# UNITED	STATES	SECURITIES	AND	EXCHANGE	COMMISSION

# ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)

# OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

For	the	fiscal	year	ended	December	31,	2010

o TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)

Commission	File	Number:	1-8400

# AMR	Corporation

(Exact	name	of	registrant	as	specified	in	its	charter)

Delaware

(State	or	other	jurisdiction	of incorporation	or	organization)

(Address	of	principal	executive	offices,	including	zip	code)

(Registrant's	telephone	number,	including	area	code)

# Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Title	of	Each	Class

Common	Stock,	$1	par	value	per	share

(IRS	Employer Identification	Number)

Name	of	Exchange	on	Which	Registered

# New	York	Stock	Exchange

# Securities	registered	pursuant	to	Section	12(g)	of	the	Act:

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.		þ	Yes					o	No

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.		o	Yes					þ	No

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the	preceding	12	months	(or	for	such	shorter	period that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90	days.		þ	Yes					o	No

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to	be	submitted	and	posted	pursuant	to	Rule	405	of Regulation	S-T	(§	232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	and	post	such	files).		þ	Yes					o	No

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of	the	registrant's	knowledge,	in	definitive	proxy	or information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.		þ

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.	See	the	definitions	of	"large	accelerated	filer,"	"accelerated filer"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.	(Check	one):

Large	accelerated	filer	þ Accelerated	filer	o Non-accelerated	filer	o Smaller	reporting	company	o (Do	not	check	if	a	smaller	reporting	company)

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Act).		o	Yes					þ	No

The	aggregate	market	value	of	the	voting	stock	held	by	non-affiliates	of	the	registrant	as	of	June	30,	2010,	was	approximately	$2.3	billion.	As	of	February	9,	2011,	333,435,431	shares	of	the	registrant's	common stock	were	outstanding.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Part	III	of	this	Form	10-K	incorporates	by	reference	certain	information	from	the	Proxy	Statement	for	the	Annual	Meeting	of	Stockholders	to	be	held	May	18,	2011.

# PART	I

# ITEM	1. BUSINESS

AMR	Corporation	(AMR	or	the	Company)	was	incorporated	in	October	1982.	Virtually	all	of	AMR's	operations	fall	within	the	airline	industry.	AMR's	principal	subsidiary,	American	Airlines, Inc.	(American),	was	founded	in	1934.	At	the	end	of	2010,	American	provided	scheduled	jet	service	to	approximately	160	destinations	throughout	North	America,	the	Caribbean,	Latin	America,	Europe and	Asia.

AMR	Eagle	Holding	Corporation	(AMR	Eagle),	a	wholly-owned	subsidiary	of	AMR,	owns	two	regional	airlines	which	do	business	as	"American	Eagle"	—	American	Eagle	Airlines,	Inc.	and Executive	Airlines,	Inc.	(collectively,	the	American	Eagle®	carriers).	American	also	contracts	with	an	independently	owned	regional	airline,	which	does	business	as	"AmericanConnection"	(the AmericanConnection®	carrier).

The	AMR	Eagle	fleet	is	operated	to	feed	passenger	traffic	to	American	pursuant	to	a	capacity	purchase	agreement	between	American	and	AMR	Eagle	under	which	American	receives	all passenger	revenue	from	flights	and	pays	AMR	Eagle	a	fee	for	each	flight.	The	capacity	purchase	agreement	reflects	what	the	Company	believes	are	current	market	rates	received	by	other	regional	carriers for	similar	flying.	Amounts	paid	to	AMR	Eagle	under	the	capacity	purchase	agreement	are	available	to	pay	for	various	operating	expenses	of	AMR	Eagle,	such	as	crew	expenses,	maintenance	and	aircraft ownership.	As	of	December	31,	2010,	AMR	Eagle	operated	approximately	1,500	daily	departures,	offering	scheduled	passenger	service	to	over	175	destinations	in	North	America,	Mexico	and	the Caribbean.	On	a	separate	company	basis,	AMR	Eagle	reported	$2.3	billion	in	revenue	in	2010.	However,	this	historical	financial	information	is	not	indicative	of	what	AMR	Eagle's	future	revenues	might be	if	AMR	Eagle	were	a	stand-alone	entity.

American,	AMR	Eagle	and	the	AmericanConnection®	airline	serve	more	than	250	cities	in	approximately	50	countries	with,	on	average,	3,400	daily	flights.	The	combined	network	fleet	numbers approximately	900	aircraft.	American	Airlines	is	also	a	founding	member	of	oneworld®	alliance,	which	enables	member	airlines	to	offer	their	customers	more	services	and	benefits	than	any	member airline	can	provide	individually.	These	services	include	a	broader	route	network,	opportunities	to	earn	and	redeem	frequent	flyer	miles	across	the	combined	oneworld	network	and	more	airport	lounges. Together,	oneworld	members	serve	750	destinations	in	approximately	150	countries,	with	about	8,500	daily	departures.	American	is	also	one	of	the	largest	scheduled	air	freight	carriers	in	the	world, providing	a	wide	range	of	freight	and	mail	services	to	shippers	throughout	its	system	onboard	American's	passenger	fleet.

# Competition

Domestic	Air	Transportation			The	domestic	airline	industry	is	fiercely	competitive.	Currently,	any	United	States	(U.S.)	air	carrier	deemed	fit	by	the	U.S.	Department	of	Transportation	(DOT)	is free	to	operate	scheduled	passenger	service	between	any	two	points	within	the	U.S.	and	its	possessions.	Most	major	air	carriers	have	developed	hub-and-spoke	systems	and	schedule	patterns	in	an	effort	to maximize	the	revenue	potential	of	their	service.	American	operates	in	five	primary	domestic	markets:	Dallas/Fort	Worth	(DFW),	Chicago	O'Hare,	Miami,	New	York	City	and	Los	Angeles.

The	American	Eagle®	carriers	increase	the	number	of	markets	the	Company	serves	by	providing	connections	at	American's	primary	markets.	The	AmericanConnection®	carrier	currently provides	connecting	service	to	American	through	Chicago	O'Hare.	American's	competitors	also	own	or	have	marketing	agreements	with	regional	carriers	which	provide	similar	services	at	their	major hubs	and	other	locations.

On	most	of	its	domestic	non-stop	routes,	the	Company	faces	competing	service	from	at	least	one,	and	sometimes	more	than	one,	domestic	airline	including:	AirTran	Airways	(Air	Tran),	Alaska Airlines	(Alaska),	Continental	Airlines	(Continental),	Delta	Air	Lines	(including	Northwest	Airlines)	(Delta),	Frontier	Airlines,	JetBlue	Airways	(JetBlue),	Hawaiian	Airlines,	Southwest	Airlines (Southwest),	Spirit	Airlines,	United	Airlines	(United),	US	Airways,	Virgin	America	Airlines	and	their	affiliated	regional	carriers.	Competition	is	even	greater	between	cities	that	require	a	connection, where	the	major	airlines	compete	via	their	respective	hubs.	In	addition,	the	Company	faces	competition	on	some	of	its	connecting	routes	from	carriers	operating	point-to-point	service	on	such

routes.	The	Company	also	competes	with	all-cargo	and	charter	carriers	and,	particularly	on	shorter	segments,	ground	and	rail	transportation.	On	all	of	its	routes,	pricing	decisions	are	affected,	in	large part,	by	the	need	to	meet	competition	from	other	airlines.

American	commenced	commercial	collaboration	in	New	York	and	Boston	with	JetBlue	during	2010.	American's	agreement	with	JetBlue	provides	customers	with	interline	service	in	non- overlapping	markets,	letting	customers	connect	between	15	of	American's	international	destinations	from	New	York	and	Boston	and	26	domestic	cities	flown	by	JetBlue.	Further,	American	expanded	its relationship	with	JetBlue	so	that	AAdvantage	members	and	members	of	JetBlue's	customer	loyalty	program	will	be	able	to	earn	AAdvantage	miles	or	JetBlue	points,	respectively,	when	they	fly	on American	and	JetBlue	cooperative	interline	routes.

Most	of	the	Company's	largest	domestic	competitors	and	several	smaller	carriers	have	reorganized	under	the	protection	of	Chapter	11	of	the	U.S.	Bankruptcy	Code	(Chapter	11)	in	recent	years.	It is	possible	that	in	the	future	one	or	more	of	the	Company's	competitors	may	seek	to	reorganize	in	or	out	of	Chapter	11.	Successful	reorganizations	present	the	Company	with	competitors	with significantly	lower	operating	costs	derived	from	renegotiated	labor,	supply	and	financing	contracts.

International	Air	Transportation			In	addition	to	its	extensive	domestic	service,	the	Company	provides	international	service	to	the	Caribbean,	Canada,	Latin	America,	Europe	and	Asia.	The Company's	operating	revenues	from	foreign	operations	(flights	serving	international	destinations)	were	approximately	40	percent	of	the	Company's	total	operating	revenues	in	each	of	the	three	years 2010,	2009,	and	2008.	Additional	information	about	the	Company's	foreign	operations	is	included	in	Note	14	to	the	consolidated	financial	statements.

In	providing	international	air	transportation,	the	Company	competes	with	foreign	investor-owned	carriers,	foreign	state-owned	carriers	and	U.S.	airlines	that	have	been	granted	authority	to provide	scheduled	passenger	and	cargo	service	between	the	U.S.	and	various	overseas	locations.	In	general,	carriers	that	have	the	greatest	ability	to	seamlessly	connect	passengers	to	and	from	markets beyond	the	nonstop	city	pair	have	a	competitive	advantage.	In	some	cases,	however,	foreign	governments	limit	U.S.	air	carriers'	rights	to	carry	passengers	beyond	designated	gateway	cities	in	foreign countries.	To	improve	access	to	each	other's	markets,	various	U.S.	and	foreign	air	carriers	—	including	American	—	have	established	marketing	relationships	with	other	airlines	and	rail	companies. American	currently	has	marketing	relationships	with	Air	Berlin,	Air	Pacific,	Air	Tahiti	Nui,	Alaska	Airlines,	British	Airways,	Cape	Air,	Cathay	Pacific,	China	Eastern	Airlines,	Dragonair,	Deutsche Bahn	German	Rail,	EL	AL,	Etihad	Airways,	EVA	Air,	Finnair,	GOL,	Gulf	Air,	Hawaiian	Airlines,	Iberia,	Japan	Airlines	(JAL),	Jet	Airways,	JetStar	Airways,	LAN	(includes	LAN	Airlines,	LAN Argentina,	LAN	Ecuador	and	LAN	Peru),	Malév	Hungarian	Airlines,	Niki	Airlines,	Qantas	Airways,	Royal	Jordanian,	S7	Airlines,	and	Vietnam	Airlines.

American	is	also	a	founding	member	of	the	oneworld	alliance,	which	includes	British	Airways,	Cathay	Pacific,	Finnair,	LAN	Airlines,	Iberia,	Qantas,	JAL,	Malév	Hungarian,	Mexicana,	Royal Jordanian	and	S7	Airlines.	S7	Airlines,	which	is	Russia's	largest	domestic	airline,	joined	the	oneworld	alliance	in	November	2010.	Kingfisher,	India's	leading	domestic	airline,	is	scheduled	to	join	the alliance	in	2011	and	Air	Berlin,	the	5th	largest	airline	in	Europe,	is	scheduled	to	join	in	2012.	The	oneworld	alliance	links	the	networks	of	the	member	carriers	to	enhance	customer	service	and	smooth connections	to	the	destinations	served	by	the	alliance,	including	linking	the	carriers'	frequent	flyer	programs	and	access	to	the	carriers'	airport	lounge	facilities.

In	July	2010,	American	obtained	clearance	from	the	European	Commission	(EC)	and	approval	by	the	DOT	for	antitrust	immunity	(ATI)	for	its	cooperation	with	British	Airways,	Iberia,	Finnair and	Royal	Jordanian.	This	approval	enables	American,	British	Airways	and	Iberia,	through	a	joint	business	agreement	(JBA),	to	cooperate	on	flights	between	North	America	and	most	countries	in Europe,	and	allows	pooling	and	sharing	of	certain	revenues	and	costs,	expanded	codesharing,	enhanced	frequent	flyer	program	reciprocity,	and	cooperation	in	other	areas.	American	began implementation	of	the	JBA	with	British	Airways	and	Iberia	and	expanded	cooperation	with	Finnair	and	Royal	Jordanian	in	October	2010.

In	February	2010,	American	and	JAL	entered	into	a	JBA	which	will	enhance	their	scope	of	cooperation	on	routes	between	North	America	and	Asia	through	adjustments	to	their	respective networks,	flight	schedules,	and	other	business	activities.	This,	in	turn,	will	allow	both	carriers	to	better	complement	each	other's	operations	and	to	develop	and	offer	competitive	products	and	quality service	to	their	customers.	In	the	fourth	quarter	of	2010,

American	and	JAL	received	approval	for	ATI	on	certain	routes	between	North	America	and	Asia	from	the	DOT	and	the	Ministry	of	Land	Infrastructure,	Transport	and	Tourism	of	Japan	(MLIT). Implementation	of	the	JBA	is	subject	to	successful	negotiation	of	certain	detailed	financial	and	commercial	arrangements	and	other	approvals.	American	expects	to	begin	implementing	the	JBA	with	JAL in	2011.

Price	Competition			The	airline	industry	is	characterized	by	substantial	and	intense	price	competition.	Fare	discounting	by	competitors	has	historically	had	a	negative	effect	on	the	Company's financial	results	because	the	Company	is	generally	required	to	match	competitors'	fares,	as	failing	to	match	would	provide	even	less	revenue	due	to	customers'	price	sensitivity.

There	are	a	number	of	low-cost	carriers	(LCCs)	in	the	domestic	market	and	the	Company	competes	with	LCCs	over	a	very	large	part	of	its	network.	Several	major	airlines,	including	the Company,	have	implemented	efforts	to	lower	their	costs	since	lower	cost	structures	enable	airlines	to	offer	lower	fares.	In	addition,	several	air	carriers	have	reorganized	in	recent	years	under	Chapter	11, including	United,	Delta	and	US	Airways.	These	cost	reduction	efforts	and	bankruptcy	reorganizations	have	allowed	carriers	to	decrease	operating	costs.	In	the	past,	lower	cost	structures	have	generally resulted	in	fare	reductions.	If	fare	reductions	by	the	Company	are	not	offset	by	increases	in	passenger	traffic,	changes	in	the	mix	of	traffic	that	improve	yields	and/or	cost	reductions,	the	Company's operating	results	will	be	negatively	impacted.

# Regulation

General			The	Airline	Deregulation	Act	of	1978,	as	amended,	eliminated	most	domestic	economic	regulation	of	passenger	and	freight	transportation.	However,	DOT	and	the	Federal	Aviation Administration	(FAA)	still	exercise	certain	regulatory	authority	over	air	carriers.	DOT	maintains	jurisdiction	over	the	approval	of	international	codeshare	agreements,	international	route	authorities, certain	consumer	protection	and	competition	matters,	such	as	advertising,	denied	boarding	compensation	and	baggage	liability.

The	FAA	regulates	flying	operations	generally,	including	establishing	standards	for	personnel,	aircraft	and	certain	security	measures.	As	part	of	that	oversight,	the	FAA	has	implemented	a number	of	requirements	that	the	Company	has	incorporated	and	is	incorporating	into	its	maintenance	programs.	The	Company	is	progressing	toward	the	completion	of	over	500	airworthiness	directives, a	number	of	which	require	the	Company	to	perform	significant	maintenance	work	and	to	incur	additional	expenses.	Based	on	its	current	implementation	schedule,	the	Company	expects	to	be	in compliance	with	the	applicable	requirements	within	the	required	time	periods.	DOT	and	DOJ	have	jurisdiction	over	airline	antitrust	matters.	The	U.S.	Postal	Service	has	jurisdiction	over	certain	aspects of	the	transportation	of	mail	and	related	services.	Labor	relations	in	the	air	transportation	industry	are	regulated	under	the	Railway	Labor	Act,	which	vests	in	the	National	Mediation	Board	(NMB)	certain functions	with	respect	to	disputes	between	airlines	and	labor	unions	relating	to	union	representation	and	collective	bargaining	agreements.	In	addition,	as	a	result	of	heightened	levels	of	concern	regarding data	privacy,	the	Company	is	subject	to	an	increasing	number	of	domestic	and	foreign	laws	regarding	the	privacy	and	security	of	passenger	and	employee	data.

