to raise additional capital on acceptable terms, or at all, due to, among other factors: our substantial level of existing indebtedness, particularly following the additional liquidity transactions completed in response to the impact of the COVID-19 pandemic; our non-investment grade credit rating; volatile or otherwise unfavorable market conditions; and the availability of assets to use as collateral for loans or other indebtedness, which has been reduced significantly as a result of certain financing transactions we have undertaken since the beginning of 2020 and may be further reduced.
If needed, it may be difficult for us to raise additional capital on acceptable terms, or at all, due to, among other factors: our substantial level of existing indebtedness, particularly following transactions we completed in response to the impact of the COVID-19 pandemic; our non-investment grade credit rating; volatile or otherwise unfavorable market conditions; and the availability of assets to use as collateral for loans or other indebtedness, which has been reduced significantly as a result of certain financing transactions we have undertaken since the beginning of 2020 and may be further reduced.
As a result of competitive pressure, and the need to improve security screening throughput to support the pace of our operations, it is unlikely that we will be able to capture all security-related costs through increased fares. In addition, we cannot forecast what new security requirements may be imposed in the future, or their impact on our business.
As a result of competitive pressure, and the need to improve security screening throughput to support the pace of our operations, it is unlikely that we will be able to capture all security-related costs through increased fares. We cannot forecast what new security requirements may be imposed in the future, or their impact on our business.
These factors may become even more significant in periods when the industry experiences large losses (such as occurred recently during the COVID-19 pandemic), as airlines under financial stress, or in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long-term viability.
These factors may become even more significant in periods when the industry experiences large losses (such as occurred during the COVID-19 pandemic), as airlines under financial stress, or in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long-term viability.
A significant number of recent privacy and data security incidents, including those involving other large airlines, have resulted in very substantial adverse financial consequences to those companies. A cybersecurity incident could also impact our brand, including that of the AAdvantage program, harm our reputation and adversely impact our relationship with our customers, employees and stockholders.
A significant number of recent data privacy and cybersecurity incidents, including those involving other large airlines, have resulted in very substantial adverse financial consequences to those companies. A cybersecurity incident could also impact our brand, including that of the AAdvantage program, harm our reputation and adversely impact our relationship with our customers, employees and stockholders.
Growing recognition among consumers of the dangers of climate change may mean some customers choose to fly less frequently or fly on an airline they perceive as operating in a manner that is more sustainable to the climate. Business customers may choose to use alternatives to travel, such as virtual meetings and workspaces.
Additionally, growing recognition among consumers of the dangers of climate change may mean some customers choose to fly less frequently or fly on an airline they perceive as operating in a manner that is more sustainable to the climate. Business customers may choose to use alternatives to travel, such as virtual meetings and workspaces.
In connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted a tax benefits preservation plan (the Tax Benefits Preservation Plan) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income tax obligations.
In connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted a tax benefits preservation plan (the Tax Benefit Preservation Plan) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income tax obligations.
For example, they may: • make it more difficult for us to satisfy our obligations under our indebtedness; • limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments and general corporate purposes, and adversely affect the terms on which such funding can be obtained; • require us to dedicate a substantial portion of our liquidity or cash flow from operations to payments on our indebtedness and other obligations, thereby reducing the funds available for other purposes; • make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative to competitors with lower relative levels of financial leverage; • significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our business, operations, or competitive position versus other airlines; • limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions; • bear interest at floating rates, subjecting us to volatility in interest expenses as interest rates fluctuate; • contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities and collateral coverage ratios and peak debt service coverage ratios; and • contain restrictive covenants that could, among other things: ◦ limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make investments and pay dividends; and ◦ if breached, result in an event of default under our indebtedness.
For example, they may: • make it more difficult for us to satisfy our obligations under our indebtedness; • limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments and general corporate purposes, and adversely affect the terms on which such funding can be obtained; • require us to dedicate a substantial portion of our liquidity or cash flow from operations to payments on our indebtedness and other obligations, thereby reducing the funds available for other purposes; • make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative to competitors with lower relative levels of financial leverage; • significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our business, operations, or competitive position versus other airlines; • limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions; • bear interest at floating rates, subjecting us to volatility in interest expenses as interest rates fluctuate; • contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities and collateral coverage ratios and peak debt service coverage ratios; • impact availability of borrowings under revolving lines of credit; and • contain restrictive covenants that could, among other things: ◦ limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make investments and pay dividends; and ◦ if breached, result in an event of default under our other indebtedness.
Any such existing or future investment could involve significant challenges and risks, including that we may not realize a satisfactory return on our investment or that they may not generate the expected revenue synergies, and they may distract management focus from our operations or other strategic options.
Any such existing or future investment could involve significant challenges and risks, including that we may not realize a satisfactory return on our investment, if any, or that they may not generate the expected revenue synergies, and they may distract management focus from our operations or other strategic options.
See "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." The FAA also exercises comprehensive regulatory authority over nearly all technical aspects of our operations.
See “ 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.” The FAA also exercises comprehensive regulatory authority over nearly all technical aspects of our operations.
Repeated or prolonged delays in the production, delivery or induction of our new aircraft could require us to scale back our growth plans, reduce frequencies or forgo service entirely to certain markets, which could adversely affect our business, financial condition and results of operations.
Repeated or prolonged delays in the production, delivery or induction of our new aircraft could also require us to scale back our growth plans, reduce frequencies or forgo service entirely to certain markets, which could adversely affect our business, financial condition and results of operations.
The increased regulatory focus on data privacy practices apart from how personal data is secured, such as how personal data is collected, used for marketing purposes, and shared with third parties, also may require changes to our processes and increase compliance costs.
The increased regulatory focus on data privacy practices apart from how personal information is secured, such as how personal information is collected, used for marketing purposes, and shared with third parties, also may require changes to our processes and increase compliance costs.
For example, there has previously been bipartisan legislation proposed in Congress called the Credit Card Competition Act designed to increase credit card transaction routing options for merchants which, if enacted, could result in a reduction of the fees levied on credit card transactions.
For example, there has been bipartisan legislation proposed in Congress called the Credit Card Competition Act designed to increase credit card transaction routing options for merchants which, if enacted, could result in a reduction of the fees levied on credit card transactions.
In 2022, in response to rising inflation which coincided with a rapid rebound of economic activity as governments lifted restrictions and economies reopened following the COVID-19 pandemic, central banks around the world—including the U.S.
In 2022 and 2023, in response to rising inflation which coincided with a rapid rebound of economic activity as governments lifted restrictions and economies reopened following the COVID-19 pandemic, central banks around the world—including the U.S.
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 consider our intellectual property rights, particularly our branding rights such as our trademarks applicable to our airline and AAdvantage loyalty program, to be a significant and valuable aspect of our business.
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 consider our intellectual property rights, particularly our branding rights such as our trademarks applicable to our airline and AAdvantage program, to be a significant and valuable aspect of our business.
Under the Rehabilitation Plan, American was subject to an immaterial contribution surcharge, which ceased to apply June 14, 2019 upon American’s mandatory adoption of a contribution schedule under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate.
Under the Rehabilitation Plan, American was subject to an immaterial contribution surcharge, which ceased to apply on June 14, 2019 upon American’s mandatory adoption of a contribution schedule under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate.
There has been heightened legislative and regulatory focus on data privacy and cybersecurity in the U.S., the EU, China and elsewhere, particularly with respect to critical infrastructure providers, including those in the transportation sector.
There has been heightened legislative and regulatory focus on data privacy and cybersecurity in the U.S., EU, U.K., China and elsewhere, particularly with respect to critical infrastructure providers, including those in the transportation sector.
The results of our operations, demand for air travel, and the manner in which we conduct business each may be affected by changes in law and future actions taken by governmental agencies, including: • changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the types of fares offered or fees that can be charged to passengers; • the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for codesharing alliances, joint businesses and other arrangements with other airlines, and the imposition of regulatory investigations or commencement of litigation related to any of the foregoing (including our arrangements with JetBlue); • restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s ability to respond to a competitor); • the adoption of new passenger security standards or regulations that impact customer service standards; • restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights currently held by us; • the adoption of more restrictive locally-imposed noise restrictions; and • restrictions on travel or special guidelines regarding aircraft occupancy or hygiene in response to outbreaks of illness, such as occurred during the COVID-19 pandemic, including the imposition of preflight testing regimes or vaccination confirmation requirements which have to date and may in the future have the effect of reducing demand for air travel in the markets where such requirements are imposed.
The results of our operations, demand for air travel and the manner in which we conduct business each may be affected by changes in law and future actions taken by governmental agencies, including: • changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the types of fares offered or fees that can be charged to passengers; • the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for codesharing alliances, joint businesses and other arrangements with other airlines, and the imposition of regulatory investigations or commencement of litigation related to any of the foregoing; • restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s ability to respond to a competitor); • the adoption of new passenger security standards or regulations that impact customer service standards; 34 Table of Contents • restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights currently held by us; • the adoption of more restrictive locally-imposed noise restrictions; and • restrictions on travel or special guidelines regarding aircraft occupancy or hygiene in response to outbreaks of illness, such as occurred during the COVID-19 pandemic, including the imposition of preflight testing regimes or vaccination confirmation requirements which have in the past and may in the future have the effect of reducing demand for air travel in the markets where such requirements are imposed.
Evolving data security and privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of personal information about individuals) 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.
Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant data 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.
In addition, the Tax Benefits Preservation Plan may adversely affect the marketability of AAG common stock by discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership interest in AAG.
In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership interest in AAG.
Certain existing or potential future agreements pertain to SAF production from facilities that are planned but not yet operational, and which may utilize technology that has not been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines and volumes.
Certain existing or potential future agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines and volumes.
Certain existing or potential future agreements pertain to SAF production from facilities that are planned but not yet operational, and which may utilize technology that has not been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines and volumes.
Certain existing or potential future agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines and volumes.
Additionally, due to the impact of the COVID-19 pandemic and other economic factors, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to use them. 35 Table of Contents Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods.
Additionally, due to the impact of the COVID-19 pandemic and other economic factors, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to use them. 30 Table of Contents Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods.
Significant cybersecurity incidents involving us or one of our AAdvantage partners or other business partners have in the past and may in the future result in a range of potentially material negative consequences for us, including unauthorized access to, disclosure, modification, misuse, loss or destruction of company systems or data; theft of sensitive, regulated or confidential data, such as personal information or our intellectual property; the loss of functionality of critical systems through ransomware, denial of service or other attacks; a diminished ability to retain or attract new customers; a deterioration in our relationships with business partners and other third parties; interruptions or failures in our payment related systems; and business delays, service or system disruptions, damage to equipment and injury to persons or property.
Significant cybersecurity incidents involving us, our third-party service providers, or one of our AAdvantage partners or other business partners, have in the past and may in the future result in a range of potentially material negative consequences for us, including unauthorized access to, disclosure, modification, misuse, loss or destruction of company systems or data; theft of sensitive, regulated or confidential data, such as personal information or our intellectual property; the loss of functionality of critical systems through ransomware, denial of service or other cyberattacks; a diminished ability to retain or attract new customers; a deterioration in our relationships with business partners and other third parties; interruptions or failures in our payment related systems; and business delays, service or system disruptions, damage to equipment and injury to persons or property.
Also, our implementation of any new or increased fees might result in adverse brand perceptions, reputational harm or regulatory scrutiny, and could reduce the demand for air travel on our airline or across the industry in general, particularly if weakened economic conditions make our customers more sensitive to increased travel costs or provide a significant competitive advantage to other carriers that determine not to institute similar charges.
Also, our implementation of any new or increased fees might result in adverse 29 Table of Contents brand perceptions, reputational harm or regulatory scrutiny, and could reduce the demand for air travel on our airline or across the industry in general, particularly if weakened economic conditions make our customers more sensitive to increased travel costs or provide a significant competitive advantage to other carriers that determine not to institute similar charges.
Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. Accordingly, as of December 31, 2022, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption.
Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. Accordingly, as of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption.
Brexit has also led to legal and regulatory uncertainty such as the identity of the relevant regulators, new regulatory action and/or potentially divergent treaties, laws and regulations as the United Kingdom determines which EU treaties, laws and regulations to replace or replicate, including those governing aviation, labor, environmental, data protection/privacy, competition and other matters applicable to the provision of air transportation services by us or our alliance, joint business or codeshare partners.
Brexit has also led to legal and regulatory uncertainty such as new regulatory action and/or potentially divergent treaties, laws and regulations as the United Kingdom determines which EU treaties, laws and regulations to replace or replicate, including those governing aviation, labor, environmental, data protection/privacy, competition and other matters applicable to the provision of air transportation services by us or our alliance, joint business or codeshare partners.
Our regional airline subsidiaries and other regional partners have recently been unable to hire adequate numbers of pilots to meet their needs, resulting in a reduction in the number of flights offered, disruptions, increased compensation expense and costs of operations, financial difficulties and other adverse effects, and these circumstances may become more severe in the future and thereby cause a material adverse effect on our business.
Notwithstanding these efforts, our regional airline subsidiaries and other regional partners have recently been unable to hire adequate numbers of pilots to meet their needs, resulting in a reduction in the number of flights offered, operational disruptions, increased compensation expense and costs of operations, financial difficulties and other adverse effects, and these circumstances may become more severe in the future and thereby cause a material adverse effect on our business.
The Tax Benefits Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders of AAG. The Tax Benefits Preservation Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain acquisitions of AAG common stock.
The Tax Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders of AAG. The Tax Benefit Preservation Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain acquisitions of AAG common stock.
Any lapse, revocation, suspension or delay in approval of our authority to do business in a given jurisdiction may prevent us from serving certain destinations and could adversely impact our business, financial condition and results of operations. 43 Table of Contents More generally, our industry may be affected by any deterioration in global trade relations, including shifts in the trade policies of individual nations.
Any lapse, revocation, suspension or delay in approval of our authority to do business in a given jurisdiction may prevent us from serving certain destinations and could adversely impact our business, financial condition and results of operations. More generally, our industry may be affected by any deterioration in global trade relations, including shifts in the trade policies of individual nations.
There is also an increased risk to our business in the 50 Table of Contents event of a significant data privacy violation, including additional compliance costs, reputational harm, disruption to the manner in which we provide our services, including the geographies we service, and being subject to complaints and/or regulatory investigations, significant monetary liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or other additional liabilities, such as claims by industry groups or other third parties.
There is also an increased risk to our business in the event of a significant cybersecurity or data privacy violation, including additional compliance costs, reputational harm, disruption to the manner in which we provide our services, including the geographies we service, and being subject to complaints and/or regulatory investigations, significant monetary liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or other additional liabilities, such as claims by industry groups or other third parties.
Although our share repurchase programs are intended to enhance long-term stockholder value, there is no assurance that they will do so. 54 Table of Contents AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that limit voting and acquisition and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes.
Although our share repurchase programs are intended to enhance long-term stockholder value, there is no assurance that they will do so. AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that limit voting and acquisition and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes.
Each slot represents the authorization to land at or take off from the particular airport during a specified time period and may impose other operational restrictions as well. In the U.S., the 51 Table of Contents DOT and the FAA currently regulate the allocation of slots or slot exemptions at DCA and two New York City airports: JFK and LGA.
Each slot represents the authorization to land at or take off from the particular airport during a specified time period and may impose other operational restrictions as well. In the U.S., the DOT and the FAA currently regulate the allocation of slots or slot exemptions at DCA and two New York City airports: JFK and LGA.
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. We are highly dependent on existing and emerging technology and automated systems to operate our business.
W e 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. We are highly dependent on existing and emerging technology and automated systems to operate our business.
Such unanticipated extensions or delays, which recently have been relatively commonplace among manufacturers of commercial aircraft, may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs, or reductions to our schedule, thereby reducing revenues.
Such unanticipated extensions or delays, which as noted above have recently been relatively commonplace among manufacturers of commercial aircraft, may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs, or reductions to our schedule, thereby reducing revenues.
While our network is comprehensive, compared to some of our key global competitors, we generally have somewhat greater relative exposure to certain regions (for example, Latin America) and somewhat lower relative exposure to others (for example, China).
While our network is comprehensive, compared to some of our key global competitors, we generally have somewhat greater relative exposure to certain regions (for example, Latin America) and somewhat lower relative exposure to others (for example, Asia).
In addition, we use third-party service providers to help us deliver services to customers. These service providers may store personal information, credit card information and/or other confidential information. Such information may be the target of unauthorized access or subject to security breaches because of third-party action, employee error, malfeasance or otherwise.
In addition, we use third party service providers to help us deliver services to customers. These service providers may store personal information, credit card information and/or other confidential information. Such information has been and will be the target of unauthorized access or subject to security breaches because of third-party action, employee error, malfeasance or otherwise.
In addition, if the aircraft we receive do not meet expected performance or quality standards, including with respect to fuel efficiency, safety and reliability, we could face higher financing and operating costs than planned and our business, results of operations and financial condition could be adversely impacted.
If the aircraft we receive do not meet expected performance or quality standards, including with respect to fuel efficiency, safety and reliability, we could also face higher financing and operating costs than planned and our business, results of operations and financial condition could be adversely impacted.
Any material problems with the adequacy, efficiency and timeliness of contract services, resulting from financial hardships, personnel shortages or otherwise, could have a material adverse effect on our business, results of operations and financial condition. 33 Table of Contents Any damage to our reputation or brand image could adversely affect our business or financial results.
Any material problems with the adequacy, efficiency and timeliness of contract services, resulting from financial hardships, personnel shortages or otherwise, could have a material adverse effect on our business, results of operations and financial condition. Any damage to our reputation or brand image could adversely affect our business or financial results.
As another example, in July 2022, a minor phishing incident resulted in certain employee email accounts being accessed and acquired without authorization that contained personal information about a very limited number of individuals, including travelers (following which we notified the individuals).
For example, in July 2022, a minor phishing incident resulted in certain employee email accounts being accessed and acquired without authorization that contained personal information about a very limited number of individuals, including travelers (following which we notified the individuals).
Further, we could be exposed to litigation, regulatory enforcement or other legal action as a result of an incident, carrying the potential for damages, fines, sanctions or other penalties, as well as injunctive relief and enforcement actions requiring costly compliance measures.
Further, we could be exposed to litigation, regulatory enforcement or other 43 Table of Contents legal action as a result of an incident, carrying the potential for damages, fines, sanctions or other penalties, as well as injunctive relief and enforcement actions requiring costly compliance measures.
Similarly, we cannot predict actions that may be taken by our competitors in response to changes in fuel prices. We cannot predict the future availability, price volatility or cost of aircraft fuel. Natural disasters (including hurricanes or similar events in the U.S.
Similarly, we cannot predict actions that may be taken by our competitors in response to changes in fuel prices. 32 Table of Contents We cannot predict the future availability, price volatility or cost of aircraft fuel. Natural disasters (including hurricanes or similar events in the U.S.
Present and potential future security requirements can have the effect of imposing costs and inconvenience on travelers, potentially reducing the demand for air travel. Similarly, there are a number of legislative and regulatory initiatives and reforms at the state and local levels.
Present and potential future security requirements can have the effect of imposing costs and inconvenience on travelers, potentially reducing the demand for air travel. Similarly, there are a number of legislative and regulatory initiatives and reforms at the state and local levels in the U.S.
If we are forced to surrender slots, we may be unable to provide our desired level of service to or from certain destinations in the future.
If we are forced to surrender slots or other rights, we may be unable to provide our desired level of service to or from certain destinations in the future.
In addition, we have used certain assets from our AAdvantage loyalty program as collateral for the AAdvantage Financing, which contains covenants that impose restrictions on certain amendments or changes to certain of our AAdvantage Agreements and other aspects of the AAdvantage loyalty program.
In addition, we have used certain assets from our AAdvantage program as collateral for the AAdvantage Financing, which contains covenants that impose restrictions on certain amendments or changes to certain of our AAdvantage program agreements provided as collateral under the AAdvantage Financing and other aspects of the AAdvantage program.
Our current international activities and prospects have been, and in the future could be, adversely affected by government policies, reversals or delays in the opening of foreign markets, increased competition in international markets, the performance of our alliance, joint business and codeshare partners in a given market, exchange controls or other restrictions on repatriation of funds, currency and political risks (including changes in exchange rates and currency devaluations), environmental regulation, increases in taxes and fees and changes in international government regulation of our operations, including the inability to obtain or retain needed route authorities and/or slots.
Our current international activities and prospects have been, and in the future could be, adversely affected by government policies, reversals or delays in the opening of foreign markets, increased competition in international markets, the performance of our alliance, joint business and codeshare partners in a given market, exchange controls or other restrictions on repatriation of funds, currency and political risks (including changes in exchange rates and currency devaluations), environmental regulation, increases in taxes and fees and changes in international governmental regulation of our operations, including the inability to obtain or retain needed route authorities and/or slots, and new or evolved policies related to consumer protections.
We elected to be covered by certain special rules for federal income tax purposes that permitted approximately $9.0 billion (with $4.4 billion of unlimited NOLs still remaining at December 31, 2022) of our federal NOL carryforwards to be utilized without regard to the annual limitation generally imposed by Section 382.
We elected to be covered by certain special rules for federal income tax purposes that permitted approximately $9.0 billion (with $3.0 billion of unlimited NOLs still remaining at December 31, 2023) of our federal NOL carryforwards to be utilized without regard to the annual limitation generally imposed by Section 382.
This spending is expected to result in increased costs to airlines and the traveling public that use those facilities as the airports seek to recover their investments through increased rental, landing and other facility costs. In some circumstances, such costs could be imposed by the relevant airport authority without our approval.
This spending is expected to result in increased costs to airlines and the traveling public that use those facilities as the airports seek to 44 Table of Contents recover their investments through increased rental, landing and other facility costs. In some circumstances, such costs could be imposed by the relevant airport authority without our approval.
In addition, competition from foreign airlines, revenue-sharing joint ventures, joint business agreements, and other alliance arrangements by and among other airlines could impair the value of our business and assets on the open skies routes.
In addition, competition from foreign airlines, revenue-sharing 35 Table of Contents joint ventures, joint business agreements, and other alliance arrangements by and among other airlines could impair the value of our business and assets on the open skies routes.
Further, our business has been adversely impacted when government agencies have ceased to operate as expected, including due to partial shut-downs, sequestrations or similar events and the COVID-19 pandemic.
Further, our business has been adversely impacted when government agencies have ceased to operate as expected, including due to partial shutdowns, sequestrations or similar events and the COVID-19 pandemic.
We may introduce additional 34 Table of Contents initiatives in the future; however, as time goes on, we expect that it will be more difficult to identify and implement additional initiatives. We cannot assure that these measures or any future initiatives will be successful in increasing our revenues or offsetting our costs.
We may introduce additional initiatives in the future; however, as time goes on, we expect that it will be more difficult to identify and implement additional initiatives. We cannot assure that these measures or any future initiatives will be successful in increasing our revenues or offsetting our costs.
The market price of AAG common stock has fluctuated substantially in the past, and may fluctuate substantially in the future, due to a variety of factors, many of which are beyond our control, including: • the effects of the COVID-19 pandemic on our business or the U.S. and global economies; • macro-economic conditions, including the price of fuel; • changes in market values of airline companies as well as general market conditions; • our operating and financial results failing to meet the expectations of securities analysts or investors; • changes in financial estimates or recommendations by securities analysts; • changes in our level of outstanding indebtedness and other obligations; • changes in our credit ratings; • material announcements by us or our competitors; • expectations regarding any future capital deployment program, including share repurchase programs and any future dividend payments that may be declared by our Board of Directors, or any subsequent determination to cease repurchasing stock or paying dividends; • new regulatory pronouncements and changes in regulatory guidelines; • general and industry-specific economic conditions; • changes in our key personnel; • public or private sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the exercise or conversion of restricted stock unit awards, stock appreciation rights, or other securities that may be issued from time to time, including warrants we have issued in connection with our receipt of funds under the CARES Act, the PSP Extension Law and the ARP; 53 Table of Contents • increases or decreases in reported holdings by insiders or other significant stockholders; • fluctuations in trading volume; and • technical factors in the public trading market for our stock that may produce price movements that may or may not comport with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as may be expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging and other technical trading factors.
The market price of AAG common stock has fluctuated substantially in the past, and may fluctuate substantially in the future, due to a variety of factors, many of which are beyond our control, including: • the effects of external events, such as the COVID-19 pandemic, on our business or the U.S. and global economies; • macro-economic conditions, including the price of fuel; • changes in market values of airline companies as well as general market conditions; • our operating and financial results failing to meet the expectations of securities analysts or investors; • changes in financial estimates or recommendations by securities analysts; • changes in our level of outstanding indebtedness and other obligations; • changes in our credit ratings; • material announcements by us or our competitors; 46 Table of Contents • expectations regarding any future capital deployment program, including share repurchase programs and any future dividend payments that may be declared by our Board of Directors, or any subsequent determination to cease repurchasing stock or paying dividends; • new regulatory pronouncements and changes in regulatory guidelines; • general and industry-specific economic conditions; • changes in our key personnel; • inclusion of our common stock in broad market indexes favored by passive investors; • investor preferences to invest in certain sectors, including large technology companies in lieu of industrial or transportation companies; • public or private sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the exercise or conversion of restricted stock unit awards, stock appreciation rights, or other securities that may be issued from time to time, including warrants we have issued in connection with our receipt of funds under the CARES Act, the PSP Extension Law and the ARP; • increases or decreases in reported holdings by insiders or other significant stockholders; • fluctuations in trading volume; and • technical factors in the public trading market for our stock that may produce price movements that may or may not comport with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as may be expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging and other technical trading factors.
We have at times found it necessary or desirable to make 44 Table of Contents significant expenditures to comply with security-related requirements while seeking to reduce their impact on our customers, such as expenditures for automated security screening lines at airports.
We have at times found it necessary or desirable to make significant expenditures to comply with security-related requirements while seeking to reduce their impact on our customers, such as expenditures for automated security screening lines at airports.
Following the expiration of these restrictions, if we determine to make any share repurchases in the future, such repurchases may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions.