In	December	2009,	the	DOT	issued	a	new	rule	intended	to	enhance	air	passenger	protections.	The	new	rule,	which	went	into	effect	in	April	2010,	created	new	areas	of	regulation	in	passenger protection,	including	a	requirement	that	certain	carriers,	including	American,	adopt	contingency	plans	for	lengthy	tarmac	delays	at	most	U.S.	airports.	A	carrier's	failure	to	meet	certain	service performance	criteria	under	the	rule	could	subject	it	to	substantial	civil	penalties.

On	September	10,	2010,	the	FAA	introduced	a	Notice	of	Proposed	Rulemaking	(NPRM)	to	change	for	all	carriers	certificated	under	Part	121	of	the	Federal	Aviation	Regulations,	including American	and	the	AMR	Eagle	carriers,	the	required	amount	and	timing	of	rest	periods	for	pilots	between	work	assignments,	modifying	duty	and	rest	requirements	based	on	the	time	of	day,	number	of scheduled	segments,	flight	types,	time	zones	and	other	factors.	The	Company	and	other	carriers	are	seeking	clarification	with	the	FAA	of	certain	provisions	of	the	proposed	rule	changes	to	determine	if the	new	requirements	could	have	a	material	adverse	impact	on	the	Company.	If	these	regulations	were	promulgated	in	their	current	form,	we	believe	they	could	have	a	material	adverse	impact	on	the Company.

International			International	air	transportation	is	subject	to	extensive	government	regulation.	The	Company's	operating	authority	in	international	markets	is	subject	to	aviation	agreements	between the	U.S.	and	the	respective	countries	or	governmental	authorities	(such	as	the	European	Union),	and	in	some	cases,	fares	and	schedules	require	the	approval	of	DOT	and/or	the	relevant	foreign governments.	Moreover,	alliances	with	international	carriers	may	be	subject	to	the	jurisdiction	and	regulations	of	various	foreign	agencies.	Bilateral	and	multilateral	agreements	among	the	U.S.	and various	foreign	governments	of	countries	served	by	the	Company	are	periodically	subject	to	renegotiation.	Changes	in	U.S.	or	foreign	government	aviation	policies	could	result	in	the	alteration	or termination	of	such	agreements,	diminish	the	value	of	route	authorities,	or	otherwise	adversely	affect	the	Company's	international	operations.	In	addition,	at	some	foreign	airports,	an	air	carrier	needs slots	(landing	and	take-off	authorizations)	before	the	air	carrier	can	introduce	new	service	or	increase	existing	service.	The	availability	of	such	slots	is	not	assured	and	the	inability	of	the	Company	to obtain	and	retain	needed	slots	could	therefore	inhibit	its	efforts	to	compete	in	certain	international	markets.

In	April	2007,	the	U.S.	and	the	EU	approved	an	open	skies	air	services	agreement	that	provides	airlines	from	the	U.S.	and	EU	member	states	open	access	to	each	other's	markets,	with	freedom	of pricing	and	unlimited	rights	to	fly	beyond	the	U.S.	and	any	airport	in	the	EU	including	London's	Heathrow	Airport.	The	provisions	of	the	agreement	took	effect	on	March	30,	2008.	Under	the	agreement, every	U.S.	and	EU	airline	is	authorized	to	operate	between	airports	in	the	U.S.	and	Heathrow.	Notwithstanding	the	open	skies	agreement,	Heathrow	is	a	slot-controlled	airport.	The	agreement	has	resulted in	the	Company	facing	increased	competition	in	serving	Heathrow.	The	Company	is	also	facing	competition	in	other	European	markets.	In	March	2010,	the	EU	and	the	U.S.	committed	to	the	extension	of the	"open	skies"	air	services	agreement.	The	extension	of	this	agreement	reinforces	the	relationship	between	the	EU	and	the	U.S.	and	furthers	the	cause	of	aviation	liberalization.	See	Item	1A,	Risk Factors,	and	Note	11	to	the	consolidated	financial	statements	for	additional	information.

In	December	2009,	the	U.S.	and	Japan	reached	a	tentative	open	skies	air	services	agreement	that	provides	airlines	from	the	U.S.	and	Japan	open	access	to	each	other's	markets.	The	tentative agreement	was	signed	by	U.S.	and	Japanese	representatives	on	October	25,	2010.	The	open	skies	agreement	enables	carriers	of	the	two	parties	to	operate	between	any	two	airports	in	the	U.S.	and	Japan	as well	as	fly	to	points	beyond	the	two	countries	without	restriction.

The	U.S.	and	Colombia	reached	an	open	skies	aviation	pact	in	November	2010	that	will	remove	restrictions	between	the	two	countries	by	the	end	of	2012.	The	proposed	deal,	which	still	needs	to be	finalized,	will	remove	existing	restrictions	on	the	number	of	flights	that	can	be	operated	between	the	countries.	Also	in	2010,	the	U.S.	and	Brazil	entered	into	an	open	skies	aviation	services	agreement that	will	provide	for	a	phase-in	of	open	skies	by	October	2015.	The	agreement	immediately	removes	restrictions	on	pricing	and	on	the	routes	between	each	country	that	can	be	served	by	U.S.	and Brazilian	scheduled	and	charter	airlines.

Security			In	November	2001,	the	Aviation	and	Transportation	Security	Act	(ATSA)	was	enacted	in	the	U.S.	The	ATSA	created	a	new	government	agency,	the	Transportation	Security Administration	(TSA),	which	is	part	of	the	Department	of	Homeland	Security	and	is	responsible	for	aviation	security.	The	ATSA	mandates	that	the	TSA	provide	for	the	screening	of	all	passengers	and property,	including	U.S.	mail,	cargo,	carry-on	and	checked	baggage,	and	other	articles	that	will	be	carried	aboard	a	passenger	aircraft.	The	ATSA	also	provides	for	security	in	flight	decks	of	aircraft	and requires	federal	air	marshals	to	be	present	on	certain	flights.

Effective	February	1,	2002,	the	ATSA	imposed	a	$2.50	per	enplanement	security	service	fee,	which	is	being	collected	by	the	air	carriers	and	submitted	to	the	government	to	pay	for	these enhanced	security	measures.	Additionally,	air	carriers	are	annually	required	to	submit	to	the	government	an	amount	equal	to	what	the	air	carriers	paid	for	screening	passengers	and	property	in	2000.	In recent	years,	the	government	has	sought	to	increase	both	of	these	fees	under	spending	proposals	for	the	Department	of	Homeland	Security.	American	and	other	carriers	have	announced	their	opposition	to these	proposals	as	there	is	no	assurance	that	any	increase	in	fees	could	be	passed	on	to	customers.

Airline	Fares			Airlines	are	permitted	to	establish	their	own	domestic	fares	without	governmental	regulation.	DOT	maintains	authority	over	certain	international	fares,	rates	and	charges,	but applies	this	authority	on	a	limited	basis.	In	addition,	international	fares	and	rates	are	sometimes	subject	to	the	jurisdiction	of	the	governments	of	the	foreign	countries	which	the	Company	serves.	While	air carriers	are	required	to	file	and	adhere	to	international	fare

and	rate	tariffs,	substantial	commissions,	fare	overrides	and	discounts	to	travel	agents,	brokers	and	wholesalers	characterize	many	international	markets.

Airport	Access			Operations	at	four	major	domestic	airports	and	certain	foreign	airports	served	by	the	Company	are	regulated	by	governmental	entities	through	allocations	of	"slots"	or	similar regulatory	mechanisms	which	limit	the	rights	of	carriers	to	conduct	operations	at	those	airports.	Each	slot	represents	the	authorization	to	land	at	or	take	off	from	the	particular	airport	during	a	specified time	period.

In	the	U.S.,	the	FAA	currently	regulates	the	allocation	of	slots,	slot	exemptions,	operating	authorizations,	or	similar	capacity	allocation	mechanisms	at	Reagan	National	in	Washington,	D.C., LaGuardia	and	JFK	in	New	York,	and	Newark.	The	Company's	operations	at	these	airports	generally	require	the	allocation	of	slots	or	analogous	regulatory	authorities.	Similarly,	the	Company's operations	at	Tokyo's	Narita	Airport,	London's	Heathrow	Airport	and	other	international	airports	are	regulated	by	local	slot	coordinators	pursuant	to	the	International	Air	Transport	Association's Worldwide	Scheduling	Guidelines	and	applicable	local	law.	The	Company	currently	has	sufficient	slots	or	analogous	authorizations	to	operate	its	existing	flights,	and	it	has	generally	been	able	to	obtain the	rights	to	expand	its	operations	and	to	change	its	schedules.	There	is	no	assurance,	however,	that	the	Company	will	be	able	to	do	so	in	the	future	because,	among	other	reasons,	such	allocations	are subject	to	changes	in	governmental	policies.

In	2006,	the	Wright	Amendment	Reform	Act	of	2006	(the	Act)	became	law.	The	Act	is	based	on	an	agreement	by	the	cities	of	Dallas	and	Fort	Worth,	Texas,	DFW	International	Airport, Southwest,	and	the	Company	to	modify	the	Wright	Amendment,	which	authorizes	certain	flight	operations	at	Dallas	Love	Field	within	defined	geographic	areas.	Among	other	things,	the	Act	eventually eliminates	domestic	geographic	restrictions	on	operations	while	limiting	the	maximum	number	of	gates	at	Love	Field.	The	Company	believes	the	Act	is	a	pragmatic	resolution	of	the	issues	related	to	the Wright	Amendment	and	the	use	of	Love	Field.

Environmental	Matters			The	Company	is	subject	to	various	laws	and	government	regulations	concerning	environmental	matters	and	employee	safety	and	health	in	the	U.S.	and	other	countries. U.S.	federal	laws	that	have	a	particular	impact	on	the	Company	include	the	Airport	Noise	and	Capacity	Act	of	1990	(ANCA),	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	(CERCLA	or	the	Superfund	Act).	Certain	operations	of	the	Company concerning	employee	safety	and	health	matters	are	also	subject	to	the	oversight	of	the	Occupational	Safety	and	Health	Administration	(OSHA).	The	U.S.	Environmental	Protection	Agency	(EPA), OSHA,	and	other	federal	agencies	have	been	authorized	to	promulgate	regulations	that	have	an	impact	on	the	Company's	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	and	employee	safety	and	health	laws	and	regulations,	some	of which	are	similar	to	or	stricter	than	federal	requirements.

The	ANCA	recognizes	the	rights	of	airport	operators	with	noise	problems	to	implement	local	noise	abatement	programs	so	long	as	they	do	not	interfere	unreasonably	with	interstate	or	foreign commerce	or	the	national	air	transportation	system.	Authorities	in	several	cities	have	promulgated	aircraft	noise	reduction	programs,	including	the	imposition	of	nighttime	curfews.	The	ANCA	generally requires	FAA	approval	of	local	noise	restrictions	on	aircraft.	While	the	Company	has	had	sufficient	scheduling	flexibility	to	accommodate	local	noise	restrictions	imposed	to	date,	the	Company's operations	could	be	adversely	affected	if	locally-imposed	regulations	become	more	restrictive	or	widespread.

Many	aspects	of	the	Company's	operations	are	subject	to	increasingly	stringent	environmental	regulations.	Concerns	about	climate	change	and	greenhouse	gas	emissions,	in	particular,	may	result in	the	imposition	of	additional	legislation	or	regulation.	For	example,	the	EU	recently	approved	measures	that	impose	emissions	limits	on	airlines	with	operations	to,	from	or	within	the	EU	as	part	of	an emissions	trading	system	beginning	in	2012.	The	Company	is	continuing	to	assess	the	potential	costs	of	the	EU	measures.	Such	legislative	or	regulatory	action	by	the	U.S.,	state	or	foreign	governments currently	or	in	the	future	may	adversely	affect	the	Company's	business	and	financial	results.	See	Item	1A,	Risk	Factors,	for	additional	information.

The	environmental	laws	to	which	the	Company	is	subject	include	those	related	to	responsibility	for	potential	soil	and	groundwater	contamination.	The	Company	is	conducting	investigation	and remediation	activities	to	address	soil	and	groundwater	conditions	at	several	sites,	including	airports	and	maintenance	bases.	The	Company

anticipates	that	the	ongoing	costs	of	such	activities	will	be	immaterial.	The	Company	has	also	been	named	as	a	potentially	responsible	party	(PRP)	at	certain	Superfund	sites.	The	Company's	alleged volumetric	contributions	at	such	sites	are	small	in	comparison	to	total	contributions	of	all	PRPs	and	the	Company	expects	that	any	future	payments	of	its	share	of	costs	at	such	sites	will	be	immaterial.

# Labor

The	airline	business	is	labor	intensive.	Wages,	salaries	and	benefits	represented	approximately	31	percent	of	the	Company's	consolidated	operating	expenses	for	the	year	ended	December	31, 2010.	The	average	full-time	equivalent	number	of	employees	of	the	Company's	subsidiaries	for	the	year	ended	December	31,	2010	was	78,250.

The	majority	of	these	employees	are	represented	by	labor	unions	and	covered	by	collective	bargaining	agreements.	Relations	with	such	labor	organizations	are	governed	by	the	Railway	Labor	Act (RLA).	Under	this	act,	the	collective	bargaining	agreements	among	the	Company's	subsidiaries	and	these	organizations	generally	do	not	expire	but	instead	become	amendable	as	of	a	stated	date.	If	either party	wishes	to	modify	the	terms	of	any	such	agreement,	it	must	notify	the	other	party	in	the	manner	prescribed	under	the	RLA	and	as	agreed	to	by	the	parties.	Under	the	RLA,	after	receipt	of	such	notice, the	parties	must	meet	for	direct	negotiations,	and	if	no	agreement	is	reached,	either	party	may	request	the	NMB	to	appoint	a	federal	mediator.	The	RLA	prescribes	no	set	timetable	for	the	direct negotiation	and	mediation	process.	It	is	not	unusual	for	those	processes	to	last	for	many	months,	and	even	for	several	years.	If	no	agreement	is	reached	in	mediation,	the	NMB	in	its	discretion	may	declare at	some	time	that	an	impasse	exists,	and	if	an	impasse	is	declared,	the	NMB	proffers	binding	arbitration	to	the	parties.	Either	party	may	decline	to	submit	to	arbitration.	If	arbitration	is	rejected	by	either party,	a	30-day	"cooling	off"	period	commences.	During	that	period	(or	after),	a	Presidential	Emergency	Board	(PEB)	may	be	established,	which	examines	the	parties'	positions	and	recommends	a solution.	The	PEB	process	lasts	for	30	days	and	is	followed	by	another	"cooling	off"	period	of	30	days.	At	the	end	of	a	"cooling	off"	period,	unless	an	agreement	is	reached	or	action	is	taken	by	Congress, the	labor	organization	may	exercise	"self-help,"	such	as	a	strike,	and	the	airline	may	resort	to	its	own	"self-help,"	including	the	imposition	of	any	or	all	of	its	proposed	amendments	and	the	hiring	of	new employees	to	replace	any	striking	workers.

In	April	2003,	American	reached	agreements	(the	Labor	Agreements)	with	its	three	major	unions:	the	Allied	Pilots	Association	(the	APA)	which	represents	American's	pilots,	the	Transport Workers	Union	of	America	(AFL-CIO)	(the	TWU),	which	represents	seven	different	employee	groups,	and	the	Association	of	Professional	Flight	Attendants	(the	APFA),	which	represents	American's flight	attendants.	The	Labor	Agreements	substantially	moderated	the	labor	costs	associated	with	the	employees	represented	by	the	unions.	In	conjunction	with	the	Labor	Agreements,	American	also implemented	various	changes	in	the	pay	plans	and	benefits	for	non-unionized	personnel,	including	officers	and	other	management	(the	Management	Reductions).	The	Labor	Agreements	became amendable	in	2008	(although	the	parties	agreed	that	they	could	begin	the	negotiations	process	as	early	as	2006).

In	2006,	American	and	the	APA	commenced	negotiations	under	the	RLA.	In	April	of	2008,	following	a	request	by	the	APA,	a	mediator	was	appointed	by	the	NMB.	The	parties	have	been	in mediated	negotiations	since	that	time.	The	APA	has	filed	a	number	of	grievances,	lawsuits	and	complaints,	most	of	which	American	believes	are	part	of	a	corporate	campaign	related	to	the	union's	labor agreement	negotiations	with	American.	While	American	is	vigorously	defending	these	claims,	and	has	achieved	favorable	outcomes	in	many	of	them,	a	number	still	are	ongoing	and	unfavorable outcomes	of	one	or	more	of	them	could	require	American	to	incur	additional	costs,	change	the	way	it	conducts	some	parts	of	its	business,	or	otherwise	adversely	affect	the	Company.

Also	in	2006,	American	and	the	TWU	commenced	negotiations	with	respect	only	to	dispatchers,	one	of	the	seven	groups	at	American	represented	by	the	TWU.	Subsequently,	following	a	request by	the	parties,	a	mediator	was	appointed	by	the	NMB	for	the	dispatcher	negotiations.	Thereafter,	in	November	2007,	American	and	the	TWU	commenced	negotiations	under	the	RLA	with	respect	to	the other	employee	groups	represented	by	the	TWU.	Direct	negotiations	between	American	and	the	TWU	employees	with	respect	to	those	other	groups	continued	until	December	2008,	at	which	time	the parties	jointly	filed	with	the	NMB	for	mediation	with	respect	to	the	fleet	service,	stores,	ground	school	instructors,	and	simulator	technician	groups	of	employees.	The	NMB	appointed	a	mediator	soon thereafter.	Then,	in	February	2009,	following	a	request	by	the	TWU,	a	mediator	was	appointed	by	the	NMB

with	respect	to	the	mechanics	and	the	technical	specialists.	The	Company	negotiated	tentative	agreements	with	several	workgroups	within	the	TWU,	including	the	Maintenance	Control	Technician	group, the	Material	Logistics	Specialists	group	and	the	Mechanic	and	Related	group.	Agreements	with	the	TWU	groups	are	subject	to	ratification	by	the	relevant	membership	of	TWU,	and	while	the Maintenance	Control	Technician	group	ratified	their	agreement,	the	Material	Logistics	Specialists	group	and	the	Mechanic	and	Related	group	tentative	agreements	were	not	ratified.	Mediated negotiations	with	the	TWU	with	respect	to	those	groups	continue.

American	and	the	APFA	commenced	negotiations	in	the	first	half	of	2008.	Direct	negotiations	between	the	parties	continued	until	December	2008,	at	which	time	the	parties	jointly	filed	an application	to	the	NMB	asking	that	a	mediator	be	appointed.	The	NMB	appointed	a	mediator	soon	thereafter.	Since	that	time,	the	parties	have	been	conducting	mediated	negotiations	as	scheduled	by	the NMB.

The	Air	Line	Pilots	Association	(ALPA),	which	represents	American	Eagle	pilots,	reached	agreement	with	American	Eagle	effective	September	1,	1997,	to	have	all	of	the	pilots	of	the	American Eagle®	carriers	(currently	American	Eagle	Airlines,	Inc.	and	Executive	Airlines,	Inc.)	covered	by	a	single	contract.	This	agreement	lasts	until	January	1,	2013.	The	agreement	provided	to	the	parties	the right	to	seek	limited	changes	in	2000,	2004	and	2008.	If	the	parties	were	unable	to	agree	on	the	limited	changes,	the	agreement	provided	that	any	issues	would	be	resolved	by	interest	arbitration,	without the	exercise	of	self-help	(such	as	a	strike).	ALPA	and	American	Eagle	negotiated	a	tentative	agreement	in	2000,	but	that	agreement	failed	in	ratification.	Thereafter,	the	parties	participated	in	interest arbitration.	The	interest	arbitration	panel	determined	the	limited	changes	that	should	be	made	and	these	changes	were	appropriately	effected.	In	2004	and	in	2008,	the	parties	successfully	negotiated limited	changes.	The	pilot	agreement	is	amendable	January	1,	2013;	however,	the	parties	have	agreed	that	contract	openers	may	be	exchanged	120	days	prior	to	that	date.

The	Association	of	Flight	Attendants	(AFA)	represents	the	flight	attendants	of	the	American	Eagle	carriers.	The	current	agreement	between	the	American	Eagle	carriers	and	the	AFA	became amendable	on	October	27,	2009.	The	parties	are	in	direct	negotiations.

The	other	union	employees	at	the	American	Eagle	carriers	are	covered	by	separate	agreements	with	the	TWU.	The	agreements	between	the	American	Eagle	carriers	and	the	TWU	were	amendable beginning	on	October	1,	2007,	and	the	parties	commenced	negotiations.	In	January	2009,	an	application	for	mediation	was	filed	with	the	NMB	and	a	mediator	was	appointed	to	assist	the	parties.	In January	2010,	American	Eagle	and	the	TWU	reached	a	tentative	agreement	with	respect	to	aircraft	maintenance	technicians	and	fleet	service	clerks	for	24	months,	effective	the	date	of	signing.	The mechanics	ratified	the	tentative	agreement	in	March	of	2010.	The	fleet	service	clerks	failed	to	ratify	the	January	2010	tentative	agreement.	A	second	tentative	agreement	was	reached	with	the	TWU	with respect	to	the	fleet	service	clerks	in	June	of	2010;	that	tentative	agreement	also	was	not	ratified.	Mediation	with	the	TWU	concerning	American	Eagle's	dispatchers	and	fleet	services	clerks	continues.

The	Company's	operations	and	financial	results	are	significantly	affected	by	the	availability	and	price	of	jet	fuel.	The	Company's	fuel	costs	and	consumption	for	the	years	2008	through	2010

were:

| Year | Gallons<br>Consumed<br>(In	millions) | Total	Cost<br>(In	millions) | Average	Cost<br>per	Gallon<br>(In	dollars) | AMR's	Operating<br>Expenses |
| :--- | :--- | :--- | :--- | :--- |
| 2008 | 2,971 | $9,014 | $3.034 | 35.1 |
| 2009 | 2,762 | 5,553 | 2.010 | 26.5 |
| 2010 | 2,764 | 6,400 | 2.316 | 29.3 |

The	impact	of	fuel	price	changes	on	the	Company	and	its	competitors	depends	on	various	factors,	including	hedging	strategies.	The	Company	has	a	fuel	hedging	program	in	which	it	enters	into	jet fuel	and	heating	oil	hedging	contracts	to	dampen	the	impact	of	the	volatility	of	jet	fuel	prices.	The	Company	does	not	take	a	view	on	the	direction	of	fuel	prices;	instead,	the	Company	layers	in	fuel	hedges on	a	systematic	basis.	As	a	result,	the	impact	on	the	Company	from	its	fuel	hedging	program	can	be	very	different	from	the	impact	of	fuel	hedging	on	the	Company's	competitors	who	follow	a	different hedging	philosophy.	Depending	on	movements	in	the	price	of	fuel,	the	Company's	fuel	hedging	program	can	result	in	gains	or	losses	on	its	fuel	hedges.

During	2010,	2009	and	2008,	the	Company's	fuel	hedging	program	increased	(decreased)	the	Company's	fuel	expense	by	approximately	$142	million,	$651	million	and	($380)	million, respectively.	As	of	January	2011,	the	Company	had	cash	flow	hedges,	with	option	contracts,	primarily	heating	oil	collars	and	call	options,	covering	approximately	35	percent	of	its	estimated	2011	fuel requirements.	The	consumption	hedged	for	2011	by	cash	flow	hedges	is	capped	at	an	average	price	of	approximately	$2.52	per	gallon	of	jet	fuel,	and	the	Company's	collars	have	an	average	floor	price	of approximately	$1.92	per	gallon	of	jet	fuel	(both	the	capped	and	floor	price	exclude	taxes	and	transportation	costs).	A	deterioration	of	the	Company's	financial	position	could	negatively	affect	the Company's	ability	to	hedge	fuel	in	the	future.	See	the	Risk	Factors	under	Item	1A	for	additional	information	regarding	fuel.

Additional	information	regarding	the	Company's	fuel	program	is	also	included	in	Item	7(A)	"Quantitative	and	Qualitative	Disclosures	about	Market	Risk,"	Item	7	"Management's	Discussion	and Analysis	of	Financial	Condition	and	Results	of	Operations"	and	in	Note	7	to	the	consolidated	financial	statements.

# Frequent	Flyer	Program

American	established	the	AAdvantage®	frequent	flyer	program	(AAdvantage)	to	develop	passenger	loyalty	by	offering	awards	to	travelers	for	their	continued	patronage.	The	Company	believes that	the	AAdvantage	program	is	one	of	its	competitive	strengths.	AAdvantage	benefits	from	a	growing	base	of	approximately	67	million	members	with	desirable	demographics	who	have	demonstrated	a strong	willingness	to	collect	AAdvantage	miles	over	other	loyalty	program	incentives	and	are	generally	disposed	to	adjusting	their	purchasing	behavior	in	order	to	earn	additional	AAdvantage	miles. AAdvantage	members	earn	mileage	credits	by	flying	on	American,	American	Eagle,	and	the	AmericanConnection®	carrier	or	by	using	services	of	other	participants	in	the	AAdvantage	program.	Mileage credits	can	be	redeemed	for	free,	discounted	or	upgraded	travel	on	American,	American	Eagle	or	other	participating	airlines,	or	for	other	awards.	Once	a	member	accrues	sufficient	mileage	for	an	award, the	member	may	book	award	travel.	Most	travel	awards	are	subject	to	capacity	controlled	seating.	A	member's	mileage	credit	does	not	expire	as	long	as	that	member	has	any	type	of	qualifying	activity	at least	once	every	18	months.

American	sells	mileage	credits	and	related	services	to	other	participants	in	the	AAdvantage	program.	There	are	over	1,000	program	participants,	including	a	leading	credit	card	issuer,	hotels,	car rental	companies	and	other	products	and	services	companies	in	the	AAdvantage	program.	The	Company	believes	that	program	participants	benefit	from	the	sustained	purchasing	behavior	of	AAdvantage members,	which	translates	into	a	recurring	stream	of	revenues	for	AAdvantage.	Under	its	agreements	with	AAdvantage	members	and	program	participants,	the	Company	reserves	the	right	to	change	the AAdvantage	program	at	any	time	without	notice,	and	may	end	the	program	with	six	months	notice.	As	of	December	31,	2010,	AAdvantage	had	approximately	67	million	total	members,	and	587	billion outstanding	award	miles.	During	2010,	AAdvantage	issued	approximately	185	billion	miles,	of	which	approximately	62%	were	sold	to	program	participants.	See	"Critical	Accounting	Policies	and Estimates"	under	Item	7	for	more	information	on	AAdvantage.

# Cargo

American	Airlines	Cargo,	a	division	of	American	Airlines,	Inc.,	provides	over	90	million	pounds	of	weekly	cargo	lift	capacity	to	major	cities	in	the	United	States,	Europe,	Canada,	Mexico,	the Caribbean,	Latin	America	and	Asia.	American's	cargo	network	is	one	of	the	largest	air	cargo	networks	in	the	world,	with	facilities	and	interline	connections	available	across	the	globe.	During	2010, American	Airlines	Cargo	accounted	for	approximately	3.0%	of	the	Company's	operating	revenues	by	generating	$672	million	in	freight	and	mail	revenue,	an	increase	of	16.3%	versus	2009.

# Other	revenues

Other	revenues,	which	approximate	10.8%	of	total	revenues,	includes	revenue	from	the	marketing	services	related	to	the	sale	of	mileage	credits	in	the	AAdvantage	program	as	discussed	above, membership	fees	and	related	revenue	from	the	Company's	Admirals	Club	operations,	and	other	miscellaneous	service	revenue,	including	administrative	service	charges	and	baggage	handling	fees.	Other revenues	have	been	increasing	as	the	Company	unbundles	its	services	and	charges	for	ancillary	services.

# Other	Matters

Seasonality	and	Other	Factors			The	Company's	results	of	operations	for	any	interim	period	are	not	necessarily	indicative	of	those	for	the	entire	year	since	the	air	transportation	business	is	subject to	seasonal	fluctuations.	Higher	demand	for	air	travel	has	traditionally	resulted	in	more	favorable	operating	and	financial	results	for	the	second	and	third	quarters	of	the	year	than	for	the	first	and	fourth quarters.	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.	Unaudited quarterly	financial	data	for	the	two-year	period	ended	December	31,	2010	is	included	in	Note	15	to	the	consolidated	financial	statements.	In	addition,	the	results	of	operations	in	the	air	transportation business	have	also	significantly	fluctuated	in	the	past	in	response	to	general	economic	conditions.

Insurance			The	Company	carries	insurance	for	public	liability,	passenger	liability,	property	damage	and	all-risk	coverage	for	damage	to	its	aircraft.	As	a	result	of	the	terrorist	attacks	of September	11,	2001	(the	Terrorist	Attacks),	aviation	insurers	significantly	reduced	the	amount	of	insurance	coverage	available	to	commercial	air	carriers	for	liability	to	persons	other	than	employees	or passengers	for	claims	resulting	from	acts	of	terrorism,	war	or	similar	events	(war-risk	coverage).	At	the	same	time,	these	insurers	significantly	increased	the	premiums	for	aviation	insurance	in	general. While	the	price	of	commercial	insurance	has	declined	since	the	period	immediately	after	the	Terrorist	Attacks,	in	the	event	commercial	insurance	carriers	further	reduce	the	amount	of	insurance	coverage available	to	the	Company,	or	significantly	increase	its	cost,	the	Company	would	be	adversely	affected.

The	U.S.	government	has	agreed	to	provide	commercial	war-risk	insurance	for	U.S.	based	airlines	through	September	30,	2011,	covering	losses	to	employees,	passengers,	third	parties	and aircraft.	If	the	U.S.	government	were	to	cease	providing	such	insurance	in	whole	or	in	part,	it	is	likely	that	the	Company	could	obtain	comparable	coverage	in	the	commercial	market,	but	the	Company would	incur	substantially	higher	premiums	and	more	restrictive	terms.	There	can	be	no	assurance	that	comparable	war-risk	coverage	will	be	available	in	the	commercial	market.	If	the	Company	is	unable to	obtain	adequate	war-risk	coverage	at	commercially	reasonable	rates,	the	Company	would	be	adversely	affected.

Other	Government	Matters			In	time	of	war	or	during	a	national	emergency	or	defense	oriented	situation,	American	and	other	air	carriers	can	be	required	to	provide	airlift	services	to	the	Air Mobility	Command	under	the	Civil	Reserve	Air	Fleet	program.	In	the	event	the	Company	has	to	provide	a	substantial	number	of	aircraft	and	crew	to	the	Air	Mobility	Command,	its	operations	could	be adversely	impacted.

Available	Information			The	Company	makes	its	annual	report	on	Form	10-K,	quarterly	reports	on	Form	10-Q,	current	reports	on	Form	8-K,	and	amendments	to	reports	filed	or	furnished	pursuant to	Section	13(a)	or	15(d)	of	the	Securities	Exchange	Act	of	1934	available	free	of	charge	under	the	Investor	Relations	page	on	its	website,	www.aa.com,	as	soon	as	reasonably	practicable	after	such reports	are	electronically	filed	with	the	Securities	and	Exchange	Commission.	In	addition,	the	Company's	code	of	ethics	(called	the	Standards	of	Business	Conduct),	which	applies	to	all	employees	of	the Company,	including	the	Company's	Chief	Executive	Officer	(CEO),	Chief	Financial	Officer	(CFO)	and	Controller,	is	posted	under	the	Investor	Relations	page	on	its	website,	www.aa.com.	The Company	intends	to	disclose	any	amendments	to	the	code	of	ethics,	or	waivers	of	the	code	of	ethics	on	behalf	of	the	CEO,	CFO	or	Controller,	under	the	Investor	Relations	page	on	the	Company's website,	www.aa.com.	The	charters	for	the	AMR	Board	of	Directors'	standing	committees	(the	Audit,	Compensation,	Diversity	and	Nominating/Corporate	Governance	Committees),	as	well	as	the	Board of	Directors'	Governance	Policies	(the	Governance	Policies),	are	likewise	available	on	the	Company's	website,	www.aa.com.	Information	on	the	Company's	website	is	not	incorporated	into	or	otherwise made	a	part	of	this	Report.