If we determine to make any share repurchases in the future, such repurchases may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions.
For example, we are currently involved in legal proceedings brought by flight attendants and certain other work groups in California concerning alleged violations of the state's labor code including, among other things, violations of certain meal and rest break laws, and an adverse determination in any of these cases could adversely impact our operational flexibility and result in the imposition of damages and fines, which could potentially be significant.
For example, we are currently involved in legal proceedings in California concerning alleged violations of the state’s labor code including, among other things, violations of certain meal and rest break laws, and an adverse determination in any of these cases could adversely impact our operational flexibility and result in the imposition of damages and fines, which could potentially be significant.
The threat of cybersecurity incidents continues to increase as the frequency, intensity and sophistication of attacks and intrusions increase around the world.
The threat of cybersecurity incidents continues to increase as the frequency, intensity and sophistication of cyberattacks and intrusions increase around the world.
Moreover, as a result of the financing activities we undertook in response to 29 Table of Contents the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby subjecting us to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions could become binding on us as we continue to seek additional liquidity.
Moreover, as a result of the financing activities we undertook in response to the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby subjecting us to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions could become binding on us should we seek additional liquidity in the future.
Our reputation or brand image could be adversely impacted by, among other things, any failure to maintain high ethical, social and environmental sustainability practices for all of our operations and activities, our impact on the environment, public pressure from investors or policy groups to change our policies, such as movements to institute a “living wage,” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our use of social media, or customer perceptions of statements made by us, our employees and executives, agents or other third parties.
Our reputation or brand image could be adversely impacted by, among other things, any failure to maintain high ethical, social and environmental sustainability practices for all of our operations and activities, our impact on the environment, public pressure from investors or policy groups to change our policies, such as movements to institute a “living wage,” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our use of social media, including greenwashing concerns regarding our advertising campaigns and marketing programs related to our sustainability 28 Table of Contents initiatives, or customer perceptions of statements made by us, our employees and executives, agents or other third parties.
The ATC system’s inability to manage existing travel demand has led government agencies to implement short-term capacity constraints during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic.
The ATC system’s inability to manage existing travel demand, including due to significant staffing shortages, has led government agencies to implement short-term capacity constraints during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic.
In addition, several countries and U.S. states have adopted or are considering adopting programs, including new taxes, to regulate domestic GHG emissions. Finally, certain airports have adopted, and others could in the future adopt, GHG emission or climate-related goals that could impact our operations or require us to make changes or investments in our infrastructure.
In addition, several countries and U.S. states have adopted or are considering adopting programs, including potentially new taxes, to regulate GHG emissions. In addition, certain airports have proposed, and could in the future adopt, GHG emission or climate-related goals or measures that could impact our operations or require us to make changes or investments in our infrastructure.
If such changes are enacted or implemented, we are currently unable to predict the ultimate impact on our business and therefore there can be no assurance our business will not be adversely affected. 36 Table of Contents We have a significant amount of goodwill, which is assessed for impairment at least annually.
If any such changes are implemented, we are currently unable to predict the ultimate impact on our business and therefore there can be no assurance our business will not be adversely affected. We have a significant amount of goodwill, which is assessed for impairment at least annually.
While many countries have largely eliminated their pandemic restrictions, or are in the process of doing so, we can provide no assurance as to when demand for international travel will return to pre-COVID-19 pandemic levels, if at all, or whether certain international destinations we previously served will be economical in the future.
While many countries have largely eliminated their pandemic restrictions, we can provide no assurance as to when demand for international travel will return to pre-COVID-19 pandemic levels in certain markets, if at all, or whether certain international destinations we previously served will be economical in the future.
In the future, any new regulatory requirements, particularly requirements that limit our ability to operate or price our products, could have a material adverse effect on us and the industry.
In the future, any new 33 Table of Contents regulatory requirements, particularly requirements that limit our ability to operate or price our products, could have a material adverse effect on us and the industry.
These provisions include, among other things, the following: • advance notice procedures for stockholder proposals to be considered at stockholders’ meetings; • the ability of our Board of Directors to fill vacancies on the board; • a prohibition against stockholders taking action by written consent; • stockholders are restricted from calling a special meeting unless they hold at least 20% of our outstanding shares and follow the procedures provided for in the amended Bylaws; • a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors approve any amendment of our Bylaws submitted to stockholders for approval; and • super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation.
These provisions include, among other things, the following: • advance notice procedures for stockholder proposals to be considered at stockholders’ meetings; • the ability of our Board of Directors to fill vacancies on the board; • a prohibition against stockholders taking action by written consent; • stockholders are restricted from calling a special meeting unless they hold at least 20% of our outstanding shares and follow the procedures provided for in the amended Bylaws; • a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors approve any amendment of our Bylaws submitted to stockholders for approval; and • super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation. 48 Table of Contents These provisions are not intended to prevent a takeover, but are intended to protect and maximize the value of the interests of our stockholders.
A security failure, including a failure to meet relevant payment security standards, breach or other significant cybersecurity incident affecting one of our partners, interruptions or failures in our payment related systems, could result in potentially material negative consequences for us, including loss of critical data, service interruptions and the potential for fines, restrictions and expulsion from card acceptance programs.
A security failure, including a failure to meet PCI DSS requirements, breach or other significant cybersecurity incident affecting one of our partners, interruptions or failures in our payment related systems, could result in potentially material negative consequences for us, including loss of critical data, service interruptions, delays in operations, and the potential for fines, restrictions and expulsion from card acceptance programs.
In light of constraints on existing facilities, there is presently a significant amount of capital spending underway at major airports in the United States, including large projects underway at a number of airports where we have significant operations, such as ORD, Dallas/Fort Worth International Airport, JFK and LAX.
In light of constraints on existing facilities, there is presently a significant amount of capital spending underway at major airports in the United States, including large projects underway at a number of airports where we have significant operations, such as O’Hare International Airport, Dallas/Fort Worth International Airport and Los Angeles International Airport.
Furthermore, if we were to withdraw from the IAM Pension Fund, if the 30 Table of Contents IAM Pension fund were to terminate, or if the IAM Pension Fund were to undergo a mass withdrawal, we could be subject to liability as imposed by law.
Furthermore, if we were to withdraw from the IAM Pension Fund, if the IAM Pension fund were to terminate, or if the IAM Pension Fund were to undergo a mass withdrawal, we could be subject to liability as imposed by law.
Business – “Our People — Labor Relations .” In the case of a CBA that is amendable under the RLA, if no agreement is reached during direct negotiations between the parties, either party may request that the NMB appoint a federal mediator.
Business – “Sustainability – Our People .” In the case of a CBA that is amendable under the RLA, if no agreement is reached during direct negotiations between the parties, either party may request that the NMB appoint a federal mediator.
Despite ongoing efforts to maintain and improve the security of digital information, individuals, including employees or contractors, may be able to circumvent the security measures we put in place, and we may be unable to anticipate new techniques used for these attacks and intrusions and implement adequate preventative measures.
Despite ongoing efforts to maintain and improve the security of our information systems and digital information, individuals, including employees, contractors, and external threat actors, may be able to circumvent the security measures we put in place, and we may be unable to anticipate new techniques used for these attacks and intrusions and implement adequate preventative measures.
Our substantial indebtedness and other obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences.
Our substantial indebtedness and other 21 Table of Contents obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences.
Measures implemented during the COVID-19 pandemic—such as travel restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, cancellation of public events and many others—initially resulted in a precipitous decline in demand for both domestic and international business and leisure travel. Additionally, the COVID-19 pandemic necessitated changes in business practices which may persist.
Measures implemented during the COVID-19 pandemic—such as travel restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, cancellation of public events and many others—initially resulted in a precipitous decline in demand for both domestic and international business and leisure travel.
The recent telecom industry roll-out of 5G technology, and concerns regarding its possible interference with aircraft navigation systems, also resulted in regulatory uncertainty and the potential for operational impacts, including possible suspension of service to certain airports or the operation of certain aircraft.
The recent telecom industry roll-out of 5G technology, and concerns regarding its possible interference with aircraft navigation systems, also resulted in regulatory uncertainty and the potential for operational impacts, including possible suspension of service to certain airports or the operation of certain aircraft, though the issue has since been resolved.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeMainline As of December 31, 2022, American’s mainline fleet consisted of the following aircraft: Average Seating Capacity Average Age (Years) Owned Leased Total Airbus A319 128 18.7 21 112 133 Airbus A320 150 21.7 10 38 48 Airbus A321 184 10.4 164 54 218 Airbus A321neo 196 1.7 33 35 68 Boeing 737-800 (1) 172 12.8 123 171 294 Boeing 737-8 MAX 172 3.4 9 33 42 Boeing 777-200ER 273 22.0 44 3 47 Boeing 777-300ER 304 8.8 18 2 20 Boeing 787-8 234 4.6 20 13 33 Boeing 787-9 285 5.2 17 5 22 Total 12.2 459 466 925 (1) Excluded from the total operating aircraft count above are nine owned Boeing 737-800 held in temporary storage as of December 31, 2022. 57 Table of Contents Regional As of December 31, 2022, the fleet of our wholly-owned and third-party regional carriers operating as American Eagle consisted of the following aircraft: Average Seating Capacity Owned Leased Owned or Leased by Third Party Regional Carrier Total Operating Regional Carrier Number of Aircraft Operated Bombardier CRJ 700 (1) 65 40 2 80 122 SkyWest 80 PSA 42 Total 122 Bombardier CRJ 900 (1) 76 69 — 40 109 PSA 69 Mesa 40 Total 109 Embraer 170 (1) 65 2 6 13 21 Republic 13 Envoy 8 Total 21 Embraer 175 76 101 — 108 209 Envoy 101 Republic 88 SkyWest 20 Total 209 Embraer 145 (1) 50 75 — — 75 Piedmont 47 Envoy 28 Total 75 Total 287 8 241 536 536 (1) Excluded from the total operating aircraft count above are 69 regional aircraft that are being held in temporary storage as follows: 40 owned Embraer 145, 14 owned and five leased Bombardier CRJ 700, four owned and two leased Embraer 170 and four owned Bombardier CRJ 900.
Biggest changeMainline As of December 31, 2023, American’s mainline fleet consisted of the following aircraft: Average Seating Capacity Average Age (Years) Owned Leased Total Airbus A319 128 19.7 21 112 133 Airbus A320 150 22.7 10 38 48 Airbus A321 184 11.4 164 54 218 Airbus A321neo 195 2.9 43 35 78 Boeing 737-800 172 14.1 132 171 303 Boeing 737-8 MAX 172 3.2 26 33 59 Boeing 777-200ER 273 23.0 44 3 47 Boeing 777-300ER 304 9.8 18 2 20 Boeing 787-8 234 5.1 20 17 37 Boeing 787-9 285 6.2 17 5 22 Total 12.9 495 470 965 Regional As of December 31, 2023, the fleet of our wholly-owned and third-party regional carriers operating as American Eagle consisted of the following aircraft: Average Seating Capacity Owned Leased Owned or Leased by Third Party Regional Carrier Total Operating Regional Carrier Number of Aircraft Operated Bombardier CRJ 200 50 — — 40 40 Air Wisconsin 40 Bombardier CRJ 700 (1) 65 50 — 90 140 SkyWest 90 PSA 50 Total 140 Bombardier CRJ 900 (1) 76 74 — — 74 PSA 74 Embraer 170 (1) 65 6 23 5 34 Envoy 29 Republic 5 Total 34 Embraer 175 76 108 — 102 210 Envoy 108 Republic 82 SkyWest 20 Total 210 Embraer 145 (1) 50 58 — — 58 Piedmont 58 Total 296 23 237 556 556 51 Table of Contents (1) Excluded from the total operating aircraft count above are 77 regional aircraft that are being held in temporary storage as follows: 57 owned Embraer 145, seven owned and four leased Bombardier CRJ 700, six owned Bombardier CRJ 900 and three leased Embraer 170.
LEGAL PROCEEDINGS See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial Statements in Part II, Item 8B for information on legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 59 Table of Contents PART II
LEGAL PROCEEDINGS See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial Statements in Part II, Item 8B for information on legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 53 Table of Contents PART II
We lease or have built on leased property our headquarters and training facilities in Fort Worth, Texas, our principal overhaul and maintenance base in Tulsa, Oklahoma, our regional reservation offices, and administrative offices throughout the U.S. and abroad. ITEM 3.
We lease or have built on leased property our headquarters and training facilities in Fort Worth, Texas, our principal overhaul and maintenance base in Tulsa, Oklahoma, our regional reservation offices, and administrative offices throughout the U.S. and abroad. 52 Table of Contents ITEM 3.
We are supported by our wholly-owned and third-party regional carriers that fly under capacity purchase agreements operating as American Eagle. As of December 31, 2022, American Eagle operated 536 regional aircraft.
We are supported by our wholly-owned and third-party regional carriers that fly under capacity purchase agreements operating as American Eagle. As of December 31, 2023, American Eagle operated 556 regional aircraft.
Our ability to draw on the financing commitments we have in place is subject to (1) the satisfaction of various terms and conditions including, in some cases, on our acquisition of the aircraft by a certain date and (2) the performance by the counterparty providing such financing commitments of its obligations thereunder.