# ITEM	1A. RISK	FACTORS

Our	ability	to	become	profitable	and	our	ability	to	continue	to	fund	our	obligations	on	an	ongoing	basis	will	depend	on	a	number	of	risk	factors,	many	of	which	are	largely	beyond	our	control.

# As	a	result	of	significant	losses	in	recent	years,	our	financial	condition	has	been	materially	weakened.

We	incurred	significant	losses	in	recent	years,	which	has	materially	weakened	our	financial	condition.	We	lost	$893	million	in	2005,	$781	million	in	2004,	$1.2	billion	in	2003,	$3.5	billion	in 2002	and	$1.8	billion	in	2001.	Although	we	earned	a	profit	of	$456	million	in	2007	and	$189	million	in	2006,	we	lost	$2.1	billion	in	2008	(which	included	a	$1.2	billion	impairment	charge),	and, primarily	as	a	result	of	very	weak	demand	for	air	travel	driven	by	the	severe	downturn	in	the	global	economy,	we	lost	$1.5	billion	in	2009	and	$471	million	in	2010.	Because	of	our	weakened	financial condition,	we	are	vulnerable	both	to	the	impact	of	unexpected	events	(such	as	terrorist	attacks)	and	to	deterioration	of	the	operating	environment	(such	as	a	significant	increase	in	jet	fuel	prices	or significant	increased	competition).

# The	severe	global	economic	downturn	resulted	in	very	weak	demand	for	air	travel	and	lower	investment	asset	returns,	which	has	had	and	could	continue	to	have	a	significant	negative	impact	on us.

Although	demand	for	air	travel	has	improved	as	the	global	economy	continues	to	recover	from	the	recent	severe	downturn,	demand	continues	to	be	weak	by	historical	standards.	We	began	to experience	weakening	demand	late	in	2008,	and	this	weakness	continued	into	2010.	We	reduced	capacity	in	2008,	and	in	the	first	half	of	2009	we	announced	additional	reductions	to	our	capacity	plan.	In connection	with	these	capacity	reductions,	the	Company	incurred	special	charges	related	to	aircraft,	employee	reductions	and	certain	other	charges.	Demand	for	air	travel	may	weaken	if	the	global economy	does	not	continue	to	recover.	No	assurance	can	be	given	that	capacity	adjustments	or	other	steps	we	may	take	in	response	to	changes	in	demand	will	be	successful.	Capacity	reductions	or	other steps	might	result	in	additional	special	charges	in	the	future.	Further,	other	carriers	may	make	capacity	adjustments	which	may	reduce	the	expected	benefits	of	any	steps	we	may	take	to	respond	to changes	in	demand.	Industry-wide	capacity	may	increase	to	the	extent	the	economy	continues	to	recover	from	the	global	recession.	If	industry	capacity	increases,	and	if	consumer	demand	does	not continue	to	pace	those	increases,	we,	and	the	airline	industry	as	a	whole,	could	be	negatively	impacted.

The	economic	downturn	has	resulted	in	broadly	lower	investment	asset	returns	and	values.	Our	pension	assets	suffered	a	material	decrease	in	value	in	2008	related	to	broader	stock	market declines,	which	resulted	in	higher	pension	expense	in	2009	and	2010	and	will	result	in	higher	pension	expense	and	higher	required	contributions	in	future	years.	In	addition,	under	certain	circumstances, we	may	be	required	to	maintain	cash	reserves	under	our	credit	card	processing	agreements	and	to	post	cash	collateral	on	fuel	hedging	contracts.	These	issues	individually	or	collectively	may	have	a material	adverse	impact	on	our	liquidity.	Also,	disruptions	in	the	capital	markets	and	other	sources	of	funding	may	make	it	impossible	for	us	to	obtain	necessary	additional	funding	or	make	the	cost	of that	funding	prohibitive.

# We	face	numerous	challenges	as	we	seek	to	maintain	sufficient	liquidity,	and	we	will	need	to	raise	substantial	additional	funds.	We	may	not	be	able	to	raise	those	funds,	or	to	do	so	on	acceptable terms.

In	the	next	several	years,	we	have	significant	debt,	lease	and	other	obligations,	including	significant	pension	funding	obligations.	We	also	expect	to	make	substantial	capital	expenditures	during that	time.	For	example,	in	2011,	we	will	be	required	to	make	approximately	$2.5	billion	of	principal	payments	on	long-term	debt	and	capital	leases,	and	we	expect	to	spend	approximately	$1.6	billion	on capital	expenditures,	including	aircraft	commitments.	In	addition,	in	2011,	we	are	required	to	contribute	approximately	$520	million	to	our	pension	plans.	Moreover,	the	global	economic	downturn,	rising fuel	prices,	the	potential	obligation	to	post	reserves	under	credit	card	processing	agreements	and	the	potential	obligation	to	post	cash	collateral	on	fuel	hedging	contracts,	among	other	things,	have negatively	impacted,	and	may	in	the	future	negatively	impact,	our	liquidity.	To	meet	our	commitments	and	to	maintain	sufficient	liquidity	as	we	continue	to	implement	our	revenue	enhancement	and	cost reduction	initiatives,	we	will	need	continued	access	to	substantial	additional	funding.	Moreover,	while	we	have	arranged	financings	that,	subject	to	certain	terms	and	conditions	(including,	in	the	case	of financing	arrangements	covering	a	significant

number	of	aircraft,	a	condition	that,	at	the	time	of	borrowing,	we	have	a	certain	amount	of	unrestricted	cash	and	short	term	investments),	cover	all	of	our	aircraft	delivery	commitments	through	2011,	we will	continue	to	need	to	raise	substantial	additional	funds	to	meet	our	commitments.

Our	ability	to	obtain	future	financing	is	limited	by	the	value	of	our	unencumbered	assets.	Almost	all	of	our	aircraft	assets	(including	aircraft	eligible	for	the	benefits	of	Section	1110)	are encumbered	as	a	result	of	financing	activity	in	recent	years.	This	financing	activity	has	significantly	reduced	the	quantity	of	our	assets	which	could	be	used	as	collateral	in	future	financing.	Also,	the market	value	of	our	aircraft	assets	has	declined	in	recent	years,	and	may	continue	to	decline.	In	addition,	many	of	the	other	financing	sources	traditionally	available	to	us	may	be	difficult	to	access,	and	no assurance	can	be	given	as	to	the	amount	of	financing	available	to	us.

Since	the	terrorist	attacks	of	September	11,	2001	(the	"Terrorist	Attacks"),	our	credit	ratings	have	been	lowered	to	significantly	below	investment	grade.	These	reductions	have	increased	our borrowing	costs	and	otherwise	adversely	affected	borrowing	terms,	and	limited	borrowing	options.	Additional	reductions	in	our	credit	ratings	might	have	other	effects	on	us,	such	as	further	increasing borrowing	or	other	costs	or	further	restricting	our	ability	to	raise	funds.

A	number	of	other	factors,	including	our	financial	results	in	recent	years,	our	substantial	indebtedness,	the	difficult	revenue	environment	we	face,	our	reduced	credit	ratings,	recent	historically high	fuel	prices,	and	the	financial	difficulties	experienced	in	the	airline	industry,	adversely	affect	the	availability	and	terms	of	funding	for	us.	In	addition,	the	global	economic	downturn	resulted	in	greater volatility,	less	liquidity,	widening	of	credit	spreads,	and	substantially	more	limited	availability	of	funding.	As	a	result	of	these	and	other	factors,	although	we	believe	we	have	or	can	access	sufficient liquidity	to	fund	our	operations	and	obligations,	there	can	be	no	assurances	to	that	effect.	An	inability	to	obtain	necessary	additional	funding	on	acceptable	terms	would	have	a	material	adverse	impact	on us	and	on	our	ability	to	sustain	our	operations.

# We	could	be	required	to	maintain	reserves	under	our	credit	card	processing	agreements,	which	could	materially	adversely	impact	our	liquidity.

American	has	agreements	with	a	number	of	credit	card	companies	and	processors	to	accept	credit	cards	for	the	sale	of	air	travel	and	other	services.	Under	certain	of	these	agreements,	the	related credit	card	processor	may	hold	back	a	reserve	from	American's	credit	card	receivables	following	the	occurrence	of	certain	events,	including	the	failure	of	American	to	maintain	certain	levels	of	liquidity (as	specified	in	each	agreement).

Under	such	agreements,	the	amount	of	the	reserve	that	may	be	required	generally	is	based	on	the	credit	card	processor's	exposure	to	the	Company	under	the	applicable	agreement	and,	in	the	case of	a	reserve	required	because	of	American's	failure	to	maintain	a	certain	level	of	liquidity,	the	amount	of	such	liquidity.	As	of	December	31,	2010,	the	Company	was	not	required	to	maintain	any	reserve under	such	agreements.	If	circumstances	were	to	occur	that	would	allow	the	credit	card	processor	to	require	the	Company	to	maintain	a	reserve,	the	Company's	liquidity	would	be	negatively	impacted.

# Our	initiatives	to	generate	additional	revenues	and	to	reduce	our	costs	may	not	be	adequate	or	successful.

As	we	seek	to	improve	our	financial	condition,	we	must	continue	to	take	steps	to	generate	additional	revenues	and	to	reduce	our	costs.	Although	we	have	a	number	of	initiatives	underway	to address	our	cost	and	revenue	challenges,	some	of	these	initiatives	involve	changes	to	our	business	which	we	may	be	unable	to	implement.	In	addition,	it	has	become	increasingly	difficult	to	identify	and implement	significant	revenue	enhancement	and	cost	savings	initiatives.	The	adequacy	and	ultimate	success	of	our	initiatives	to	generate	additional	revenues	and	reduce	our	costs	cannot	be	assured. Moreover,	whether	our	initiatives	will	be	adequate	or	successful	depends	in	large	measure	on	factors	beyond	our	control,	notably	the	overall	industry	environment,	including	passenger	demand,	yield	and industry	capacity	growth,	and	fuel	prices.	It	will	be	very	difficult	for	us	to	continue	to	fund	our	obligations	on	an	ongoing	basis,	and	to	return	to	profitability,	if	the	overall	industry	revenue	environment does	not	continue	to	improve	or	if	fuel	prices	were	to	increase	and	persist	for	an	extended	period	at	high	levels.

# We	may	be	adversely	affected	by	increases	in	fuel	prices,	and	we	would	be	adversely	affected	by	disruptions	in	the	supply	of	fuel.

Our	results	are	very	significantly	affected	by	the	cost,	price	volatility	and	the	availability	of	jet	fuel,	which	are	in	turn	affected	by	a	number	of	factors	beyond	our	control.	Due	to	the	competitive nature	of	the	airline	industry,	we	may	not	be	able	to	pass	on	increased	fuel	prices	to	customers	by	increasing	fares.	Although	we	had	some	success	in	raising	fares	and	imposing	fuel	surcharges	in	reaction to	high	fuel	prices,	these	fare	increases	and	surcharges	did	not	keep	pace	with	the	extraordinary	increases	in	the	price	of	fuel	that	occurred	in	2007	and	2008.	Although	fuel	prices	have	abated considerably	from	the	record	high	prices	recorded	in	July	2008,	they	have	steadily	increased	since	the	first	quarter	of	2009	and	remain	high	and	extremely	volatile	by	historical	standards.	Furthermore, reduced	demand	or	increased	fare	competition,	or	both,	and	resulting	lower	revenues	may	offset	any	potential	benefit	of	any	reductions	in	fuel	prices.

While	we	do	not	currently	anticipate	a	significant	reduction	in	fuel	availability,	dependence	on	foreign	imports	of	crude	oil,	limited	refining	capacity	and	the	possibility	of	changes	in	government policy	on	jet	fuel	production,	transportation	and	marketing	make	it	impossible	to	predict	the	future	availability	of	jet	fuel.	If	there	are	additional	outbreaks	of	hostilities	or	other	conflicts	in	oil	producing areas	or	elsewhere,	or	a	reduction	in	refining	capacity	(due	to	natural	disasters	or	weather	events,	for	example),	or	governmental	limits	on	the	production	or	sale	of	jet	fuel	(including	as	a	consequence	of increased	environmental	regulation),	there	could	be	a	reduction	in	the	supply	of	jet	fuel	and	significant	increases	in	the	cost	of	jet	fuel.	Major	reductions	in	the	availability	of	jet	fuel	or	significant increases	in	its	cost	would	have	a	material	adverse	impact	on	us.

We	have	a	large	number	of	older	aircraft	in	our	fleet,	and	these	aircraft	are	not	as	fuel	efficient	as	more	recent	models	of	aircraft.	We	believe	it	is	imperative	that	we	continue	to	execute	our	fleet renewal	plans.	However,	there	will	be	significant	delays	in	the	deliveries	of	the	Boeing	787-9	aircraft	we	currently	have	on	order.

Our	aviation	fuel	purchase	contracts	generally	do	not	provide	meaningful	price	protection.	While	we	seek	to	manage	the	risk	of	fuel	price	increases	by	using	derivative	contracts,	there	can	be	no assurance	that,	at	any	given	time,	we	will	have	derivatives	in	place	to	provide	any	particular	level	of	protection	against	increased	fuel	costs.	In	addition,	a	deterioration	of	our	financial	position	could negatively	affect	our	ability	to	enter	into	derivative	contracts	in	the	future.	Moreover,	declines	in	fuel	prices	below	the	levels	established	in	derivative	contracts	may	require	us	to	post	material	amounts	of cash	collateral	to	secure	the	loss	positions	on	such	contracts,	and	if	such	contracts	close	when	fuel	prices	are	below	the	applicable	levels,	we	would	be	required	to	make	payments	to	close	such	contracts; these	payments	would	be	treated	as	additional	fuel	expense.

# We	could	be	materially	adversely	affected	if	we	are	unable	to	resolve	favorably	our	pending	litigation	with	certain	Global	Distribution	Systems	(GDSs)	and	business	discussions	with	certain	on- line	travel	agents.

We	are	currently	involved	in	litigation	with	certain	GDSs	and	in	business	discussions	with	certain	on-line	travel	agents.	An	adverse	outcome	in	any	of	these	matters	could	have	a	material	adverse effect	on	our	level	of	bookings,	business	and	results	of	operations.	See	"Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations"	—	GDS	Discussion."	In	addition,	our contracts	with	the	GDSs	operated	by	Sabre,	Travelport	and	Amadeus	expire	in	2011.	We	could	be	adversely	affected	if	we	are	unable	to	renegotiate	contract	renewals	on	acceptable	terms.

# Our	indebtedness	and	other	obligations	are	substantial	and	could	adversely	affect	our	business	and	liquidity.

We	have	and	will	continue	to	have	significant	amounts	of	indebtedness,	obligations	to	make	future	payments	on	aircraft	equipment	and	property	leases,	and	obligations	under	aircraft	purchase agreements,	as	well	as	a	high	proportion	of	debt	to	equity	capital.	We	expect	to	incur	substantial	additional	debt	(including	secured	debt)	and

lease	obligations	in	the	future.	We	also	have	substantial	pension	funding	obligations.	Our	substantial	indebtedness	and	other	obligations	have	important	consequences.	For	example,	they:

•	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	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	and	catastrophic	external	events;	and

•	limit	our	ability	to	withstand	competitive	pressures	and	reduce	our	flexibility	in	responding	to	changing	business	and	economic	conditions.

# Our	business	is	affected	by	many	changing	economic	and	other	conditions	beyond	our	control,	and	our	results	of	operations	tend	to	be	volatile	and	fluctuate	due	to	seasonality.