Our ability to draw on the financing commitments we have in place is subject to (1) the satisfaction of various terms and conditions including, in some cases, on our acquisition of the aircraft by a certain date and (2) the performance by the relevant financing counterparty of its obligations thereunder. See Part I, Item 1A.
ITEM 2. PROPERTIES Flight Equipment As of December 31, 2022, American operated a mainline fleet of 925 aircraft. During 2022, American accepted delivery of 33 mainline aircraft including 24 Airbus A321neo and nine Boeing 787-8 aircraft and returned 27 mainline aircraft to service from temporary storage.
ITEM 2. PROPERTIES Flight Equipment As of December 31, 2023, American operated a mainline fleet of 965 aircraft. During 2023, American accepted delivery of 31 mainline aircraft including 17 Boeing 737-8 MAX, 10 Airbus A321neo and four Boeing 787-8 aircraft and returned nine mainline aircraft to service from temporary storage.
Aircraft and Engine Purchase Commitments As of December 31, 2022, we had definitive purchase agreements for the acquisition of the following aircraft (1) : 2023 2024 2025 2026 2027 Total Airbus A320neo Family 2 5 19 29 5 60 Boeing 737 MAX Family 17 22 28 21 — 88 787 Family 4 12 9 4 5 34 Total 23 39 56 54 10 182 (1) Delivery schedule represents our best estimate as of the date of this report as described in footnote (e) to the “ Contractual Obligations ” table in Part II, Item 7.
Aircraft and Engine Purchase Commitments As of December 31, 2023, we had definitive purchase agreements for the acquisition of the following new aircraft (1) : 2024 2025 2026 2027 2028 2029 and Thereafter Total Airbus A320neo Family 3 21 35 5 — — 64 Boeing 737 MAX Family 20 33 21 — — — 74 787 Family 6 5 4 5 5 5 30 Embraer 175 12 — — — — — 12 Total 41 59 60 10 5 5 180 (1) Delivery schedule represents our best estimate as of the date of this report as described in footnote (e) to the “ Contractual Obligations ” table in Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. Actual delivery dates are subject to change, which could be material, based on various potential factors including production delays by the manufacturer and regulatory concerns.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. Actual delivery dates are subject to change, which could be material, based on various potential factors including production delays by the manufacturer and regulatory concerns. As of December 31, 2023, we had committed to purchase two used Airbus A321neo aircraft which were delivered in January 2024.
See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on aircraft and engine acquisition commitments.
Risk Factors – “We will need to obtain sufficient financing or other capital to operate successfully” for additional discussion. See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on aircraft and engine acquisition commitments.
During 2022, we decreased our regional fleet by a net of 31 aircraft, including the addition of 38 regional aircraft, temporary parking of 59 regional aircraft and return of 10 regional aircraft.
During 2023, we increased our regional fleet by a net of 20 aircraft, including the addition of 83 regional aircraft, the return of 55 regional aircraft to third-party regional carriers and temporarily parking eight regional aircraft.
We also have agreements for 52 spare engines to be delivered in 2023 and beyond. 58 Table of Contents We currently have financing commitments in place for all aircraft on order and scheduled to be delivered in 2023 except for 10 Boeing 737 MAX Family aircraft.
We have financing commitments in place for all aircraft scheduled to be delivered in 2024, except for three Airbus A320neo Family aircraft and two Embraer 175 aircraft.
Removed
We do not have financing commitments in place for any of the aircraft scheduled to be delivered in 2024 and beyond, except for five Boeing 787 Family aircraft scheduled to be delivered in 2024. See Part I, Item 1A. Risk Factors – “We will need to obtain sufficient financing or other capital to operate successfully” for additional discussion.
Added
We had also committed to purchasing six used Embraer 175 aircraft, which are currently flown under a capacity purchase agreement with a third-party regional carrier and which are already included in our aircraft count. We also have agreements for 44 spare engines to be delivered in 2024 and beyond.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 59 PART II Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities 60 Item 6. Selected Consolidated Financial Data 63 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 67 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 83 Item 8A.
Biggest changeItem 4. Mine Safety Disclosures 53 PART II Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities 54 Item 6. Selected Consolidated Financial Data 57 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 Item 8A.
Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 85 Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 132
Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 80 Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 126

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn addition, to reduce the risk of a potential adverse effect on our ability to use our NOL carryforwards and certain other tax attributes for federal income tax purposes, and in connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted the Tax Benefits Preservation Plan in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income tax obligations.
Biggest changeIn addition, to reduce the risk of a potential adverse effect on our ability to use our NOL carryforwards and certain other tax attributes for federal income tax purposes, and in connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted the Tax Benefit Preservation Plan.
Risk Factors – “ If we do decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so or that our capital deployment program will enhance long-term stockholder value. ” 61 Table of Contents Ownership Restrictions AAG’s Certificate of Incorporation and Bylaws provide that, consistent with the requirements of Subtitle VII of Title 49 of the United States Code, as amended (the Aviation Act), any persons or entities who are not a “citizen of the United States” (as defined under the Aviation Act and administrative interpretations issued by the DOT, its predecessors and successors, from time to time), including any agent, trustee or representative of such persons or entities (a non-citizen), shall not, in the aggregate, own (beneficially or of record) and/or control more than (a) 24.9% of the aggregate votes of all of our outstanding equity securities or (b) 49.0% of our outstanding equity securities.
Risk Factors – “ If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so or that such a capital deployment program will enhance long-term stockholder value. ” 55 Table of Contents Ownership Restrictions AAG’s Certificate of Incorporation and Bylaws provide that, consistent with the requirements of Subtitle VII of Title 49 of the United States Code, as amended (the Aviation Act), any persons or entities who are not a “citizen of the United States” (as defined under the Aviation Act and administrative interpretations issued by the DOT, its predecessors and successors, from time to time), including any agent, trustee or representative of such persons or entities (a non-citizen), shall not, in the aggregate, own (beneficially or of record) and/or control more than (a) 24.9% of the aggregate votes of all of our outstanding equity securities or (b) 49.0% of our outstanding equity securities.
Risk Factors – “AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that limit voting and acquisition and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes” and “ Our ability to utilize our NOLs and other carryforwards may be limited.” Also see AAG’s Certification of Incorporation and Bylaws, which are filed as Exhibits 3.1, 3.2 and 3.3 hereto, for the full text of the foregoing restrictions and AAG’s Description of the Registrants’ Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto, for a more detailed description. 62 Table of Contents
Risk Factors – “AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that limit voting and acquisition and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes” and “ Our ability to utilize our NOLs and other carryforwards may be limited.” Also see AAG’s Certification of Incorporation and Bylaws, which are filed as Exhibits 3.1, 3.2, 3.3 and 3.4 hereto, for the full text of the foregoing restrictions and AAG’s Description of the Registrants’ Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto, for a more detailed description. 56 Table of Contents
We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended or discontinued again at any time at our discretion and without prior notice. 60 Table of Contents Stock Performance Graph The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended or discontinued again at any time at our discretion and without prior notice. 54 Table of Contents Stock Performance Graph The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
The comparison assumes $100 was invested on December 31, 2017 in our common stock and in each of the foregoing indices and assumes that all dividends were reinvested. The stock performance shown on the following graph represents historical stock performance and is not necessarily indicative of future stock price performance. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 American Airlines Group Inc.
The comparison assumes $100 was invested on December 31, 2018 in our common stock and in each of the foregoing indices and assumes that all dividends were reinvested. The stock performance shown on the following graph represents historical stock performance and is not necessarily indicative of future stock price performance. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 American Airlines Group Inc.
In addition, the Tax Benefits Preservation Plan may adversely affect the marketability of AAG common stock by discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership interest in AAG.
In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership interest in AAG.
Dividends on Common Stock There were no cash dividend payments during the years ended December 31, 2022 and 2021. In connection with our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to pay dividends on AAG common stock through September 30, 2022 when this restriction expired.
Dividends on Common Stock There were no cash dividend payments during the years ended December 31, 2023 and 2022. In connection with our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to pay dividends on AAG common stock through September 30, 2022, when this restriction expired.
Information on securities authorized for issuance under our equity compensation plans will be set forth in our Proxy Statement for the 2023 Annual Meeting of Stockholders of American Airlines Group Inc. (the Proxy Statement) under the caption “Equity Compensation Plan Information” and is incorporated by reference into this Annual Report on Form 10-K.
Information on securities authorized for issuance under our equity compensation plans will be set forth in our Proxy Statement for the 2024 Annual Meeting of Stockholders of American Airlines Group Inc. (the Proxy Statement) under the caption “Equity Compensation Plan Information” and is incorporated by reference into this Annual Report on Form 10-K.
The Tax Benefits Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders of AAG. The Tax Benefits Preservation Plan is designed to reduce the likelihood that we experience an "ownership change” for purposes of Section 382 by deterring certain acquisitions of AAG common stock.
The Tax Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders of AAG. The Tax Benefit Preservation Plan is designed to reduce the likelihood that we experience an "ownership change” for purposes of Section 382 by deterring certain acquisitions of AAG common stock.
No repurchases of AAG common stock were made in 2022 following the lapse of these restrictions. As of December 31, 2022, the Board of Directors of AAG had not authorized another share repurchase program.
No repurchases of AAG common stock were made in 2023 or 2022 following the lapse of these restrictions. As of December 31, 2023, the Board of Directors of AAG had not authorized another share repurchase program.
The following stock performance graph compares the cumulative total stockholder returns during the period from December 31, 2017 to December 31, 2022 of our common stock to the New York Stock Exchange (NYSE) ARCA Airline Index and the Standard and Poor’s Financial Services, LLC (S&P) 500 Stock Index.
The following stock performance graph compares the cumulative total stockholder returns during the period from December 31, 2018 to December 31, 2023 of our common stock to the New York Stock Exchange (NYSE) ARCA Airline Index and the Standard and Poor’s Financial Services, LLC (S&P) 500 Stock Index.
As of February 17, 2023, there were approximately 14,000 holders of record of our common stock. However, because many of the shares of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of our common stock than record holders.
As of February 16, 2024, there were approximately 54,000 holders of record of our common stock. However, because many of the shares of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of our common stock than record holders.
(AAL) $ 100 $ 62 $ 56 $ 31 $ 35 $ 25 NYSE ARCA Airline Index (XAL) 100 78 94 71 70 45 S&P 500 Index (GSPC) 100 94 121 140 178 144 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The remaining authority under our most recent $2.0 billion share repurchase program expired in December 2020, and in connection with our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to repurchase shares of AAG common stock through September 30, 2022 when this restriction expired.
(AAL) $ 100 $ 91 $ 50 $ 57 $ 40 $ 44 NYSE ARCA Airline Index (XAL) 100 121 92 90 58 75 S&P 500 Index (GSPC) 100 129 150 190 153 190 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The remaining authority under our most recent $2.0 billion share repurchase program expired in December 2020, and in connection with our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to repurchase shares of AAG common stock through September 30, 2022, when this restriction expired.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeYear Ended December 31, 2022 2021 (In millions) Components of Total Special Items, Net: (1) Fleet impairment (2) $ 149 $ — Litigation reserve adjustments 37 (19) PSP Financial Assistance (3) — (4,162) Severance expenses (4) — 168 Mark-to-market adjustments on bankruptcy obligations, net — (3) Other operating special items, net 7 10 Mainline operating special items, net 193 (4,006) PSP Financial Assistance (3) — (539) Regional pilot retention program (5) — 61 Fleet impairment (2) — 27 Severance expenses (4) — 2 Other operating special items, net 5 — Regional operating special items, net 5 (449) Operating special items, net 198 (4,455) Mark-to-market adjustments on equity and other investments, net (6) 71 31 Debt refinancing, extinguishment and other, net 3 29 Nonoperating special items, net 74 60 Pre-tax special items, net 272 (4,395) Income tax special items, net (9) — Total special items, net $ 263 $ (4,395) Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items: Pre-tax income (loss) – GAAP $ 186 $ (2,548) Adjusted for: Pre-tax special items, net 272 (4,395) Pre-tax income (loss) excluding net special items $ 458 $ (6,943) Reconciliation of Net Income (Loss) Excluding Net Special Items: Net income (loss) – GAAP $ 127 $ (1,993) Adjusted for: Total special items, net 263 (4,395) Adjusted for: Net tax effect of net special items (62) 993 Net income (loss) excluding net special items $ 328 $ (5,395) (1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items.
Biggest changeYear Ended December 31, 2023 2022 (In millions) Components of Total Special Items, Net: (1) Labor contract expenses (2) $ 989 $ — Severance expenses (3) 23 — Fleet impairment (4) — 149 Litigation reserve adjustments — 37 Other operating special items, net (41) 7 Mainline operating special items, net 971 193 Regional operating special items, net 8 5 Operating special items, net 979 198 Debt refinancing and extinguishment (5) 280 3 Mark-to-market adjustments on equity investments, net (6) 82 71 Nonoperating special items, net 362 74 Pre-tax special items, net 1,341 272 Income tax special items, net — (9) Total special items, net $ 1,341 $ 263 Reconciliation of Pre-Tax Income Excluding Net Special Items: Pre-tax income – GAAP $ 1,121 $ 186 Adjusted for: Pre-tax special items, net 1,341 272 Pre-tax income excluding net special items $ 2,462 $ 458 Reconciliation of Net Income Excluding Net Special Items: Net income – GAAP $ 822 $ 127 Adjusted for: Total special items, net 1,341 263 Adjusted for: Net tax effect of net special items (304) (62) Net income excluding net special items $ 1,859 $ 328 (1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items.