Our	business	and	our	results	of	operations	are	affected	by	many	changing	economic	and	other	conditions	beyond	our	control,	including,	among	others:

•	actual	or	potential	changes	in	international,	national,	regional	and	local	economic,	business	and	financial	conditions,	including	recession,	inflation,	higher	interest	rates,	wars,	terrorist	attacks or	political	instability;

•	changes	in	consumer	preferences,	perceptions,	spending	patterns	or	demographic	trends;

•	changes	in	the	competitive	environment	due	to	industry	consolidation,	changes	in	airline	alliance	affiliations	and	other	factors;

•	actual	or	potential	disruptions	to	the	air	traffic	control	systems;

•	increases	in	costs	of	safety,	security	and	environmental	measures;

•	outbreaks	of	diseases	that	affect	travel	behavior;	and

•	weather	and	natural	disasters.

As	a	result,	our	results	of	operations	tend	to	be	volatile	and	subject	to	rapid	and	unexpected	change.	In	addition,	due	to	generally	greater	demand	for	air	travel	during	the	summer,	our	revenues	in the	second	and	third	quarters	of	the	year	tend	to	be	stronger	than	revenues	in	the	first	and	fourth	quarters	of	the	year.

# The	airline	industry	is	fiercely	competitive	and	may	undergo	further	consolidation	or	changes	in	industry	alliances,	and	we	are	subject	to	increasing	competition.

Service	over	almost	all	of	our	routes	is	highly	competitive	and	fares	remain	at	low	levels	by	historical	standards.	We	face	vigorous,	and,	in	some	cases,	increasing,	competition	from	major domestic	airlines,	national,	regional,	all-cargo	and	charter	carriers,	foreign	air	carriers,	low-cost	carriers	and,	particularly	on	shorter	segments,	ground	and	rail	transportation.	We	also	face	increasing	and significant	competition	from	marketing/operational	alliances	formed	by	our	competitors.	Competition	with	foreign	air	carriers	and	with	such	marketing/operational	alliances	has	been	increasing	in	recent years	in	part	due	to	the	adoption	of	liberalized	open	skies	aviation	agreements	between	the	United	States	and	an	increasing	number	of	countries	around	the	world.	Moreover,	the	percentage	of	routes	on which	we	compete	with	carriers	having	substantially	lower	operating	costs	than	ours	has	grown	significantly	over	time,	and	we	now	compete	with	low-cost	carriers	over	a	very	large	part	of	our	network. Our	ability	to	compete	effectively	depends	in	part	on	our	ability	to	maintain	a	competitive	cost	structure.	If	we	cannot	do	so,	then	our	business,	financial	condition	and	operating	results	would	be adversely	affected.

Certain	airline	alliances	have	been,	or	may	in	the	future	be,	granted	immunity	from	antitrust	regulations	by	governmental	authorities	for	specific	areas	of	cooperation,	such	as	joint	pricing decisions.	To	the	extent	alliances	formed	by	the	Company's	competitors	can	undertake	activities	that	are	not	available	to	the	Company,	the	Company's	ability	to	effectively	compete	may	be	hindered.

Pricing	decisions	are	significantly	affected	by	competition	from	other	airlines.	Fare	discounting	by	competitors	historically	has	had	a	negative	effect	on	our	financial	results	because	we	must generally	match	competitors'	fares,	since	failing	to	match	would	result	in	even	less	revenue.	We	have	faced	increased	competition	from	carriers	with	simplified	fare	structures,	which	are	generally preferred	by	travelers.	Any	fare	reduction	or	fare	simplification	initiative	may	not	be	offset	by	increases	in	passenger	traffic,	reduction	in	cost	or	changes	in	the	mix	of	traffic	that	would	improve	yields. Moreover,	decisions	by	our	competitors	that	increase	or	reduce	overall	industry	capacity,	or	capacity	dedicated	to	a	particular	domestic	or	foreign	region,	market	or	route,	can	have	a	material	impact	on related	fare	levels.

There	have	been	numerous	mergers	and	acquisitions	within	the	airline	industry	and	numerous	changes	in	industry	alliances.	Southwest	Airlines	and	AirTran	Airways	announced	during	2010 plans	to	merge,	and	the	recent	mergers	of	United	Air	Lines,	Inc.	with	Continental	Airlines,	Inc.	and	Delta	Airlines	with	Northwest	Airlines	Corporation	have	resulted	in	the	formation	of	larger	competitors than	the	Company	with	more	extensive	networks	than	the	Company.	We	are	seeking	to	address	these	competitive	challenges	with	our	cornerstone	market	and	alliance	strategies;	however,	there	can	be	no assurances	as	to	the	level	of	success	of	these	strategies.

In	the	future,	there	may	be	additional	mergers	and	acquisitions,	and	changes	in	airline	alliances,	including	those	in	which	the	Company	may	participate	and	those	that	may	be	undertaken	by others.	Any	airline	industry	consolidation	or	changes	in	airline	alliances,	including	oneworld,	could	substantially	alter	the	competitive	landscape	and	result	in	changes	in	our	corporate	or	business	strategy. We	regularly	assess	and	explore	the	potential	for	consolidation	in	our	industry	and	changes	in	airline	alliances,	our	strategic	position	and	ways	to	enhance	our	competitiveness,	including	the	possibilities for	our	participation	in	merger	activity.	Consolidation	involving	other	participants	in	our	industry	could	result	in	the	formation	of	one	or	more	airlines	with	greater	financial	resources,	more	extensive networks,	and/or	lower	cost	structures	than	exist	currently,	which	could	have	a	material	adverse	effect	on	our	competitive	position	and	adversely	affect	our	business	and	results	of	operations.	For	similar reasons,	changes	in	airline	alliances	could	have	a	similar	impact	on	us.

In	2008,	we	entered	into	a	joint	business	agreement	and	related	marketing	arrangements	with	British	Airways	and	Iberia,	providing	for	commercial	cooperation	on	flights	between	North	America and	most	countries	in	Europe,	pooling	and	sharing	of	certain	revenues	and	costs,	expanded	codesharing,	enhanced	frequent	flyer	program	reciprocity,	and	cooperation	in	other	areas.	In	July	2010, American	obtained	clearance	from	the	European	Commission	("EC")	and	approval	by	the	Department	of	Transportation	("DOT")	for	antitrust	immunity	("ATI")	for	its	planned	cooperation	with	British Airways,	Iberia,	Finnair	and	Royal	Jordanian.	Regulatory	conditions	for	ATI	approval	for	the	British	Airways,	Iberia,	Finnair	and	Royal	Jordanian	cooperative	agreement	include	a	collective	obligation of	the	Company,	British	Airways	and	Iberia	to	lease	to	other	carriers	up	to	seven	takeoff	and	landing	slot	pairs	at	London	Heathrow	airport	and	up	to	three	John	F.	Kennedy	airport	operational	authorities, depending	on	market	conditions.	American	began	implementation	of	the	JBA	with	British	Airways	and	Iberia	and	expanded	cooperation	with	Finnair	and	Royal	Jordanian	in	October	2010.	No	assurances can	be	given	as	to	any	arrangements	that	may	ultimately	be	implemented	or	any	benefits	that	we	may	derive	from	such	arrangements.

In	February	2010,	American	and	JAL	announced	the	decision	to	strengthen	their	relationship.	The	carriers,	both	members	of	the	oneworld	alliance,	jointly	applied	to	DOT	for	ATI	on	certain routes,	and	jointly	notified	the	Ministry	of	Land	Infrastructure,	Transport	and	Tourism	of	Japan	of	the	proposed	cooperation.	As	a	part	of	the	application,	American	and	JAL	entered	into	a	joint	business agreement	which	will	enhance	their	scope	of	cooperation	on	routes	between	North	America	and	Asia	through	adjustments	to	their	respective	networks,	flight	schedules,	and	other	business	activities.	This, in	turn,	will	allow	both	carriers	to	better	complement	each	other's	operations	and	to	develop	and	offer	competitive	products	and	quality	service	to	their	customers.	In	November	2010,	American	obtained approval	by	DOT	for	ATI	for	its	planned	cooperation	with	JAL.	Implementation	of	the	JBA	with	JAL	is	subject	to	successful	negotiation	of	certain	detailed	financial	and	commercial	arrangements	and other	approvals.	American	expects	to	begin	implementing	the	JBA	with	JAL	in	2011.	No	assurances	can	be	given	as	to	any	arrangements	that	may	ultimately	be	implemented	or	any	benefits	that	we	may derive	from	such	arrangements.

Any	plans	to	enter	into	or	expand	ATI	joint	business	agreements	or	similar	arrangements,	including	implementation	of	the	joint	business	agreements	referred	to	above,	are	subject	to	various conditions,	including	various	U.S.	and	foreign	regulatory	approvals,	successful	negotiation	of	certain	detailed	financial	and	commercial

arrangements,	and	other	approvals.	Governmental	entities	from	which	such	approvals	must	be	obtained,	including	DOT	and	foreign	governmental	authorities	or	entities	such	as	the	EU,	have	imposed	or may	impose	requirements	or	limitations	as	a	condition	of	granting	any	such	approvals,	such	as	requiring	divestiture	of	routes,	gates,	slots	or	other	assets.	No	assurances	can	be	given	as	to	any arrangements	that	may	ultimately	be	implemented	or	any	benefits	we	may	derive	from	such	arrangements.

# We	compete	with	reorganized	carriers,	which	results	in	competitive	disadvantages	for	us.

We	must	compete	with	air	carriers	that	have	reorganized	under	the	protection	of	Chapter	11	of	the	Bankruptcy	Code	in	recent	years,	including	United,	Delta	and	U.S.	Airways.	It	is	possible	that other	significant	competitors	may	seek	to	reorganize	in	or	out	of	Chapter	11.

Successful	reorganizations	by	other	carriers	present	us	with	competitors	with	significantly	lower	operating	costs	and	stronger	financial	positions	derived	from	renegotiated	labor,	supply,	and financing	contracts.	These	competitive	pressures	may	limit	our	ability	to	adequately	price	our	services,	may	require	us	to	further	reduce	our	operating	costs,	and	could	have	a	material	adverse	impact	on us.

# Fares	are	at	low	levels	and	our	reduced	pricing	power	adversely	affects	our	ability	to	achieve	adequate	pricing,	especially	with	respect	to	business	travel.

Our	passenger	yield	(on	an	inflation-adjusted	basis)	remains	low	by	historical	standards.	We	believe	that	this	is	due	in	large	part	to	a	corresponding	decline	in	our	pricing	power.	Our	reduced pricing	power	is	the	product	of	several	factors	including:	greater	cost	sensitivity	on	the	part	of	travelers	(particularly	business	travelers);	pricing	transparency	resulting	from	the	use	of	the	internet;	greater competition	from	low-cost	carriers	and	from	carriers	that	have	reorganized	in	recent	years	under	the	protection	of	Chapter	11;	other	carriers	being	better	hedged	against	rising	fuel	costs	and	able	to	better absorb	high	jet	fuel	prices;	fare	simplification	efforts	by	certain	carriers;	and	the	economy.	We	believe	that	this	pricing	environment	could	persist	indefinitely.

# Our	corporate	or	business	strategy	may	change.

In	light	of	the	rapid	changes	in	the	airline	industry,	we	evaluate	our	assets	on	an	ongoing	basis	with	a	view	to	maximizing	their	value	to	us	and	determining	which	are	core	to	our	operations.	We also	regularly	evaluate	our	corporate	and	business	strategies,	and	they	are	influenced	by	factors	beyond	our	control,	including	changes	in	the	competitive	landscape	we	face.	Our	corporate	and	business strategies	are,	therefore,	subject	to	change.

AMR	is	considering,	and	may	engage	in	discussions	with	third	parties	regarding,	the	divestiture	of	AMR	Eagle	and	other	separation	transactions,	and	may	decide	to	proceed	with	one	or	more such	transactions.	There	can	be	no	assurance	that	AMR	will	complete	any	separation	transactions	or	that	any	announced	plans	or	transactions	will	be	consummated,	and	no	prediction	can	be	made	as	to the	impact	of	any	such	transactions	on	stockholder	value	or	on	us.	See	"Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations"	—	Recent	Events."

Our	business	is	subject	to	extensive	government	regulation,	which	can	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.	In	particular,	recently	enacted	and	possible	future	environmental	regulations	may	adversely	affect	our	business	and	financial	results.

Airlines	are	subject	to	extensive	domestic	and	international	regulatory	requirements.	Many	of	these	requirements	result	in	significant	costs.	For	example,	the	FAA	from	time	to	time	issues directives	and	other	regulations	relating	to	the	maintenance	and	operation	of	aircraft.	In	addition,	the	FAA	has	recently	proposed	regulations	that	would	affect	crewmember	hiring	and	crewmember	rest and	duty	requirements.	It	is	unknown	at	this	time	whether,	and	in	what	form,	these	regulations	may	be	promulgated.	However,	if	these	regulations	were	promulgated	in	their	current	form,	we	believe	they could	have	a	material	adverse	impact	on	the	Company.	In	addition,	as	a	result	of	heightened	levels	of	concern	regarding	data	privacy,	the	Company	is	subject	to	an	increasing	number	of	domestic	and foreign	laws	regarding	the	privacy	and	security	of	passenger	and	employee	data.

Compliance	with	regulatory	requirements	drives	significant	expenditures	and	has	in	the	past,	and	may	in	the	future,	cause	disruptions	to	our	operations.	In	addition,	the	ability	of	U.S.	carriers	to operate	international	routes	is	subject	to	change	because	the	applicable	arrangements	between	the	U.S.	and	foreign	governments	may	be	amended	from	time	to	time	(such	as	through	the	adoption	of	an open	skies	policy),	or	because	appropriate	slots	or	facilities	are	not	made	available.	Any	such	change	could	adversely	impact	the	value	of	our	international	route	authorities	and	related	assets.

Moreover,	additional	laws,	regulations,	taxes	and	airport	rates	and	charges	have	been	enacted	from	time	to	time	that	have	significantly	increased	the	costs	of	airline	operations,	reduced	the demand	for	air	travel	or	restricted	the	way	we	can	conduct	our	business.	For	example,	the	ATSA,	which	became	law	in	2001,	mandated	the	federalization	of	certain	airport	security	procedures	and resulted	in	the	imposition	of	additional	security	requirements	on	airlines.

The	results	of	our	operations,	demand	for	air	travel,	and	the	manner	in	which	we	conduct	our	business	each	may	be	affected	by	changes	in	law	and	future	actions	taken	by	governmental	agencies, including:

•	changes	in	law	which	affect	the	services	that	can	be	offered	by	airlines	in	particular	markets	and	at	particular	airports,	or	the	types	of	fees	that	can	be	charged	to	passengers;

•	the	granting	and	timing	of	certain	governmental	approvals	(including	foreign	government	approvals)	needed	for	codesharing	alliances	and	other	arrangements	with	other	airlines;

•	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	(for	example,	"passenger	bill	of	rights");

•	restrictions	on	airport	operations,	such	as	restrictions	on	the	use	of	takeoff	and	landing	slots	at	airports	or	the	auction	or	reallocation	of	slot	rights	currently	or	previously	held	by	us;	or •	the	adoption	of	more	restrictive	locally	imposed	noise	restrictions.

In	addition,	the	U.S.	air	traffic	control	(ATC)	system,	which	is	operated	by	the	FAA,	is	not	successfully	managing	the	growing	demand	for	U.S.	air	travel.	U.S.	airlines	carry	about	750	million passengers	a	year	and	are	forecast	to	accommodate	a	billion	passengers	annually	by	2021.	Air	traffic	controllers	rely	on	outdated	technologies	that	routinely	overwhelm	the	system	and	compel	airlines	to fly	inefficient,	indirect	routes.	We	support	a	common	sense	approach	to	ATC	modernization	that	would	allocate	costs	to	all	ATC	system	users	in	proportion	to	the	services	they	consume.	Reauthorization of	legislation	that	funds	the	FAA,	which	includes	proposals	regarding	upgrades	to	the	ATC	system,	is	under	consideration	in	Congress.	It	is	uncertain	whether	such	legislation	will	become	law.	In	the meantime,	FAA	funding	continues	under	temporary	periodic	extensions.

Many	aspects	of	our	operations	are	subject	to	increasingly	stringent	environmental	regulations.	Concerns	about	climate	change	and	greenhouse	gas	emissions,	in	particular,	may	result	in	the imposition	of	additional	legislation	or	regulation.	The	EU	has	adopted	a	directive	under	which	each	EU	member	state	is	required	to	extend	the	existing	EU	emissions	trading	scheme	(ETS)	to	aviation. This	will	require	the	Company	to	annually	submit	emission	allowances	in	order	to	operate	flights	to	and	from	EU	member	states	in	January	2012	and	thereafter,	including	flights	between	the	U.S.	and	EU member	states.	In	December	2009,	the	ATA,	joined	by	American,	Continental	and	United,	filed	a	legal	action	in	the	United	Kingdom	challenging	the	implementation	of	the	EU	ETS	as	applied	to aviation.	We	believe	that	non-EU	governments	are	also	likely	to	consider	formal	challenges	to	the	EU	ETS	as	applied	to	aviation.	It	is	not	clear	whether	the	EU	ETS	will	withstand	such	challenges. However,	unless	interim	relief	is	granted,	we	will	be	required	to	continue	to	comply	with	the	EU	ETS	during	the	pendency	of	the	legal	challenges.	Although	the	cost	of	compliance	with	the	EU	ETS	is difficult	to	predict	given	the	uncertainty	of	a	number	of	variables,	such	as	the	number	and	price	of	emission	allowances	we	may	be	required	to	purchase,	such	costs	could	be	significant.

Other	legislative	or	regulatory	actions	addressing	climate	change	and	emissions	from	aviation	that	may	be	taken	in	the	future	by	the	U.S.,	state	or	foreign	governments	or	through	international treaties	may	adversely	affect	our	business	and	financial	results.	The	United	Nations'	International	Civil	Aviation	Organization	("ICAO"),	for

example,	recently	adopted	a	resolution	identifying	certain	fuel	efficiency	goals	and	emission	trading	system	principles	for	international	aviation,	which	may	provide	a	basis	for	such	future	legislative	or regulatory	action.	Climate	change	legislation	was	previously	introduced	in	the	U.S.	Congress;	such	legislation	could	be	re-introduced	in	the	future	by	the	U.S.	Congress	and	state	legislatures,	and	could contain	provisions	affecting	the	aviation	industry.	In	addition,	the	EPA	could	seek	to	regulate	greenhouse	gas	emissions	from	aircraft.	It	is	currently	unknown	how	climate	change	legislation	or	regulation, if	enacted,	would	specifically	apply	to	the	aviation	industry.	However,	the	impact	on	us	of	any	climate	change	legislation	or	regulation	is	likely	to	be	adverse	and	related	costs	of	compliance	could	be significant.	Such	legislation	or	regulation	could	result	in,	among	other	things,	increased	fuel	costs,	carbon	taxes	or	fees,	the	imposition	of	requirements	to	purchase	emission	offsets	or	credits,	increased aircraft	and	equipment	costs,	and	restrictions	on	the	growth	of	airline	operations.	We	continue	to	evaluate	ongoing	climate	change	developments	at	the	international,	federal	and	state	levels	and	assess	the potential	associated	impacts	on	our	business	and	operations.

# We	could	be	adversely	affected	by	conflicts	overseas	or	terrorist	attacks.

Actual	or	threatened	U.S.	military	involvement	in	overseas	operations	has,	on	occasion,	had	an	adverse	impact	on	our	business,	financial	position	(including	access	to	capital	markets)	and	results of	operations,	and	on	the	airline	industry	in	general.	The	continuing	conflicts	in	Iraq	and	Afghanistan,	or	other	conflicts	or	events	in	the	Middle	East	or	elsewhere,	may	result	in	similar	adverse	impacts.

The	Terrorist	Attacks	had	a	material	adverse	impact	on	us.	The	occurrence	of	another	terrorist	attack	(whether	domestic	or	international	and	whether	against	us	or	another	entity)	could	again	have a	material	adverse	impact	on	us.

# Our	international	operations	are	subject	to	economic	and	political	instability	and	could	be	adversely	affected	by	numerous	events,	circumstances	or	government	actions	beyond	our	control.

Our	current	international	activities	and	prospects	could	be	adversely	affected	by	factors	such	as	reversals	or	delays	in	the	opening	of	foreign	markets,	exchange	controls,	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.

For	example,	the	open	skies	air	services	agreement	between	the	U.S.	and	the	EU	which	took	effect	in	March	2008	provides	airlines	from	the	U.S.	and	EU	member	states	open	access	to	each other's	markets,	with	freedom	of	pricing	and	unlimited	rights	to	fly	beyond	the	U.S.	and	any	airport	in	the	EU	including	London's	Heathrow	Airport.	The	agreement	has	resulted	in	American	facing increased	competition	in	these	markets,	including	Heathrow.	In	addition,	an	open	skies	air	services	agreement	between	the	U.S.	and	Japan	that	provides	airlines	from	the	U.S.	and	Japan	open	access	to each	other's	markets	took	effect	in	November	2010.

# We	could	be	adversely	affected	by	an	outbreak	of	a	disease	that	affects	travel	behavior.

In	the	second	quarter	of	2009,	there	was	an	outbreak	of	the	H1N1	virus	which	had	an	adverse	impact	throughout	our	network	but	primarily	on	our	operations	to	and	from	Mexico.	In	2003,	there was	an	outbreak	of	Severe	Acute	Respiratory	Syndrome	(SARS),	which	had	an	adverse	impact	primarily	on	our	Asia	operations.	In	addition,	in	the	past	there	have	been	concerns	about	outbreaks	or potential	outbreaks	of	other	diseases,	such	as	avian	flu.	Any	outbreak	of	a	disease	(including	an	additional	outbreak	of	the	H1N1	virus)	that	affects	travel	behavior	could	have	a	material	adverse	impact on	us.	In	addition,	outbreaks	of	disease	could	result	in	quarantines	of	our	personnel	or	an	inability	to	access	facilities	or	our	aircraft,	which	could	adversely	affect	our	operations.

# Our	labor	costs	are	higher	than	those	of	our	competitors.

Wages,	salaries	and	benefits	constitute	a	significant	percentage	of	our	total	operating	expenses.	In	2010,	they	constituted	approximately	31	percent	of	our	total	operating	expenses.	All	of	the major	hub-and-spoke	carriers	with	whom	American	competes	have	achieved	significant	labor	cost	savings	through	or	outside	of	bankruptcy	proceedings.	We	believe	American's	labor	costs	are	higher than	those	of	its	primary	competitors,	and	it	is	unclear

how	long	this	labor	cost	disadvantage	may	persist.	These	higher	labor	costs	may	adversely	affect	our	ability	to	achieve	and	sustain	profitability	while	competing	with	other	airlines	with	lower	labor	costs. Additionally,	we	cannot	predict	the	outcome	of	our	ongoing	negotiations	with	our	unionized	work	groups.	Significant	increases	in	pay	and	benefits	resulting	from	changes	to	our	collective	bargaining agreements	could	have	a	material	adverse	effect	on	us.

# We	could	be	adversely	affected	if	we	are	unable	to	have	satisfactory	relations	with	any	unionized	or	other	employee	work	group.

Our	business	is	labor	intensive.	To	the	extent	that	we	are	unable	to	have	satisfactory	relations	with	any	unionized	or	other	employee	work	group,	our	operations	and	our	ability	to	execute	our strategic	plans	could	be	adversely	affected.	In	addition,	any	disruption	by	an	employee	work	group	(e.g.,	sick-out,	slowdown,	full	or	partial	strike,	or	other	job	action)	may	materially	adversely	affect	our operations	and	impair	our	financial	performance.

In	April	2003,	American	reached	agreements	(the	"Labor	Agreements")	with	each	of	its	three	major	unions,	the	APA,	the	TWU)	and	the	APFA.	The	Labor	Agreements	substantially	moderated the	labor	costs	associated	with	the	employees	represented	by	the	unions.	In	conjunction	with	the	Labor	Agreements,	American	also	implemented	various	changes	in	the	pay	plans	and	benefits	for	non- unionized	personnel.	The	Labor	Agreements	became	amendable	in	2008	(although	the	parties	agreed	that	they	could	begin	the	negotiations	process	as	early	as	2006).	American	has	been	in	negotiations with	the	APA	since	September	20	2006,	the	TWU	since	May	11,	2006	(with	respect	to	Dispatchers),	and	since	November	7,	2007	(with	respect	to	the	other	six	groups	at	American	represented	by	the TWU),	and	with	the	APFA	since	June	2008	(expedited	negotiations)	and	September	10,	2008	(standard	negotiations),	to	amend	their	respective	Labor	Agreements.	At	this	time,	all	such	negotiations	are mediated	negotiations	under	the	auspices	of	the	National	Mediation	Board	("NMB").	NMB	mediation	with	the	APA	began	on	May	6,	2008,	with	the	TWU	(with	respect	to	the	Dispatchers)	on October	28,	2008,	with	the	other	TWU	groups	on	various	dates	in	2009,	and	with	the	APFA	on	January	22,	2009.	These	negotiations	are	governed	by	the	Railway	Labor	Act	("RLA"),	which	prescribes	no set	timetable	for	the	negotiations	and	mediation	process.	The	negotiations	and	mediation	process	in	the	airline	industry	typically	is	slow	and	sometimes	contentious.	The	RLA	prohibits	the	parties	from engaging	in	self-help	prior	to	the	exhaustion	of	the	RLA's	bargaining	process.	That	process	is	not	exhausted	until	the	NMB	has	declared	the	parties	are	at	a	bargaining	impasse,	one	or	both	parties	has declined	the	NMB's	proffer	of	binding	arbitration,	and	a	30-day	cooling	off	period	has	expired	without	the	appointment	of	a	Presidential	Emergency	Board.	If	we	are	unable	to	reach	agreement	with	any of	our	unionized	work	groups,	and	the	RLA's	bargaining	process	has	been	fully	exhausted,	we	may	be	subject	to	lawful	strikes,	work	stoppages	or	other	job	actions.

In	May,	2010,	American	negotiated	tentative	agreements	with	several	workgroups	within	the	TWU,	including	the	Maintenance	Control	Technician	group,	the	Material	Logistics	Specialists	group and	the	Mechanic	and	Related	group.	Agreements	with	the	TWU	groups	are	subject	to	ratification	by	the	relevant	membership	of	TWU,	and,	while	the	Maintenance	Control	Technician	group	ratified their	agreement,	the	Material	Logistics	Specialists	group	and	the	Mechanic	and	Related	group	tentative	agreements	were	not	ratified.

Mediated	negotiations	with	the	APA,	with	the	APFA	and	with	the	TWU	with	respect	to	groups	other	than	the	Maintenance	Control	Technician	group	continue.	In	addition,	the	APA	has	filed	a number	of	grievances,	lawsuits	and	complaints,	most	of	which	American	believes	are	part	of	a	corporate	campaign	related	to	the	union's	labor	agreement	negotiations	with	American.	While	American	is vigorously	defending	these	disputes,	unfavorable	outcomes	in	one	or	more	of	them	could	require	American	to	incur	additional	costs,	change	the	way	it	conducts	some	parts	of	its	business,	or	otherwise adversely	affect	us.

# Increases	in	insurance	costs	or	reductions	in	coverage	could	have	an	adverse	impact	on	us.

We	carry	insurance	for	public	liability,	passenger	liability,	property	damage	and	all-risk	coverage	for	damage	to	our	aircraft.	As	a	result	of	the	Terrorist	Attacks,	aviation	insurers	significantly reduced	the	amount	of	insurance	coverage	available	to	commercial	air	carriers	for	liability	to	persons	other	than	employees	or	passengers	for	claims	resulting	from	acts	of	terrorism,	war	or	similar	events (war-risk	coverage).	At	the	same	time,	these	insurers	significantly	increased	the	premiums	for	aviation	insurance	in	general.	While	the	price	of	commercial	insurance	has	declined	since	the	period immediately	after	the	Terrorist	Attacks,	in	the	event	commercial	insurance	carriers	further

reduce	the	amount	of	insurance	coverage	available	to	us,	or	significantly	increase	its	cost,	we	would	be	adversely	affected.

The	U.S.	government	has	agreed	to	provide	commercial	war-risk	insurance	for	U.S.	based	airlines	through	September	30,	2011,	covering	losses	to	employees,	passengers,	third	parties	and aircraft.	If	the	U.S.	government	were	to	cease	providing	such	insurance	in	whole	or	in	part,	it	is	likely	that	we	could	obtain	comparable	coverage	in	the	commercial	market,	but	we	could	incur substantially	higher	premiums	and	more	restrictive	terms,	if	such	coverage	is	available	at	all.	If	we	are	unable	to	obtain	adequate	war-risk	coverage	at	commercially	reasonable	rates,	we	would	be adversely	affected.

# We	may	be	unable	to	retain	key	management	personnel.

We	are	dependent	on	the	experience	and	industry	knowledge	of	our	key	management	employees,	and	there	can	be	no	assurance	that	we	will	be	able	to	retain	them.	Any	inability	to	retain	our	key management	employees,	or	attract	and	retain	additional	qualified	management	employees,	could	have	a	negative	impact	on	us.

# We	are	increasingly	dependent	on	technology	and	could	be	adversely	affected	by	a	failure	or	disruption	of	our	computer,	communications	or	other	technology	systems.

We	are	heavily	and	increasingly	dependent	on	technology	to	operate	our	business,	reduce	our	costs	and	enhance	customer	service.	The	computer	and	communications	systems	on	which	we	rely could	be	disrupted	due	to	various	events,	some	of	which	are	beyond	our	control,	including	natural	disasters,	power	failures,	terrorist	attacks,	equipment	failures,	system	implementation	failures,	software failures	and	computer	viruses	and	hackers.	We	have	taken	certain	steps	to	help	reduce	the	risk	of	some	(but	not	all)	of	these	potential	disruptions.	There	can	be	no	assurance,	however,	that	the	measures we	have	taken	are	adequate	to	prevent	or	remedy	disruptions	or	failures	of	these	systems.	Any	substantial	or	repeated	failure	of	these	systems	could	impact	our	operations	and	customer	service,	result	in the	loss	of	important	data,	loss	of	revenues,	and	increased	costs,	and	generally	harm	our	business.	Moreover,	a	failure	of	certain	of	our	vital	systems	could	limit	our	ability	to	operate	our	flights	for	an extended	period	of	time,	which	would	have	a	material	adverse	impact	on	our	operations	and	our	business.	In	addition,	we	will	need	to	continue	to	make	significant	investments	in	technology	to	pursue initiatives	to	reduce	costs	and	enhance	customer	service.	If	we	are	unable	to	make	these	investments,	our	business	could	be	negatively	impacted.

# We	are	at	risk	of	losses	and	adverse	publicity	which	might	result	from	an	accident	involving	any	of	our	aircraft.

If	one	of	our	aircraft	were	to	be	involved	in	an	accident,	we	could	be	exposed	to	significant	tort	liability.	The	insurance	we	carry	to	cover	damages	arising	from	any	future	accidents	may	be inadequate.	In	the	event	that	our	insurance	is	not	adequate,	we	may	be	forced	to	bear	substantial	losses	from	an	accident.	In	addition,	any	accident	involving	an	aircraft	operated	by	us	could	adversely affect	the	public's	perception	of	us.

# Interruptions	or	disruptions	in	service	at	one	or	more	of	our	primary	market	airports	could	have	an	adverse	impact	on	us.

Our	business	is	heavily	dependent	on	our	operations	at	our	primary	market	airports	in	Dallas/Ft.	Worth,	Chicago,	Miami,	New	York	City	and	Los	Angeles.	Each	of	these	operations	includes flights	that	gather	and	distribute	traffic	from	markets	in	the	geographic	region	around	the	primary	market	to	other	major	cities.	A	significant	interruption	or	disruption	in	service	at	one	or	more	of	our primary	markets	could	adversely	impact	our	operations.