The adjustment to exclude fuel and net special items allows management an additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding.
The adjustment to exclude net special items and fuel allows management an additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA Selected Consolidated Financial Data of AAG The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended and as of December 31, 2022, 2021 and 2020, are derived from AAG’s audited consolidated financial statements.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA Selected Consolidated Financial Data of AAG The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from AAG’s audited consolidated financial statements.
See Note 8 to American's Consolidated Financial Statements in Part II, Item 8B for further information on pension and postretirement benefits. 66 Table of Contents
See Note 8 to American's Consolidated Financial Statements in Part II, Item 8B for further information on pension and postretirement benefits. 60 Table of Contents
We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. 63 Table of Contents The following table presents the components of our total net special items and the reconciliation of pre-tax income (loss) and net income (loss) (GAAP measures) to pre-tax income (loss) excluding net special items and net income (loss) excluding net special items (non-GAAP measures).
We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. 57 Table of Contents The following table presents the components of our total net special items and the reconciliation of pre-tax income and net income (GAAP measures) to pre-tax income excluding net special items and net income excluding net special items (non-GAAP measures).
(6) Mark-to-market adjustments on equity and other investments, net principally included net unrealized gains and losses associated with certain equity investments. See Note 8 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information related to our equity investments.
See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information. 58 Table of Contents (6) Mark-to-market adjustments on equity investments, net included net unrealized gains and losses associated with certain equity investments. See Note 8 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information related to our equity investments.
Year Ended December 31, 2022 2021 2020 (In millions) Consolidated Statements of Operations data: Total operating revenues $ 48,965 $ 29,880 $ 17,335 Total operating expenses 47,312 30,841 27,559 Operating income (loss) 1,653 (961) (10,224) Net income (loss) 338 (1,777) (8,450) Consolidated Balance Sheet data (at end of period): Total assets $ 70,324 $ 71,145 $ 69,215 Debt and finance leases 30,422 32,094 28,982 Pension and postretirement obligations (1) 2,900 5,117 7,089 Operating lease liabilities 7,961 8,074 8,380 Stockholder’s equity 5,593 3,826 4,348 (1) Substantially all defined benefit pension plans were frozen effective November 1, 2012.
Year Ended December 31, 2023 2022 2021 (In millions) Consolidated Statements of Operations data: Total operating revenues $ 52,784 $ 48,965 $ 29,880 Total operating expenses 49,715 47,312 30,841 Operating income (loss) 3,069 1,653 (961) Net income (loss) 1,188 338 (1,777) Consolidated Balance Sheet data (at end of period): Total assets $ 69,074 $ 70,324 $ 71,145 Debt and finance leases 27,675 30,422 32,094 Pension and postretirement obligations (1) 3,148 2,900 5,117 Operating lease liabilities 7,708 7,961 8,074 Stockholder’s equity 6,577 5,593 3,826 (1) Substantially all defined benefit pension plans were frozen effective November 1, 2012.
Year Ended December 31, 2022 2021 Reconciliation of CASM Excluding Net Special Items and Fuel: (In millions) Total operating expenses – GAAP $ 47,364 $ 30,941 Operating net special items (1) : Mainline operating special items, net (193) 4,006 Regional operating special items, net (5) 449 Aircraft fuel and related taxes (13,791) (6,792) Total operating expenses, excluding net special items and fuel $ 33,375 $ 28,604 (In millions) Total Available Seat Miles (ASM) 260,226 214,535 (In cents) CASM 18.20 14.42 Operating net special items per ASM (1) : Mainline operating special items, net (0.07) 1.87 Regional operating special items, net — 0.21 Aircraft fuel and related taxes per ASM (5.30) (3.17) CASM, excluding net special items and fuel 12.83 13.33 (1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. 65 Table of Contents Selected Consolidated Financial Data of American The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended and as of December 31, 2022, 2021 and 2020, are derived from American’s audited consolidated financial statements.
Year Ended December 31, 2023 2022 Reconciliation of CASM Excluding Net Special Items and Fuel: (In millions) Total operating expenses – GAAP $ 49,754 $ 47,364 Operating net special items (1) : Mainline operating special items, net (971) (193) Regional operating special items, net (8) (5) Aircraft fuel and related taxes (12,257) (13,791) Total operating expenses, excluding net special items and fuel $ 36,518 $ 33,375 (In millions) Total Available Seat Miles (ASM) 277,723 260,226 (In cents) CASM 17.92 18.20 Operating net special items per ASM (1) : Mainline operating special items, net (0.35) (0.07) Regional operating special items, net — — Aircraft fuel and related taxes per ASM (4.41) (5.30) CASM, excluding net special items and fuel 13.15 12.83 (1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. 59 Table of Contents Selected Consolidated Financial Data of American The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from American’s audited consolidated financial statements.
Year Ended December 31, 2022 2021 2020 (In millions, except share and per share amounts) Consolidated Statements of Operations data: Total operating revenues $ 48,971 $ 29,882 $ 17,337 Total operating expenses 47,364 30,941 27,758 Operating income (loss) 1,607 (1,059) (10,421) Net income (loss) 127 (1,993) (8,885) Earnings (loss) per common share: Basic $ 0.20 $ (3.09) $ (18.36) Diluted 0.19 (3.09) (18.36) Shares used for computation (in thousands): Basic 650,345 644,015 483,888 Diluted 655,122 644,015 483,888 Consolidated Balance Sheet data (at end of period): Total assets $ 64,716 $ 66,467 $ 62,008 Debt and finance leases 35,663 38,060 32,593 Pension and postretirement obligations (1) 2,926 5,150 7,131 Operating lease liabilities 8,024 8,117 8,428 Stockholders’ deficit (5,799) (7,340) (6,867) (1) Substantially all defined benefit pension plans were frozen effective November 1, 2012.
Year Ended December 31, 2023 2022 2021 (In millions, except share and per share amounts) Consolidated Statements of Operations data: Total operating revenues $ 52,788 $ 48,971 $ 29,882 Total operating expenses 49,754 47,364 30,941 Operating income (loss) 3,034 1,607 (1,059) Net income (loss) 822 127 (1,993) Earnings (loss) per common share: Basic $ 1.26 $ 0.20 $ (3.09) Diluted 1.21 0.19 (3.09) Shares used for computation (in thousands): Basic 653,612 650,345 644,015 Diluted 719,669 655,122 644,015 Consolidated Balance Sheet data (at end of period): Total assets $ 63,058 $ 64,716 $ 66,467 Debt and finance leases 32,902 35,663 38,060 Pension and postretirement obligations (1) 3,171 2,926 5,150 Operating lease liabilities 7,761 8,024 8,117 Stockholders’ deficit (5,202) (5,799) (7,340) (1) Substantially all defined benefit pension plans were frozen effective November 1, 2012.
(2) Fleet impairment for 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 the market conditions for certain used aircraft.
(4) Fleet impairment 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 the 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.
Removed
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. 64 Table of Contents Fleet impairment for 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.
Added
(2) Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. (3) Severance expenses included costs associated with headcount reductions in certain corporate functions.
Removed
(3) 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 programs established by the U.S. Government. See Note 1(b) to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information.
Added
(5) Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early repayment of debt.
Removed
(4) 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.
Removed
(5) Our regional pilot retention program provides for, among other things, a cash retention bonus paid in the fourth quarter of 2021 to eligible captains at our wholly-owned regional carriers included on the pilot seniority list as of September 1, 2021.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

95 edited+33 added−40 removed48 unchanged
Biggest changeOperating Expenses Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2022 2021 (In millions, except percentage changes) Aircraft fuel and related taxes $ 13,791 $ 6,792 $ 6,999 nm Salaries, wages and benefits 12,965 11,811 1,154 9.8 Regional expenses 4,345 3,111 1,234 39.7 Maintenance, materials and repairs 2,684 1,979 705 35.6 Other rent and landing fees 2,730 2,619 111 4.2 Aircraft rent 1,395 1,425 (30) (2.1) Selling expenses 1,815 1,098 717 65.3 Depreciation and amortization 1,969 2,019 (50) (2.4) Mainline operating special items, net 193 (4,006) 4,199 nm Other 5,425 3,993 1,432 35.8 Total operating expenses $ 47,312 $ 30,841 $ 16,471 53.4 Total operating expenses increased $16.5 billion, or 53.4%, in 2022 from 2021 driven by higher aircraft fuel and related taxes and other expenses as a result of an increase in the average price per gallon of aircraft fuel and increased capacity.
Biggest changeTotal operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as described above. 67 Table of Contents Operating Expenses Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2023 2022 (In millions, except percentage changes) Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) Salaries, wages and benefits 14,572 12,965 1,607 12.4 Regional expenses 4,619 4,345 274 6.3 Maintenance, materials and repairs 3,265 2,684 581 21.6 Other rent and landing fees 2,928 2,730 198 7.3 Aircraft rent 1,369 1,395 (26) (1.9) Selling expenses 1,799 1,815 (16) (0.9) Depreciation and amortization 1,927 1,969 (42) (2.2) Mainline operating special items, net 971 193 778 nm Other 6,008 5,425 583 10.8 Total operating expenses $ 49,715 $ 47,312 $ 2,403 5.1 Additional detail regarding changes in American’s operating expenses is as follows: Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel consumed due to increased capacity.
(h) Includes purchase commitments for aircraft fuel, flight equipment maintenance, information technology support and construction projects and excludes obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the construction of a production facility.
(h) Includes purchase commitments for aircraft fuel, flight equipment maintenance and information technology support and excludes obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the construction of a production facility.
At the time of each covered aircraft or spare engine financing, the relevant trust used the proceeds of the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines.
At the time of each covered aircraft or spare engine financing, the relevant trust used the proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines.
The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses historical data, including award redemption patterns by geographic region and class of service, as well as similar fares as those used to settle award redemptions.
The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to settle award redemptions.
Mileage credits can be redeemed for travel on American and other participating partner airlines, as well as other non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage loyalty program members, we apply the deferred revenue method.
Mileage credits can be redeemed for travel on American and other participating partner airlines, as well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, we apply the deferred revenue method.
These cash outflows were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment notes related to the 2021-1 Aircraft EETCs and $205 million in connection with the financing of certain aircraft.
These cash outflows were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment notes related to EETCs and $205 million in connection with the financing of certain aircraft.
These cash outflows were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment notes related to the 2021-1 Aircraft EETCs and $205 million in connection with the financing of certain aircraft.
These cash outflows were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment notes related to EETCs and $205 million in connection with the financing of certain aircraft.
These assumptions as of December 31 were: 2022 2021 Pension weighted average discount rate (1) 5.6 % 3.0 % Retiree medical and other postretirement benefits weighted average discount rate (1) 5.7 % 2.8 % Expected rate of return on plan assets (2) 8.0 % 8.0 % (1) When establishing our discount rate to measure our obligations, we match high quality corporate bonds available in the marketplace whose cash flows approximate our projected benefit disbursements.
These assumptions as of December 31 were: 2023 2022 Pension weighted average discount rate (1) 5.2 % 5.6 % Retiree medical and other postretirement benefits weighted average discount rate (1) 5.3 % 5.7 % Expected rate of return on plan assets (2) 8.0 % 8.0 % (1) When establishing the discount rate to measure our obligations, we match high quality corporate bonds available in the marketplace whose cash flows approximate our projected benefit disbursements.
For instance, an economic downturn or general global instability caused by military actions, terrorism, disease outbreaks (such as occurred during the COVID-19 pandemic), natural disasters or other causes could reduce the demand for air travel, which would reduce the amount of cash generated by operations. See Part I, Item 1A.
For instance, an economic downturn or general global instability caused by military actions, terrorism, disease outbreaks (such as the COVID-19 pandemic), natural disasters or other causes could reduce the demand for air travel, which would reduce the amount of cash generated by operations. See Part I, Item 1A.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2022 Financial Overview The selected financial data presented below is derived from AAG’s audited consolidated financial statements included in Part II, Item 8A of this report and should be read in conjunction with those financial statements and the related notes thereto.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2023 Financial Overview The selected financial data presented below is derived from AAG’s audited consolidated financial statements included in Part II, Item 8A of this report and should be read in conjunction with those financial statements and the related notes thereto.
See Note 6 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on income taxes. American’s Results of Operations For a comparison of the 2021 to 2020 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “ American’s Results of Operations” of American’s 2021 Form 10-K.
See Note 6 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on income taxes. American’s Results of Operations For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “ American’s Results of Operations” of American’s 2022 Form 10-K.
See the “ Basis of Presentation and Summary of Significant Accounting Policies ” included in Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Item 8A and 8B, respectively, for additional discussion of the application of these estimates and other accounting policies.
See the “ Basis of Presentation and Summary of Significant Accounting Policies ” included in Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for additional discussion of the application of these estimates and other accounting policies.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – “ AAG’s Results of Operations” of our 2021 Form 10-K. Operating Statistics The table below sets forth selected operating data for the years ended December 31, 2022 and 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – “ AAG’s Results of Operations” of our 2022 Form 10-K. Operating Statistics The table below sets forth selected operating data for the years ended December 31, 2023 and 2022.
(2) The expected rate of return on plan assets is based upon an evaluation of our historical trends and experience, taking into account current and expected market conditions and our target asset allocation of 30% fixed income securities, 24% U.S. stocks, 22% private investments, 16% developed international stocks and 8% emerging market stocks.
(2) The expected rate of return on plan assets is based upon an evaluation of our historical trends and experience, taking into account current and expected market conditions and our target asset allocation of 30% U.S. fixed income securities, 24% U.S. stocks, 24% private investments, 16% developed international stocks and 6% emerging market stocks.
The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member lists, which is the predominant element in these agreements, as well as advertising. We recognize the marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method.
The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method.
For further information regarding our debt covenants, see Note 4 to AAG’s 75 Table of Contents Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B. Sources and Uses of Cash For a comparison of the 2021 and 2020 reporting periods, see Part II, Item 7.
For further information regarding our debt covenants, see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B. 70 Table of Contents Sources and Uses of Cash For a comparison of the 2022 and 2021 reporting periods, see Part II, Item 7.
As of December 31, 2022, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review that policy from time to time based on market conditions and other factors.
As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors.
For the year ended December 31, 2022, a hypothetical 10% increase in the estimated selling price of mileage credits would have decreased revenues by approximately $105 million as a result of additional amounts deferred from passenger ticket sales to be recognized in future periods. 81 Table of Contents Mileage credits sold to co-branded credit cards and other partners We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partners, under contracts with remaining terms generally from one to seven years as of December 31, 2022.
For the year ended December 31, 2023, a hypothetical 10% increase in the estimated selling price of mileage credits would have decreased revenues by approximately $128 million as a result of additional amounts deferred from passenger ticket sales to be recognized in future periods. 76 Table of Contents Mileage credits sold to co-branded credit cards and other partners We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partners, under contracts with remaining terms generally from one to six years as of December 31, 2023.
Rental payments under operating leases for certain aircraft flown under these capacity purchase agreements are reflected in the operating lease commitments line above. (g) Represents minimum pension contributions based on actuarially determined estimates as of December 31, 2022 and is based on estimated payments through 2032. In January 2023, we made $67 million of required pension contributions.
Rental payments under operating leases for certain aircraft flown under these capacity purchase agreements are reflected in the operating lease commitments line above. (g) Represents minimum pension contributions based on actuarially determined estimates as of December 31, 2023 and is based on estimated payments through 2033. In January 2024, we made $280 million of required pension contributions.
Certain of our debt financing agreements (including our secured notes, term loans, revolving credit facilities and spare engine EETCs) contain loan to value (LTV), collateral coverage or peak debt service coverage ratio covenants and certain agreements require us to appraise the related collateral annually or semiannually.
Additionally, certain of our debt financing agreements (including our secured notes, term loans, revolving credit facilities and spare engine enhanced equipment trust certificates (EETCs)) contain loan to value (LTV), collateral coverage or peak debt service coverage ratio covenants and certain agreements require us to appraise the related collateral annually or semiannually.
However, the equipment notes issued to the trusts are direct obligations of American and, in certain instances, have been guaranteed by AAG. As of December 31, 2022, $9.2 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet.
However, the equipment notes issued to the trusts are direct obligations of American and, in certain instances, have been guaranteed by AAG. As of December 31, 2023, $7.7 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet.
Going forward, depending on market conditions, our cash position and other considerations, we may continue to take such actions. 80 Table of Contents OTHER INFORMATION Basis of Presentation See Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for information regarding the basis of presentation.
Going forward, depending on market conditions, our cash position and other considerations, we may continue to take such actions, and the amounts involved may be material. 75 Table of Contents OTHER INFORMATION Basis of Presentation See Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for information regarding the basis of presentation.
For the year ended December 31, 2022, a hypothetical 10% increase in our estimate of mileage credits not expected to be redeemed would have increased revenues by approximately $100 million.
For the year ended December 31, 2023, a hypothetical 10% increase in our estimate of mileage credits not expected to be redeemed would have increased revenues by approximately $127 million.
Lowering the expected long-term rate of return on plan assets by 50 basis points as of December 31, 2022 would increase estimated 2023 pension expense and retiree medical and other postretirement benefits expense by approximately $60 million and $1 million, respectively. 82 Table of Contents Annually, we review and revise certain economic and demographic assumptions including the pension and retiree medical and other postretirement benefits discount rates.
Lowering the expected long-term rate of return on plan assets by 50 basis points as of December 31, 2023 would increase estimated 2024 pension expense and retiree medical and other postretirement benefits expense by approximately $60 million and $1 million, respectively. 77 Table of Contents Annually, we review and revise certain economic and demographic assumptions including the pension and retiree medical and other postretirement benefits discount rates and health care costs.
(b) Amounts represent contractual amounts due. Excludes $364 million and $22 million of unamortized debt discount, premium and issuance costs as of December 31, 2022 for American and AAG Parent, respectively. (c) For variable-rate debt, future interest obligations are estimated using the current forward rates at December 31, 2022.
(b) Amounts represent contractual amounts due. Excludes $349 million and $14 million of unamortized debt discount, premium and issuance costs as of December 31, 2023 for American and AAG Parent, respectively. (c) For variable-rate debt, future interest obligations are estimated using the current forward rates at December 31, 2023.
See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on our debt obligations. AAG’s Results of Operations For a comparison of the 2021 to 2020 reporting periods, see Part II, Item 7.
See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on our debt obligations. 63 Table of Contents AAG’s Results of Operations For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7.
The letters of credit and surety bonds that are subject to expiration will expire on various dates through 2026. 78 Table of Contents Contractual Obligations The following table provides details of our estimated material cash requirements from contractual obligations as of December 31, 2022 (in millions).
The letters of credit and surety bonds that are subject to expiration will expire on various dates through 2028. 73 Table of Contents Contractual Obligations The following table provides details of our estimated material cash requirements from contractual obligations as of December 31, 2023 (in millions).
Ticket and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The majority of tickets sold are nonrefundable.
Ticket and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The contract duration of passenger tickets is generally one year. The majority of tickets sold are nonrefundable.
However, the actual delivery schedule may differ, potentially materially, based on various potential factors including production delays by the manufacturer and regulatory concerns. Additionally, the amounts in the table exclude four Boeing 787-8 aircraft scheduled to be delivered in 2023 and five Boeing 787-9 aircraft scheduled to be delivered in 2024, for which we have obtained committed lease financing.
However, the actual delivery schedule may differ, potentially materially, based on various potential factors including production delays by the manufacturer and regulatory concerns. Additionally, the amounts in the table exclude five Boeing 787 Family 74 Table of Contents aircraft scheduled to be delivered in 2024, for which we have obtained committed lease financing.
Lowering the discount rate by 50 basis points as of December 31, 2022 would increase our pension and retiree medical and other postretirement benefits obligations by approximately $725 million and $30 million, respectively, and decrease estimated 2023 pension and retiree medical and other postretirement benefits expense by approximately $5 million and $1 million, respectively.
Lowering the discount rate by 50 basis points as of December 31, 2023 would increase our pension and retiree medical and other postretirement benefits obligations by approximately $740 million and $40 million, respectively, and decrease estimated 2024 pension and retiree medical and other postretirement benefits expense by approximately $5 million and $1 million, respectively.
Other operating revenue increased $665 million, or 26.5%, in 2022 as compared to 2021, driven primarily by higher revenue associated with our loyalty program. During 2022 and 2021, cash payments from co-branded credit card and other partners were $4.5 billion and $3.4 billion, respectively.
Other operating revenue increased $294 million, or 9.3%, in 2023 as compared to 2022, driven primarily by higher revenue associated with our loyalty program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively.
Income Taxes In 2022, we recorded an income tax provision of $59 million with an effective rate of approximately 32%, which was substantially non-cash. Substantially all of our income before income taxes is attributable to the United States.
Income Taxes In 2023, we recorded an income tax provision of $299 million with an effective rate of approximately 27%, which was substantially non-cash. Substantially all of our income before income taxes is attributable to the United States.
Risk Factors – “Downturns in economic conditions could adversely affect our business.” for additional discussion.
Risk Factors – “Downturns in economic conditions could adversely affect our business” for additional discussion.
At December 31, 2022, American had approximately $16.1 billion of gross federal NOLs and $3.5 billion of other carryforwards available to reduce future federal taxable income, of which $6.2 billion will expire beginning in 2024 if unused and $13.4 billion can be carried forward indefinitely.
At December 31, 2023, American had approximately $13.7 billion of gross federal NOLs and $3.6 billion of other carryforwards available to reduce future federal taxable income, of which $3.8 billion will expire beginning in 2033 if unused and $13.5 billion can be carried forward indefinitely.
Letters of Credit and Other We provide financial assurance, such as letters of credit and surety bonds, primarily to support airport commitments. As of December 31, 2022, we had $218 million of letters of credit and surety bonds securing various obligations, of which $100 million is collateralized with our restricted cash.
Letters of Credit and Other We provide financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation obligations and airport commitments. As of December 31, 2023, we had $318 million of letters of credit and surety bonds securing various obligations, of which $94 million is collateralized with our restricted cash.
In 2021, other nonoperating income, net included $337 million of non-service related pension and other postretirement benefit plan income, offset in part by $60 million of net special charges principally for mark-to-market net unrealized losses associated with certain equity investments and non-cash charges associated with debt refinancings and extinguishments.
In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $32 million of non-service related pension and other postretirement benefit plan income.
(d) Includes $9.2 billion of future principal payments and $1.4 billion of future interest payments as of December 31, 2022, related to EETCs associated with mortgage financings of certain aircraft and spare engines. 79 Table of Contents (e) See Part I, Item 2.
(d) Includes $7.7 billion of future principal payments and $1.0 billion of future interest payments as of December 31, 2023, related to EETCs associated with mortgage financings of certain aircraft and spare engines. (e) See Part I, Item 2.
Additional detail regarding our available liquidity is provided in the table below (in millions): AAG American December 31, December 31, 2022 2021 2022 2021 Cash $ 440 $ 273 $ 429 $ 265 Short-term investments 8,525 12,158 8,523 12,155 Undrawn facilities 3,033 3,411 3,033 3,411 Total available liquidity $ 11,998 $ 15,842 $ 11,985 $ 15,831 In the ordinary course of our business, we or our affiliates may, at any time and from time to time, seek to prepay, retire or repurchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise.
Additional detail regarding our available liquidity is provided in the table below (in millions): AAG American December 31, December 31, 2023 2022 2023 2022 Cash $ 578 $ 440 $ 567 $ 429 Short-term investments 7,000 8,525 6,998 8,523 Undrawn facilities 2,862 3,033 2,862 3,033 Total available liquidity $ 10,440 $ 11,998 $ 10,427 $ 11,985 In the ordinary course of our business, we or our affiliates may, at any time and from time to time, seek to prepay, retire or repurchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise.
These cash inflows were offset in part by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and $321 million of equity investments, principally related to GOL.
These cash inflows were offset in part by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and $321 million of equity investments, principally related to GOL. Financing Activities Our net cash used in financing activities was $3.2 billion and $2.6 billion in 2023 and 2022, respectively.
American also had approximately $5.9 billion of NOL carryforwards to reduce future state taxable income at December 31, 2022, which will expire in taxable years 2022 through 2042 if unused. In 2021, American recorded an income tax benefit of $500 million at an effective rate of approximately 22%, which was substantially non-cash.
American also had approximately $5.3 billion of NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if unused. In 2022, American recorded an income tax provision of $116 million at an effective rate of approximately 26%, which was substantially non-cash.
See Note 5 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on income taxes. Liquidity and Capital Resources Liquidity At December 31, 2022, AAG had $12.0 billion in total available liquidity and $995 million in restricted cash and short-term investments.
See Note 5 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on income taxes. 69 Table of Contents Liquidity and Capital Resources Liquidity At December 31, 2023, AAG had $10.4 billion in total available liquidity and $910 million in restricted cash and short-term investments.
Other Costs We remain committed to actively managing our cost structure, which we believe is necessary in an industry whose economic prospects are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel. Our 2022 CASM was 18.20 cents, an increase of 26.2%, from 14.42 cents in 2021.
Other Costs We remain committed to actively managing our cost structure, which we believe is necessary in an industry in which economic prospects are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel. Our 2023 CASM was 17.92 cents, a decrease of 1.6%, from 18.20 cents in 2022.
In 2022, other nonoperating income, net primarily included $424 million of non-service related pension and other postretirement benefit plan income, offset in part by $74 million of net special charges principally for mark-to-market net unrealized losses associated with certain equity investments.
In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $33 million of non-service related pension and other postretirement benefit plan income.
These cash inflows were offset in part by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and $321 million of equity investments, principally related to GOL.
These cash inflows were offset in part by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and $321 million of equity investments, principally related to GOL. Financing Activities American’s net cash used in financing activities was $3.2 billion and $1.8 billion in 2023 and 2022, respectively.