# The	airline	industry	is	heavily	taxed.

The	airline	industry	is	subject	to	extensive	government	fees	and	taxation	that	negatively	impact	our	revenue.	The	U.S.	airline	industry	is	one	of	the	most	heavily	taxed	of	all	industries.	These	fees and	taxes	have	grown	significantly	in	the	past	decade	for	domestic	flights	and	various	U.S.	fees	and	taxes	also	are	assessed	on	international	flights.	In	addition,	the	governments	of	foreign	countries	in which	we	operate	impose	on	U.S.	airlines,	including	us,	various	fees	and	taxes,	and	these	assessments	have	been	increasing	in	number	and	amount	in	recent	years.	Certain	of

these	fees	and	taxes	must	be	included	in	the	fares	we	advertise	or	quote	to	our	customers.	Due	to	the	competitive	revenue	environment,	many	increases	in	these	fees	and	taxes	have	been	absorbed	by	the airline	industry	rather	than	being	passed	on	to	the	passenger.	Further	increases	in	fees	and	taxes	may	reduce	demand	for	air	travel,	and	thus	our	revenues.

# ITEM	1B. UNRESOLVED	STAFF	COMMENTS

The	Company	had	no	unresolved	Securities	and	Exchange	Commission	staff	comments	at	December	31,	2010.

# ITEM	2. PROPERTIES

# Flight	Equipment	—	Operating

Owned	and	leased	aircraft	operated	by	the	Company	at	December	31,	2010	included:

| Equipment	Type | Seating<br>Capacity | Owned | Capital<br>Leased | Operating<br>Leased | Total | Average<br>Age	(Years) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| American\tAirlines\tAircraft |  |  |  |  |  |  |
| Boeing\t737\t-\t800 | 156 | 86 | — | 66 | 152 | 6 |
| Boeing\t757\t-\t200 | 187 | 84 | 9 | 31 | 124 | 16 |
| Boeing\t767\t-\t200\tExtended\tRange | 168 | 3 | 11 | 1 | 15 | 24 |
| Boeing\t767\t-\t300\tExtended\tRange | 225 | 45 | 2 | 11 | 58 | 17 |
| Boeing\t777\t-\t200\tExtended\tRange | 247 | 47 | — | — | 47 | 10 |
| McDonnell\tDouglas\tMD-80 | 140 | 83 | 48 | 93 | 224 | 20 |
| Total |  | 348 | 70 | 202 | 620 | 15 |
| AMR\tEagle\tAircraft |  |  |  |  |  |  |
| Bombardier\tCRJ\t-\t700 | 63/65 | 39 | — | — | 39 | 5 |
| Embraer\tRJ\t-\t135 | 37 | 39 | — | — | 39 | 11 |
| Embraer\tRJ\t-\t140 | 44 | 59 | — | — | 59 | 9 |
| Embraer\tRJ\t-\t145 | 50 | 118 | — | — | 118 | 9 |
| Super\tATR | 64/66 | — | — | 39 | 39 | 16 |
| Total |  | 255 | — | 39 | 294 | 10 |

Almost	all	of	the	Company's	owned	aircraft	are	encumbered	by	liens	granted	in	connection	with	financing	transactions	entered	into	by	the	Company.

Of	the	operating	aircraft	listed	above,	2	owned	McDonnell	Douglas	MD-80	and	17	owned	Embraer	RJ-135	aircraft	were	in	temporary	storage	as	of	December	31,	2010.

# Flight	Equipment	—	Non-Operating

Owned	and	leased	aircraft	not	operated	by	the	Company	at	December	31,	2010	included:

| Equipment	Type | Owned | Capital<br>Leased | Operating<br>Leased | Total |
| :--- | :--- | :--- | :--- | :--- |
| American\tAirlines\tAircraft |  |  |  |  |
| Airbus\tA300\t-\t600R | 1 | — | 9 | 10 |
| Fokker\t100 | — | — | 4 | 4 |
| Boeing\t737\t-\t800 | 1 | — | — | 1 |
| McDonnell\tDouglas\tMD-80 | 35 | 14 | 10 | 59 |
| Total | 37 | 14 | 23 | 74 |
| AMR\tEagle\tAircraft |  |  |  |  |
| Saab\t340B | 41 | — | — | 41 |
| Total | 41 | — | — | 41 |

For	information	concerning	the	estimated	useful	lives	and	residual	values	for	owned	aircraft,	lease	terms	for	leased	aircraft	and	amortization	relating	to	aircraft	under	capital	leases,	see	Notes	1 and	5	to	the	consolidated	financial	statements.

# Flight	Equipment	—	Leased

Lease	expirations	for	the	aircraft	included	in	the	table	of	capital	and	operating	leased	flight	equipment	operated	by	the	Company	as	of	December	31,	2010	are:

| Equipment	Type | 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| American\tAirlines\tAircraft |  |  |  |  |  |  |
| Boeing\t737\t-\t800 | — | — | 8 | 1 | — | 57 |
| Boeing\t757\t-\t200 | 1 | — | — | 10 | 24 | 5 |
| Boeing\t767\t-\t200\tExtended\tRange | 1 | 2 | 8 | 1 | — | — |
| Boeing\t767\t-\t300\tExtended\tRange | — | — | 3 | — | 1 | 9 |
| McDonnell\tDouglas\tMD-80 | 7 | 20 | 22 | 17 | 15 | 60 |
|  | 9 | 22 | 41 | 29 | 40 | 131 |
| AMR\tEagle\tAircraft |  |  |  |  |  |  |
| Super\tATR | — | 1 | 12 | 12 | 14 | — |
|  | — | 1 | 12 | 12 | 14 | — |

American	leases	all	39	Super	ATR	aircraft	from	a	third	party	and	in	turn,	subleases	those	aircraft	to	AMR	Eagle	for	operation.

Substantially	all	of	the	Company's	aircraft	leases	include	an	option	to	purchase	the	aircraft	or	to	extend	the	lease	term,	or	both,	with	the	purchase	price	or	renewal	rental	to	be	based	essentially	on the	market	value	of	the	aircraft	at	the	end	of	the	term	of	the	lease	or	at	a	predetermined	fixed	amount.

# Ground	Properties

The	Company	leases	or	has	built	as	leasehold	improvements	on	leased	property:	most	of	its	airport	and	terminal	facilities	in	the	U.S.	and	overseas;	its	training	facilities	in	Fort	Worth,	Texas;	its principal	overhaul	and	maintenance	bases	at	Tulsa	International	Airport	(Tulsa,	Oklahoma)	and	Alliance	Airport	(Fort	Worth,	Texas);	its	regional	reservation	offices;	and	local	ticket	and	administration offices	throughout	the	system.	In	November	2010,

AMR	closed	its	Kansas	City	overhaul	and	maintenance	base.	The	Company	owns	its	headquarters	building	in	Fort	Worth,	Texas.	American	has	entered	into	agreements	with	the	Tulsa	Municipal	Airport Trust;	the	Alliance	Airport	Authority,	Fort	Worth,	Texas;	the	New	York	City	Industrial	Development	Agency;	and	the	Dallas/Fort	Worth,	Chicago	O'Hare,	Newark,	San	Juan,	and	Los	Angeles	airport authorities	to	provide	funds	for	the	cost	of	constructing,	improving	and	modifying	facilities	and	acquiring	equipment	which	are	or	will	be	leased	to	the	Company.	The	Company	also	uses	public	airports for	its	flight	operations	under	lease	or	use	arrangements	with	the	municipalities	or	governmental	agencies	owning	or	controlling	them	and	leases	certain	other	ground	equipment	for	use	at	its	facilities.

For	information	concerning	the	estimated	lives	and	residual	values	for	owned	ground	properties,	lease	terms	and	amortization	relating	to	ground	properties	under	capital	leases,	and	acquisitions	of ground	properties,	see	Notes	1	and	5	to	the	consolidated	financial	statements.

# ITEM	3. LEGAL	PROCEEDINGS

On	February	14,	2006,	the	Antitrust	Division	of	the	United	States	Department	of	Justice	(DOJ)	served	the	Company	with	a	grand	jury	subpoena	as	part	of	an	ongoing	investigation	into	possible criminal	violations	of	the	antitrust	laws	by	certain	domestic	and	foreign	air	cargo	carriers.	At	this	time,	the	Company	does	not	believe	it	is	a	target	of	the	DOJ	investigation.	The	New	Zealand	Commerce Commission	notified	the	Company	on	February	17,	2006	that	it	is	investigating	whether	the	Company	and	certain	other	cargo	carriers	entered	into	agreements	relating	to	fuel	surcharges,	security surcharges,	war-risk	surcharges,	and	customs	clearance	surcharges.	On	February	22,	2006,	the	Company	received	a	letter	from	the	Swiss	Competition	Commission	informing	the	Company	that	it	is investigating	whether	the	Company	and	certain	other	cargo	carriers	entered	into	agreements	relating	to	fuel	surcharges,	security	surcharges,	war-risk	surcharges,	and	customs	clearance	surcharges.	On March	11,	2008,	the	Company	received	a	request	for	information	from	the	Swiss	Competition	Commission	concerning,	among	other	things,	the	scope	and	organization	of	the	Company's	activities	in Switzerland.	On	June	27,	2007	and	October	31,	2007,	the	Company	received	requests	for	information	from	the	Australian	Competition	and	Consumer	Commission	seeking	information	regarding	fuel surcharges	imposed	by	the	Company	on	cargo	shipments	to	and	from	Australia	and	regarding	the	structure	of	the	Company's	cargo	operations.	On	September	1,	2008,	the	Company	received	a	request from	the	Korea	Fair	Trade	Commission	seeking	information	regarding	cargo	rates	and	surcharges	and	the	structure	of	the	Company's	activities	in	Korea.	On	January	23,	2007,	the	Brazilian	competition authorities,	as	part	of	an	ongoing	investigation,	conducted	an	unannounced	search	of	the	Company's	cargo	facilities	in	Sao	Paulo,	Brazil.	On	April	24,	2008,	the	Brazilian	competition	authorities	charged the	Company	with	violating	Brazilian	competition	laws.	On	December	31,	2009,	the	Brazilian	competition	authorities	made	a	non-binding	recommendation	to	the	Brazilian	competition	tribunal	that	it find	the	Company	in	violation	of	competition	laws.	The	authorities	are	investigating	whether	the	Company	and	certain	other	foreign	and	domestic	air	carriers	violated	Brazilian	competition	laws	by illegally	conspiring	to	set	fuel	surcharges	on	cargo	shipments.	The	Company	is	vigorously	contesting	the	allegations	and	the	preliminary	findings	of	the	Brazilian	competition	authorities.	On December	19,	2006	and	June	12,	2007,	the	Company	received	requests	for	information	from	the	European	Commission	seeking	information	regarding	the	Company's	corporate	structure,	and	revenue	and pricing	announcements	for	air	cargo	shipments	to	and	from	the	European	Union.	On	December	18,	2007,	the	European	Commission	issued	a	Statement	of	Objection	(SO)	against	26	airlines,	including	the Company.	The	SO	alleges	that	these	carriers	participated	in	a	conspiracy	to	set	surcharges	on	cargo	shipments	in	violation	of	EU	law.	On	November	12,	2010,	the	EU	Commission	notified	the	Company that	it	was	closing	its	proceedings	against	the	Company	without	imposing	any	fine	or	finding	any	wrongdoing.	The	Company	intends	to	cooperate	fully	with	all	pending	investigations.	In	the	event	that any	investigations	uncover	violations	of	the	U.S.	antitrust	laws	or	the	competition	laws	of	some	other	jurisdiction,	or	if	the	Company	were	named	and	found	liable	in	any	litigation	based	on	these allegations,	such	findings	and	related	legal	proceedings	could	have	a	material	adverse	impact	on	the	Company.	Forty-five	purported	class	action	lawsuits	have	been	filed	in	the	U.S.	against	the	Company and	certain	foreign	and	domestic	air	carriers	alleging	that	the	defendants	violated	U.S.	antitrust	laws	by	illegally	conspiring	to	set	prices	and	surcharges	on	cargo	shipments.	These	cases,	along	with	other purported	class	action	lawsuits	in	which	the	Company	was	not	named,	were	consolidated	in	the	United	States	District	Court	for	the	Eastern	District	of	New	York	as	In	re	Air	Cargo	Shipping	Services Antitrust	Litigation,	06-MD-1775	on	June	20,	2006.	Plaintiffs	are	seeking	trebled	money	damages	and	injunctive	relief.	To	facilitate	a	settlement	on	a	class	basis,	the	company	agreed	to	be	named	in	a

separate	class	action	complaint,	which	was	filed	on	July	26,	2010.	The	settlement	of	that	complaint,	in	which	the	company	does	not	admit	and	denies	liability,	was	given	preliminary	approval	by	the	court on	September	8,	2010.	The	settlement	has	not	yet	received	final	approval,	and	some	members	of	the	class	have	elected	to	opt	out,	thereby	preserving	their	rights	to	sue	the	Company	separately.	Any adverse	judgment	could	have	a	material	adverse	impact	on	the	Company.	Also,	on	January	23,	2007,	the	Company	was	served	with	a	purported	class	action	complaint	filed	against	the	Company, American,	and	certain	foreign	and	domestic	air	carriers	in	the	Supreme	Court	of	British	Columbia	in	Canada	(McKay	v.	Ace	Aviation	Holdings,	et	al.).	The	plaintiff	alleges	that	the	defendants	violated Canadian	competition	laws	by	illegally	conspiring	to	set	prices	and	surcharges	on	cargo	shipments.	The	complaint	seeks	compensatory	and	punitive	damages	under	Canadian	law.	On	June	22,	2007,	the plaintiffs	agreed	to	dismiss	their	claims	against	the	Company.	The	dismissal	is	without	prejudice	and	the	Company	could	be	brought	back	into	the	litigation	at	a	future	date.	If	litigation	is	recommenced against	the	Company	in	the	Canadian	courts,	the	Company	will	vigorously	defend	itself;	however,	any	adverse	judgment	could	have	a	material	adverse	impact	on	the	Company.

On	June	20,	2006,	DOJ	served	the	Company	with	a	grand	jury	subpoena	as	part	of	an	ongoing	investigation	into	possible	criminal	violations	of	the	antitrust	laws	by	certain	domestic	and	foreign passenger	carriers.	At	this	time,	the	Company	does	not	believe	it	is	a	target	of	the	DOJ	investigation.	The	Company	intends	to	cooperate	fully	with	this	investigation.	On	September	4,	2007,	the	Attorney General	of	the	State	of	Florida	served	the	Company	with	a	Civil	Investigative	Demand	as	part	of	its	investigation	of	possible	violations	of	federal	and	Florida	antitrust	laws	regarding	the	pricing	of	air passenger	transportation.	In	the	event	that	this	or	other	investigations	uncover	violations	of	the	U.S.	antitrust	laws	or	the	competition	laws	of	some	other	jurisdiction,	such	findings	and	related	legal proceedings	could	have	a	material	adverse	impact	on	the	Company.	Approximately	52	purported	class	action	lawsuits	have	been	filed	in	the	U.S.	against	the	Company	and	certain	foreign	and	domestic air	carriers	alleging	that	the	defendants	violated	U.S.	antitrust	laws	by	illegally	conspiring	to	set	prices	and	surcharges	for	passenger	transportation.	On	October	25,	2006,	these	cases,	along	with	other purported	class	action	lawsuits	in	which	the	Company	was	not	named,	were	consolidated	in	the	United	States	District	Court	for	the	Northern	District	of	California	as	In	re	International	Air	Transportation Surcharge	Antitrust	Litigation,	Civ.	No.	06-1793	(the	Passenger	MDL).	On	July	9,	2007,	the	Company	was	named	as	a	defendant	in	the	Passenger	MDL.	On	August	25,	2008,	the	plaintiffs	dismissed their	claims	against	the	Company	in	this	action.	On	March	13,	2008,	and	March	14,	2008,	an	additional	purported	class	action	complaint,	Turner	v.	American	Airlines,	et	al.,	Civ.	No.	08-1444	(N.D. Cal.),	was	filed	against	the	Company,	alleging	that	the	Company	violated	U.S.	antitrust	laws	by	illegally	conspiring	to	set	prices	and	surcharges	for	passenger	transportation	in	Japan	and	certain	European countries,	respectively.	The	Turner	plaintiffs	have	failed	to	perfect	service	against	the	Company,	and	it	is	unclear	whether	they	intend	to	pursue	their	claims.	In	the	event	that	the	Turner	plaintiffs	pursue their	claims,	the	Company	will	vigorously	defend	these	lawsuits,	but	any	adverse	judgment	in	these	actions	could	have	a	material	adverse	impact	on	the	Company.