We also had approximately $6.0 billion of NOL carryforwards to reduce future state taxable income at December 31, 2022, which will expire in taxable years 2022 through 2042 if unused. In 2021, we recorded an income tax benefit of $555 million at an effective rate of approximately 22%, which was substantially non-cash.
We also had approximately $5.5 billion of NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if unused. In 2022, we recorded an income tax provision of $59 million at an effective rate of approximately 32%, which was substantially non-cash.
This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed.
We have consistently applied this accounting method to estimate and recognize revenue from unused tickets at the date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed.
For further information regarding our debt repurchases for the year ended 2022, see Note 4 to AAG's Condensed Consolidated Financial Statements in Part II, Item 8A.
For further information regarding our debt repurchases for the year ended December 31, 2023, see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B.
Selected Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures.” Liquidity As of December 31, 2022, we had $12.0 billion in total available liquidity, consisting of $9.0 billion in unrestricted cash and short-term investments, $2.8 billion in undrawn capacity under revolving credit facilities and a total of $220 million in undrawn short-term revolving and other facilities.
Selected Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures.” 62 Table of Contents Liquidity As of December 31, 2023, we had $10.4 billion in total available liquidity, consisting of $7.6 billion in unrestricted cash and short-term investments and $2.9 billion in total undrawn capacity under revolving credit and other short-term facilities.
At December 31, 2022, we had approximately $16.2 billion of gross federal NOLs and $4.3 billion of other carryforwards available to reduce future federal taxable income, of which $5.9 billion will expire beginning in 2024 if unused and $14.6 billion can be carried forward indefinitely.
At December 31, 2023, we had approximately $13.7 billion of gross federal NOLs and $4.7 billion of other carryforwards available to reduce future federal taxable income, of which $3.4 billion will expire beginning in 2029 if unused and $15.0 billion can be carried forward indefinitely.
During 2022 and 2021, cash payments from co-branded credit card and other partners were $4.5 billion and $3.4 billion, respectively. Total operating revenues in 2022 increased $19.1 billion, or 63.9%, from 2021 and our TRASM increased 35.1% to 18.82 cents in 2022 from 13.93 cents in 2021, driven principally by the increase in passenger revenue as described above.
During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively. Total operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as described above. Our TRASM was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – “ Sources and Uses of Cash” of our 2021 Form 10-K. AAG Operating Activities Our net cash provided by operating activities was $2.2 billion and $704 million in 2022 and 2021, respectively, a $1.5 billion year-over-year increase.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – “ Sources and Uses of Cash” of our 2022 Form 10-K. AAG Operating Activities Our net cash provided by operating activities was $3.8 billion and $2.2 billion in 2023 and 2022, respectively, a $1.6 billion year-over-year increase due to higher profitability and cash provided by working capital management.
This increase was primarily driven by a 73.0% increase in the average price per gallon of aircraft fuel including related taxes to $3.54 in 2022 from $2.04 in 2021 and a 17.4% increase in gallons of fuel consumed due to increased capacity.
This decrease was primarily driven by a 16.3% decrease in the average price per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel consumed due to increased capacity.
Year Ended December 31, Increase 2022 2021 Revenue passenger miles (millions) (a) 215,624 161,538 33.5% Available seat miles (millions) (b) 260,226 214,535 21.3% Passenger load factor (percent) (c) 82.9 75.3 7.6pts Yield (cents) (d) 20.67 16.13 28.1% Passenger revenue per available seat mile (cents) (e) 17.13 12.15 41.0% Total revenue per available seat mile (cents) (f) 18.82 13.93 35.1% Fuel consumption (gallons in millions) 3,901 3,324 17.4% Average aircraft fuel price including related taxes (dollars per gallon) 3.54 2.04 73.0% Total operating cost per available seat mile (cents) (g) 18.20 14.42 26.2% Aircraft at end of period (h) 1,461 1,432 2.0% Full-time equivalent employees at end of period 129,700 123,400 5.1% (a) Revenue passenger mile (RPM) – A basic measure of sales volume.
Year Ended December 31, Increase (Decrease) 2023 2022 Revenue passenger miles (millions) (a) 231,926 215,624 7.6% Available seat miles (millions) (b) 277,723 260,226 6.7% Passenger load factor (percent) (c) 83.5 82.9 0.6pts Yield (cents) (d) 20.92 20.67 1.2% Passenger revenue per available seat mile (cents) (e) 17.47 17.13 2.0% Total revenue per available seat mile (cents) (f) 19.01 18.82 1.0% Fuel consumption (gallons in millions) 4,140 3,901 6.1% Average aircraft fuel price including related taxes (dollars per gallon) 2.96 3.54 (16.3)% Total operating cost per available seat mile (cents) (g) 17.92 18.20 (1.6)% Aircraft at end of period (h) 1,521 1,461 4.1% Full-time equivalent employees at end of period 132,100 129,700 1.9% (a) Revenue passenger mile (RPM) – A basic measure of sales volume.
Nonoperating Results Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2022 2021 (In millions, except percentage changes) Interest income $ 349 $ 34 $ 315 nm Interest expense, net (1,872) (1,642) (230) 14.0 Other income, net 324 292 32 11.3 Total nonoperating expense, net $ (1,199) $ (1,316) $ 117 (8.9) Interest income increased in 2022 compared to 2021 primarily as a result of higher returns on American’s short-term investments and related party receivables from AAG.
Nonoperating Results Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2023 2022 (In millions, except percentage changes) Interest income $ 1,078 $ 349 $ 729 nm Interest expense, net (2,206) (1,872) (334) 17.8 Other income (expense), net (359) 324 (683) nm Total nonoperating expense, net $ (1,487) $ (1,199) $ (288) 24.0 Interest income increased $729 million in 2023 compared to 2022 primarily as a result of higher returns on American’s short-term investments and related party receivables from AAG.
In 2022, American recorded an income tax provision of $116 million with an effective rate of approximately 26%, which was substantially non-cash. Substantially all of American’s income before income taxes is attributable to the United States.
Income Taxes American is a member of AAG’s consolidated federal and certain state income tax returns. In 2023, American recorded an income tax provision of $394 million with an effective rate of approximately 25%, which was substantially non-cash. Substantially all of American’s income before income taxes is attributable to the United States.
In addition, American had $207 million of deferred financing cost cash outflows. 77 Table of Contents Commitments For further information regarding our commitments, see the Notes to AAG’s Consolidated Financial Statements in Part II, Item 8A and the Notes to American’s Consolidated Financial Statements in Part II, Item 8B at the referenced footnotes below.
Commitments For further information regarding our commitments, see the Notes to AAG’s Consolidated Financial Statements in Part II, Item 8A and the Notes to American’s Consolidated Financial Statements in Part II, Item 8B at the referenced footnotes below.
Nonoperating Results Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2022 2021 (In millions, except percentage changes) Interest income $ 216 $ 18 $ 198 nm Interest expense, net (1,962) (1,800) (162) 9.0 Other income, net 325 293 32 10.9 Total nonoperating expense, net $ (1,421) $ (1,489) $ 68 (4.6) Interest income increased in 2022 compared to 2021 primarily as a result of higher returns on our short-term investments.
Nonoperating Results Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2023 2022 (In millions, except percentage changes) Interest income $ 591 $ 216 $ 375 nm Interest expense, net (2,145) (1,962) (183) 9.3 Other income (expense), net (359) 325 (684) nm Total nonoperating expense, net $ (1,913) $ (1,421) $ (492) 34.6 Interest income increased $375 million in 2023 compared to 2022 primarily as a result of higher returns on our short-term investments.
Year Ended December 31, 2021 Year Ended December 31, 2022 Passenger Revenue RPMs ASMs Load Factor Passenger Yield PRASM (In millions) Passenger revenue $ 44,568 71.0% 33.5% 21.3% 7.6pts 28.1% 41.0% Passenger revenue increased $18.5 billion, or 71.0%, in 2022 from 2021 primarily due to a 33.5% increase in RPMs, driven by the continued strength in demand for air travel domestically and in the Atlantic and Latin America regions, resulting in a 7.6 point increase in passenger load factor to 82.9% in 2022, and a 28.1% increase in passenger yield.
Year Ended December 31, 2022 Year Ended December 31, 2023 Passenger Revenue RPMs ASMs Load Factor Passenger Yield PRASM (In millions) Passenger revenue $ 48,512 8.8% 7.6% 6.7% 0.6pts 1.2% 2.0% Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, resulting in a 7.6% increase in RPMs and an 83.5% load factor in 2023.
The net effect of changing this assumption for the pension plans resulted in a decrease of $4.6 billion in the projected benefit obligation at December 31, 2022. The net effect of changing this assumption for retiree medical and other postretirement benefits plans resulted in a decrease of $183 million in the accumulated postretirement benefit obligation at December 31, 2022.
The net effect of changing these assumptions for the pension plans resulted in an increase of $546 million in the projected benefit obligation at December 31, 2023. The net effect of changing these assumptions for retiree medical and other postretirement benefits plans resulted in an increase of $89 million in the accumulated postretirement benefit obligation at December 31, 2023.
A small percentage of tickets, some of which are partially used tickets, expire unused. The estimate for tickets expected to expire unused is generally based on an analysis of our historical data. We have consistently applied this accounting method to estimate and recognize revenue from unused tickets at the date of travel.
A small percentage of tickets, some of which are partially used tickets, expire unused. The estimate for tickets expected to expire unused is generally based on an analysis of our historical data and other current applicable factors such as policy changes.
Other operating expenses increased $1.4 billion, or 35.8%, in 2022 from 2021 primarily as a result of increased aircraft food and catering, crew travel, passenger accommodation and ground and cargo handling expenses driven by the increase in flight operations as well as certain general and administrative expenses.
Other operating expenses increased $584 million, or 10.8%, in 2023 from 2022 primarily driven by the increase in flight operations, including increased costs for onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain general and administrative expenses.
Selling expenses increased $717 million, or 65.3%, in 2022 from 2021 primarily due to higher credit card fees and commission expense driven by the overall increase in passenger revenues.
Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit card fees driven by the overall increase in passenger revenues.
Pass-Through Trusts American currently has 352 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment or to permit issuance of debt backed by existing flight equipment.
These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment or to permit issuance of debt backed by existing flight equipment.
Cargo revenue decreased $81 million, or 6.2%, in 2022 from 2021 primarily due to a 5.3% decrease in cargo ton miles driven by the discontinuation of our cargo-only flying and lower demand. Other operating revenue increased $665 million, or 26.5%, in 2022 from 2021 driven primarily by higher revenue associated with our loyalty program.
Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to a 29.4% decrease in cargo yield and a 6.7% decrease in cargo ton miles driven by lower demand and increased air freight capacity globally. Other operating revenue increased $294 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with our loyalty program.
We have no off-balance sheet arrangements of the types described in the first three categories above that we believe may have a material current or future effect on financial condition, liquidity or results of operations.
We have no off-balance sheet arrangements of the types described in the first three categories above that we believe may have a material current or future effect on financial condition, liquidity or results of operations. 72 Table of Contents Pass-Through Trusts American currently has 308 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by pass-through trusts.
Investing Activities Our net cash provided by investing activities was $636 million in 2022 as compared to net cash used in investing activities of $6.0 billion in 2021. Our principal investing activities in 2022 included $3.7 billion in net sales of short-term investments.
Investing Activities Our net cash used in investing activities was $502 million in 2023 as compared to net cash provided by investing activities of $636 million in 2022.
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 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.
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.
American retired its 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 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.
American retired its Airbus A330 fleet in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic.
Our total revenue per available seat mile (TRASM) was 18.82 cents in 2022, a 35.1% increase as compared to 13.93 cents in 2021, driven principally by the increase in passenger revenue as described above. Fuel In 2022, aircraft fuel expense totaled $13.8 billion, an increase of $7.0 billion as compared to 2021.
Our total revenue per available seat mile (TRASM) was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022. Fuel In 2023, aircraft fuel expense totaled $12.3 billion, a decrease of $1.5 billion, or 11.1%, as compared to 2022.
The increase in passenger revenue in 2022 was primarily due to a 33.5% increase in revenue passenger miles (RPMs), driven by the continued strength in demand for air travel domestically and in the Atlantic and Latin America regions, resulting in a 7.6 point increase in passenger load factor to 82.9% in 2022, and a 28.1% increase in passenger yield.
Passenger revenue was $48.5 billion, an increase of $3.9 billion, or 8.8%, as compared to 2022. The increase in passenger revenue in 2023 was primarily due to a 7.6% increase in RPMs, driven by the continued strength in demand for air travel, resulting in an 83.5% load factor.
Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2022 2021 (In millions, except percentage changes) Passenger revenue $ 44,568 $ 26,063 $ 18,505 71.0 Cargo revenue 1,233 1,314 (81) (6.2) Other operating revenue 3,170 2,505 665 26.5 Total operating revenues 48,971 29,882 19,089 63.9 Aircraft fuel and related taxes 13,791 6,792 6,999 nm (2) Salaries, wages and benefits 12,972 11,817 1,155 9.8 Total operating expenses 47,364 30,941 16,423 53.1 Operating income (loss) 1,607 (1,059) 2,666 nm Pre-tax income (loss) 186 (2,548) 2,734 nm Income tax provision (benefit) 59 (555) 614 nm Net income (loss) 127 (1,993) 2,120 nm Pre-tax income (loss) – GAAP $ 186 $ (2,548) $ 2,734 nm Adjusted for: pre-tax net special items (1) 272 (4,395) 4,667 nm Pre-tax income (loss) excluding net special items $ 458 $ (6,943) $ 7,401 nm (1) See Part II, Item 6.
Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2023 2022 (In millions, except percentage changes) Passenger revenue $ 48,512 $ 44,568 $ 3,944 8.8 Cargo revenue 812 1,233 (421) (34.1) Other operating revenue 3,464 3,170 294 9.3 Total operating revenues 52,788 48,971 3,817 7.8 Aircraft fuel and related taxes 12,257 13,791 (1,534) (11.1) Salaries, wages and benefits 14,580 12,972 1,608 12.4 Total operating expenses 49,754 47,364 2,390 5.0 Operating income 3,034 1,607 1,427 88.8 Pre-tax income 1,121 186 935 nm (2) Income tax provision 299 59 240 nm Net income 822 127 695 nm Pre-tax income – GAAP $ 1,121 $ 186 $ 935 nm Adjusted for: pre-tax net special items (1) 1,341 272 1,069 nm Pre-tax income excluding net special items $ 2,462 $ 458 $ 2,004 nm (1) See Part II, Item 6.
Operating Expenses Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2022 2021 (In millions, except percentage changes) Aircraft fuel and related taxes $ 13,791 $ 6,792 $ 6,999 nm Salaries, wages and benefits 12,972 11,817 1,155 9.8 Regional expenses 4,385 3,204 1,181 36.9 Maintenance, materials and repairs 2,684 1,979 705 35.6 Other rent and landing fees 2,730 2,619 111 4.2 Aircraft rent 1,395 1,425 (30) (2.1) Selling expenses 1,815 1,098 717 65.3 Depreciation and amortization 1,977 2,019 (42) (2.1) Mainline operating special items, net 193 (4,006) 4,199 nm Other 5,422 3,994 1,428 35.8 Total operating expenses $ 47,364 $ 30,941 $ 16,423 53.1 Total operating expenses increased $16.4 billion, or 53.1%, in 2022 from 2021 driven by higher aircraft fuel and related taxes and other expenses as a result of an increase in the average price per gallon of aircraft fuel and increased capacity.
Operating Expenses Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2023 2022 (In millions, except percentage changes) Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) Salaries, wages and benefits 14,580 12,972 1,608 12.4 Regional expenses 4,643 4,385 258 5.9 Maintenance, materials and repairs 3,265 2,684 581 21.6 Other rent and landing fees 2,928 2,730 198 7.3 Aircraft rent 1,369 1,395 (26) (1.9) Selling expenses 1,799 1,815 (16) (0.9) Depreciation and amortization 1,936 1,977 (41) (2.1) Mainline operating special items, net 971 193 778 nm Other 6,006 5,422 584 10.8 Total operating expenses $ 49,754 $ 47,364 $ 2,390 5.0 Additional detail regarding changes in our operating expenses is as follows: Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel consumed due to increased capacity.
Interest expense, net increased in 2022 compared to 2021 primarily due to the impact of the AAdvantage Financing issued at the end of the first quarter of 2021 and higher interest expense on our variable-rate debt instruments as a result of increased interest rates, offset in part by debt repayments.
Interest expense, net increased $183 million, or 9.3%, in 2023 compared to 2022 primarily due to higher interest rates on our variable-rate debt instruments, offset in part by debt repayments.
Operating Revenues Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2022 2021 (In millions, except percentage changes) Passenger $ 44,568 $ 26,063 $ 18,505 71.0 Cargo 1,233 1,314 (81) (6.2) Other 3,164 2,503 661 26.4 Total operating revenues $ 48,965 $ 29,880 $ 19,085 63.9 72 Table of Contents Passenger revenue increased $18.5 billion, or 71.0%, in 2022 from 2021 primarily due to an increase in RPMs, driven by the continued strength in demand for air travel domestically and in the Atlantic and Latin America regions, resulting in an increase in passenger load factor in 2022, and an increase in passenger yield.
Operating Revenues Year Ended December 31, Increase (Decrease) Percent Increase (Decrease) 2023 2022 (In millions, except percentage changes) Passenger $ 48,512 $ 44,568 $ 3,944 8.8 Cargo 812 1,233 (421) (34.1) Other 3,460 3,164 296 9.3 Total operating revenues $ 52,784 $ 48,965 $ 3,819 7.8 Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, resulting in an increase in RPMs and an increase in load factor in 2023.
Selling expenses increased $717 million, or 65.3%, in 2022 from 2021 primarily due to higher credit card fees and commission expense driven by the overall increase in passenger revenues.
Other rent and landing fees increased $198 million, or 7.3%, in 2023 from 2022 primarily due to rate increases at certain airports, incremental engine leases and higher landing fees. Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit card fees driven by the overall increase in passenger revenues.
Cargo revenue decreased $81 million, or 6.2%, in 2022 from 2021 primarily due to a decrease in cargo ton miles driven by the discontinuation of American’s cargo-only flying and lower demand. Other operating revenue increased $661 million, or 26.4%, in 2022 from 2021 driven primarily by higher revenue associated with American’s loyalty program.
Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to decreases in cargo yield and cargo ton miles driven by lower demand and increased air freight capacity globally. Other operating revenue increased $296 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with American’s loyalty program.
In 2021, other nonoperating income, net included $335 million of non-service related pension and other postretirement benefit plan income, offset in part by $60 million of net special charges principally for mark-to-market net unrealized losses associated with certain equity investments and non-cash charges associated with debt refinancings and extinguishments. 74 Table of Contents Income Taxes American is a member of AAG’s consolidated federal and certain state income tax returns.
In 2022, other nonoperating income, net primarily included $424 million of non-service related pension and other postretirement benefit plan income, offset in part by $74 million of net special charges principally for mark-to-market net unrealized losses associated with certain equity investments. 66 Table of Contents The decrease in non-service related pension and other postretirement benefit plan income in 2023 as compared to 2022 is principally due to an increase in interest cost for the pension and other postretirement benefit obligations driven by higher discount rates and a decrease in expected return on pension plan assets from a reduction in plan assets.
The year-over-year improvement in our pre-tax income excluding pre-tax net special items was primarily due to record passenger revenue in 2022, offset in part by higher aircraft fuel and related taxes and increases in other operating expenses, as described above. 67 Table of Contents Revenue In 2022, we reported total operating revenues of $49.0 billion, an increase of $19.1 billion, or 63.9%, as compared to 2021.
The year-over-year improvement in our pre-tax income excluding pre-tax net special items was primarily due to record passenger revenue in 2023 and lower fuel costs, offset in part by increases in certain operating expenses including salaries, wages and benefits, as described above.
In 2022, cargo revenue was $1.2 billion, a decrease of $81 million, or 6.2%, as compared to 2021, primarily due to a 5.3% decrease in cargo ton miles driven by the discontinuation of our cargo-only flying and lower demand.
Cargo revenue decreased $421 million, or 34.1%, in 2023 as compared to 2022, primarily due to a 29.4% decrease in cargo yield and a 6.7% decrease in cargo ton miles driven by lower demand and increased air freight capacity globally.
Interest expense, net increased in 2022 compared to 2021 primarily due to the impact of the AAdvantage Financing issued at the end of the first quarter of 2021 and higher interest expense on American’s variable-rate debt instruments as a result of increased interest rates, offset in part by debt repayments.
Interest expense, net increased $334 million, or 17.8%, in 2023 compared to 2022 primarily due to higher interest rates on American’s variable-rate debt instruments and related party payables from AAG’s wholly-owned subsidiaries, offset in part by debt repayments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAdditionally, the replacement of LIBOR with a comparable or successor rate could cause the amount of interest payable on our long-term debt to be different or higher than expected. 84 Table of Contents
Biggest changeWe cannot predict the extent to which Term SOFR will gain widespread acceptance as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial markets generally or on our business, financial condition or results of operations specifically, and our transition to successor rates could cause the amount of interest payable on our long-term debt to be different or higher than expected. 79 Table of Contents
Our largest exposure comes from the Euro, British pound sterling, Canadian dollar and various Latin American currencies (primarily the Brazilian real). We do not currently have a foreign currency hedge program.
Our largest exposure comes from the Euro, Canadian dollar, British pound sterling and various Latin American currencies (primarily the Brazilian real). We do not currently have a foreign currency hedge program.
Interest Our earnings and cash flow are affected by changes in interest rates due to the impact those changes have on our interest expense from variable-rate debt instruments and our interest income from short-term, interest-bearing investments. Our largest exposure with respect to variable-rate debt comes from changes in the relevant benchmark rate underlying such debt financings, principally LIBOR and SOFR.
Interest Our earnings and cash flow are affected by changes in interest rates due to the impact those changes have on our interest expense from variable-rate debt instruments and our interest income from short-term, interest-bearing investments. Our largest exposure with respect to variable-rate debt comes from changes in the relevant benchmark rate underlying such debt financings, principally SOFR.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in the price of fuel, foreign currency exchange rates and interest rates as discussed below.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in the price of aircraft fuel, foreign currency exchange rates and interest rates as discussed below.
We estimate a uniform 10% strengthening in the value of the U.S. dollar from 2022 levels relative to each of the currencies in which we have foreign currency exposure would have resulted in a decrease in pre-tax income of approximately $175 million for the year ended December 31, 2022.
We estimate a uniform 10% strengthening in the value of the U.S. dollar from 2023 levels relative to each of the currencies in which we have foreign currency exposure would have resulted in a decrease in pre-tax income of approximately $155 million for the year ended December 31, 2023.
We had variable-rate debt instruments representing 27% of our total long-term debt at December 31, 2022. We currently do not have an interest rate hedge program to hedge our exposure to floating interest rates on our variable-rate debt obligations.
We had variable-rate debt instruments representing 30% of our total long-term debt at December 31, 2023. We currently do not have an interest rate hedge program to hedge our exposure to floating interest rates on our variable-rate debt obligations.
Based on our 2023 forecasted fuel consumption, we estimate that a one cent per gallon increase in the price of aircraft fuel would increase our 2023 annual fuel expense by approximately $40 million. 83 Table of Contents Foreign Currency We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated transactions.
Based on our 2024 forecasted fuel consumption, we estimate that a one cent per gallon increase in the price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. Foreign Currency We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated transactions.
If annual interest rates increase 100 basis points, based on our December 31, 2022 variable-rate debt and short-term investments balances, annual interest expense on variable-rate debt would increase by approximately $95 million and annual interest income on short-term investments would increase by approximately $90 million.
If annual interest rates increase 100 basis points, based on our December 31, 2023 variable-rate debt and short-term investments balances, annual interest expense on variable-rate debt would increase by approximately $100 million and annual interest income on short-term investments would increase by approximately $80 million.
Market prices for aircraft fuel have fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of approximately $0.37 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2020 to December 31, 2022.
Market prices for aircraft fuel have fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of approximately $1.32 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2021 to December 31, 2023. 78 Table of Contents As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption.
As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices.
Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices.
Federal Reserve, in conjunction with the Alternative Reference Rates Committee, has chosen SOFR, and specifically Term SOFR, as the recommended risk-free reference rate for the U.S. (calculated based on repurchase agreements backed by treasury securities), we cannot currently predict the extent to which this index will gain widespread acceptance as a replacement for LIBOR.
Federal Reserve, in conjunction with the Alternative Reference Rates Committee, has chosen SOFR, and specifically Term SOFR, as the recommended risk-free reference rate for the U.S. (calculated based on repurchase agreements backed by treasury securities). Prior to the discontinuation of LIBOR, we amended substantially all of our LIBOR-based financing arrangements to transition them to successor rates, primarily Term SOFR.
Additionally, the fair value of fixed-rate debt would have decreased by approximately $670 million for AAG and $480 million for American. On July 27, 2017, the U.K. Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.
Additionally, the fair value of fixed-rate debt would have decreased by approximately $700 million for AAG and $460 million for American. In connection with the phase-out of LIBOR as a reference rate in June 2023, the U.S.
Removed
As of December 31, 2022, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review that policy from time to time based on market conditions and other factors.
Removed
The discontinuation date for submission and publication of rates for certain tenors of USD LIBOR (1-month, 3-month, 6-month, and 12-month) was subsequently extended by the ICE Benchmark Administration (the administrator of LIBOR) until June 30, 2023.
Removed
It is not possible to predict what rate or rates may become the predominant alternative to LIBOR, or what effect these changes in views or alternatives may have on financial markets for LIBOR-linked financial instruments. While the U.S.
Removed
It is not possible to predict the effect of these changes, other reforms or the establishment of alternative reference rates in the United Kingdom, the United States or elsewhere. As of December 31, 2022, we had $9.2 billion of borrowings with interest rates linked to LIBOR.
Removed
We have commenced the process of amending our LIBOR-based financing agreements to transition them to successor reference rates in anticipation of LIBOR’s discontinuation, but we may not be able to reach agreements with all affected lenders, or to do so on favorable terms.

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