On	August	21,	2006,	a	patent	infringement	lawsuit	was	filed	against	American	and	American	Beacon	Advisors,	Inc.	(then	a	wholly-owned	subsidiary	of	the	Company)	in	the	United	States	District Court	for	the	Eastern	District	of	Texas	(Ronald	A.	Katz	Technology	Licensing,	L.P.	v.	American	Airlines,	Inc.,	et	al.).	This	case	has	been	consolidated	in	the	Central	District	of	California	for	pre-trial purposes	with	numerous	other	cases	brought	by	the	plaintiff	against	other	defendants.	The	plaintiff	alleges	that	American	infringes	a	number	of	the	plaintiff's	patents,	each	of	which	relates	to	automated telephone	call	processing	systems.	The	plaintiff	is	seeking	past	and	future	royalties,	injunctive	relief,	costs	and	attorneys'	fees.	On	December	1,	2008,	the	court	dismissed	with	prejudice	all	claims	against American	Beacon.	On	May	22,	2009,	following	its	granting	of	summary	judgment	to	American	based	on	invalidity	and	non-infringement,	the	court	dismissed	all	claims	against	American.	Plaintiff	filed	a notice	of	appeal	on	June	22,	2009	with	respect	to	the	court's	ruling	for	American.	Although	the	Company	believes	that	the	plaintiff's	claims	are	without	merit	and	is	vigorously	defending	the	lawsuit,	a final	adverse	court	decision	awarding	substantial	money	damages	or	placing	material	restrictions	on	existing	automated	telephone	call	system	operations	would	have	a	material	adverse	impact	on	the Company.

On	January	5,	2010,	Sabre	notified	the	Company	that	it	was	immediately	introducing	bias	against	the	display	of	American's	services	in	its	global	distribution	system	(GDS),	as	well	as substantially	increasing	the	rates	that	it	would	charge	the	Company	for	bookings	made	through	the	Sabre	GDS.	Sabre	contended	that	its	agreement	with	the	Company	permitted	it	to	take	these	actions.	On January	10,	2010,	the	Company	filed	a	lawsuit	in	Tarrant	County,

Texas	State	Court	against	Sabre	alleging,	among	other	claims,	that	Sabre's	actions	breached	its	agreement	with	the	Company.	That	same	day,	the	Company	successfully	obtained	a	temporary	restraining order	that	prohibited	Sabre	from	continuing	to	bias	the	display	of	American's	services.	On	January	23,	2010,	the	Company	and	Sabre	entered	into	a	Stand-Down	Agreement,	pursuant	to	which	American agreed	to	suspend	the	litigation	against	Sabre,	and	Sabre	agreed	not	to	reintroduce	biasing	against	American's	services	in	its	GDS	and	to	return	to	the	pricing	in	effect	on	January	4,	2010.	The	parties further	agreed	to	enter	into	good	faith	negotiations.	The	Stand-Down	Agreement	will	remain	in	effect	until	June	1,	2010.	In	the	event	that	the	Stand	Down	Agreement	expires	without	a	new	agreement with	Sabre,	and	the	Court	does	not	further	enjoin	Sabre	from	introducing	bias	against	American's	services,	actions	taken	by	Sabre	could	have	a	material	adverse	effect	on	the	Company.

# ITEM	4. SUBMISSION	OF	MATTERS	TO	A	VOTE	OF	SECURITY	HOLDERS

No	matters	were	submitted	to	a	vote	of	the	Company's	security	holders	during	the	last	quarter	of	its	fiscal	year	ended	December	31,	2010.

# Executive	Officers	of	the	Registrant

The	following	information	relates	to	the	executive	officers	of	AMR	as	of	the	filing	of	this	Form	10-K.

Gerard	J.	Arpey Mr.	Arpey	currently	serves	as	Chairman	and	Chief	Executive	Officer	of	AMR	and	American.	Mr.	Arpey	was	elected Chairman,	President	and	Chief	Executive	Officer	of	AMR	and	American	in	May	2004.	He	was	elected	Chief	Executive Officer	of	AMR	and	American	in	April	2003.	He	served	as	President	and	Chief	Operating	Officer	of	AMR	and	American from	April	2002	to	April	2003.	He	served	as	Executive	Vice	President	—	Operations	of	American	from	January	2000	to April	2002,	Chief	Financial	Officer	of	AMR	from	1995	through	2000	and	Senior	Vice	President	—	Planning	of American	from	1992	to	January	1995.	Prior	to	that,	he	served	in	various	management	positions	at	American	since	1982. Age	52.

Thomas	W.	Horton Mr.	Horton	was	named	President	—	AMR	Corporation	and	American	Airlines	in	July	2010.	Mr.	Horton	served	as Executive	Vice	President	of	Finance	and	Planning	and	Chief	Financial	Officer	of	AMR	and	American	from	March	2006 to	July	2010,	In	2006,	Mr.	Horton	returned	to	American	from	AT&T	Corp.,	a	telecommunications	company,	where	he had	been	Vice	Chairman	and	Chief	Financial	Officer.	Prior	to	leaving	for	AT&T	Corp.,	Mr.	Horton	was	Senior	Vice President	and	Chief	Financial	Officer	of	AMR	and	American	from	January	2000	to	2002.	From	1994	to	January	2000, Mr.	Horton	served	as	a	Vice	President	of	American	and	prior	to	that	served	in	various	management	positions	of American	beginning	in	1985.	Age	49.

# Daniel	P.	Garton

Daniel	P.	Garton	was	named	President	and	Chief	Executive	Officer	of	American	Eagle	Airlines	in	June	2010.	He	is	also an	Executive	Vice	President	of	AMR	and	American	Airlines.	Mr.	Garton	served	as	Executive	Vice	President	— Marketing	of	American	from	September	2002	to	June	2010.	He	served	as	Executive	Vice	President	—	Customer	Services of	American	from	January	2000	to	September	2002	and	Senior	Vice	President	—	Customer	Services	of	American	from 1998	to	January	2000.	Prior	to	that,	he	served	as	President	of	AMR	Eagle	from	1995	to	1998.	Except	for	two	years service	as	Senior	Vice	President	and	Chief	Financial	Officer	of	Continental	between	1993	and	1995,	he	has	been	with	the Company	in	various	management	positions	since	1984.	Age	53.

# Robert	W.	Reding

# Gary	F.	Kennedy

# Isabella	D.	Goren

Mr.	Reding	was	elected	Executive	Vice	President	—	Operations	for	American	in	September	2007.	He	is	also	an Executive	Vice	President	of	AMR.	He	served	as	Senior	Vice	President	—	Technical	Operations	for	American	from	May 2003	to	September	2007.	He	joined	the	Company	in	March	2000	and	served	as	Chief	Operations	Officer	of	AMR	Eagle through	May	2003.	Prior	to	joining	the	Company,	Mr.	Reding	served	as	President	and	Chief	Executive	Officer	of	Reno Air	from	1992	to	1998	and	President	and	Chief	Executive	Officer	of	Canadian	Regional	Airlines	from	1998	to	March 2000.	Age	61.

Mr.	Kennedy	was	elected	Senior	Vice	President	and	General	Counsel	of	AMR	and	American	in	January	2003.	He	is	also the	Company's	Chief	Compliance	Officer.	He	served	as	Vice	President	—	Corporate	Real	Estate	of	American	from	1996 to	January	2003.	Prior	to	that,	he	served	as	an	attorney	and	in	various	management	positions	at	American	since	1984. Age	55.

Ms.	Goren	was	named	Senior	Vice	President	and	Chief	Financial	Officer	of	AMR	and	American	in	July	2010.	She served	as	Senior	Vice	President	—	Customer	Relationship	Marketing	from	March	2006	to	July	2010.	Prior	to	that,	she served	as	Vice	President	Interactive	Marketing	and	Reservations	from	July	2003	to	March	2006,	and	as	Vice	President	— Customer	Services	Planning	from	October	1998	to	July	2003.	She	has	been	with	the	Company	in	various	management positions	since	1986.	Age	50.

There	are	no	family	relationships	among	the	executive	officers	of	the	Company	named	above.

There	have	been	no	events	under	any	bankruptcy	act,	no	criminal	proceedings,	and	no	judgments	or	injunctions	material	to	the	evaluation	of	the	ability	and	integrity	of	any	director	or	executive officer	during	the	past	ten	years.

# PART	II

# ITEM	5. MARKET	FOR	REGISTRANT'S	COMMON	STOCK	AND	RELATED	STOCKHOLDER	MATTERS

The	Company's	common	stock	is	traded	on	the	New	York	Stock	Exchange	(symbol	AMR).	The	approximate	number	of	record	holders	of	the	Company's	common	stock	at	February	9,	2011	was

The	range	of	closing	market	prices	for	AMR's	common	stock	on	the	New	York	Stock	Exchange	was:

|  | 2010 | 2010 | 2009 | 2009 |
| :--- | :--- | :--- | :--- | :--- |
|  | High | Low | High | Low |
| Quarter\tEnded |  |  |  |  |
| March\t31 | $10.16 | $6.92 | $12.29 | $2.54 |
| June\t30 | 9.10 | 6.53 | 6.22 | 3.37 |
| September\t30 | 7.44 | 5.99 | 9.03 | 3.98 |
| December\t31 | 8.87 | 5.96 | 8.14 | 5.19 |

No	cash	dividends	on	common	stock	were	declared	for	any	period	during	2010	or	2009,	and	the	Company	has	no	intention	of	paying	cash	dividends	in	the	foreseeable	future.

# ITEM	6. SELECTED	CONSOLIDATED	FINANCIAL	DATA

| ITEM	6.<br>SELECTED	CONSOLIDATED	FINANCIAL	DATA |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2010(2) | 2009(2),(6) | 2008(2),(5) | 2007(4) | 2006(1) |
|  |  |  | (In\tmillions,\texcept\tper\tshare\tamounts) |  |  |
| Total\toperating\trevenues | $22,170 | $ 19,917 | $ 23,766 | $22,935 | $22,563 |
| Operating\tincome\t(loss) | 308 | (1,004) | (1,889) | 965 | 1,060 |
| Net\tincome\t(loss) | (471) | (1,468) | (2,118) | 456 | 189 |
| Net\tincome\t(loss)\tper\tshare: |  |  |  |  |  |
| Basic | (1.41) | (4.99) | (8.16) | 1.86 | 0.92 |
| Diluted | (1.41) | (4.99) | (8.16) | 1.71 | 0.82 |
| Total\tassets | \t25,088 | \t 25,438 | \t 25,175 | \t28,571 | \t29,145 |
| Long-term\tdebt,\tless\tcurrent\tmaturities | 8,756 | 9,984 | 8,423 | 9,387 | \t11,122 |
| Obligations\tunder\tcapital\tleases,\tless\tcurrent\tobligations | 497 | 599 | 582 | 680 | 824 |
| Obligation\tfor\tpension\tand\tpostretirement\tbenefits | 7,877 | 7,397 | 6,614 | 3,620 | 5,341 |
| Stockholders'\tequity\t(deficit)(3) | \t(3,945) | (3,489) | (2,935) | 2,704 | (511) |

(1) Includes	the	impact	of	adopting	guidance	related	to	planned	major	maintenance	activities.

(2) Includes	restructuring	charges	and	special	items.	In	2010,	special	items	consisted	of	$81	million	and	include	the	impairment	of	certain	route	authorities	in	Latin	America	and	losses	on	Venezuelan currency	remeasurement.	In	2009,	these	restructuring	charges	of	$171	million	primarily	consisted	of	the	grounding	of	the	Airbus	A300	fleet	and	the	impairment	of	Embraer	RJ-135	aircraft.	Special items	in	2009	consisted	of	$184	million	and	include	the	impairment	of	certain	route	and	slot	authorities,	primarily	in	Latin	America,	and	losses	on	certain	sale	leaseback	transactions.	In	2008, restructuring	charges	consisted	of	$1.2	billion	primarily	related	to	aircraft	and	employee	charges	due	to	announced	capacity	reductions	(for	further	discussion	of	these	items,	see	Note	2	to	the consolidated	financial	statements).

(3) Effective	December	31,	2006,	the	Company	adopted	guidance	issued	on	accounting	for	defined	benefit	plans	and	other	postretirement	plans.	This	adoption	decreased	Stockholders'	equity	by $1.0	billion	and	increased	the	obligation	for	pension	and	other	postretirement	benefits	by	$880	million.	As	a	result	of	actuarial	changes,	including	the	discount	rate	and	the	impact	of	legislation changing	pilot	retirement	age	to	65,	the	Company	recorded	a	$1.7	billion	reduction	in	pension	and	retiree	medical	and	other	benefits	and	a	corresponding	increase	in	stockholders'	equity	in	2007. As	a	result	of	a	significant	decline	in	2008	in	the	market	value	of	the	Company's	benefit	plan	assets,	the	Company	recorded	a	$3.0	billion	increase	in	pension	and	retiree	medical	and	other	benefits and	a	similar	decrease	in	stockholders'	equity	in	2008.	In	2008,	the	Company	incurred	$103	million	in	expense	due	to	a	pension	settlement.

(4) Includes	the	impact	of	the	$138	million	gain	on	the	sale	of	ARINC	.

(5) Includes	the	impact	of	the	$432	million	gain	on	the	sale	of	American	Beacon	Advisors.

(6) Includes	the	impact	of	a	$248	million	tax	benefit	related	to	the	allocation	of	tax	expense	to	other	comprehensive	income	items	recognized	in	2009.

No	cash	dividends	were	declared	on	AMR's	common	shares	during	any	of	the	periods	above.

Information	on	the	comparability	of	results	is	included	in	Item	7,	"Management's	Discussion	and	Analysis"	and	the	notes	to	the	consolidated	financial	statements.

# ITEM	7. MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION	AND	RESULTS	OF	OPERATIONS

# Forward-Looking	Information

The	discussions	under	Business,	Risk	Factors,	Properties	and	Legal	Proceedings,	and	the	following	discussions	under	"Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results of	Operations"	and	"Quantitative	and	Qualitative	Disclosures	about	Market	Risk"	contain	various	forward-looking	statements	within	the	meaning	of	Section	27A	of	the	Securities	Act	of	1933,	as amended,	and	Section	21E	of	the	Securities	Exchange	Act	of	1934,	as	amended,	which	represent	the	Company's	expectations	or	beliefs	concerning	future	events.	When	used	in	this	document	and	in documents	incorporated	herein	by	reference,	the	words	"expects,"	"estimates,"	"plans,"	"anticipates,"	"indicates,"	"believes,"	"forecast,"	"guidance,"	"outlook,"	"may,"	"will,"	"should,"	"seeks," "targets"	and	similar	expressions	are	intended	to	identify	forward-looking	statements.	Similarly,	statements	that	describe	the	Company's	objectives,	plans	or	goals,	or	actions	the	Company	may	take	in	the future,	are	forward-looking	statements.	Forward-looking	statements	include,	without	limitation,	the	Company's	expectations	concerning	operations	and	financial	conditions,	including	changes	in capacity,	revenues,	and	costs;	future	financing	plans	and	needs;	the	amounts	of	its	unencumbered	assets	and	other	sources	of	liquidity;	fleet	plans;	overall	economic	and	industry	conditions;	plans	and objectives	for	future	operations;	regulatory	approvals	and	actions;	and	the	impact	on	the	Company	of	its	results	of	operations	in	recent	years	and	the	sufficiency	of	its	financial	resources	to	absorb	that impact.	Other	forward-looking	statements	include	statements	which	do	not	relate	solely	to	historical	facts,	such	as,	without	limitation,	statements	which	discuss	the	possible	future	effects	of	current known	trends	or	uncertainties,	or	which	indicate	that	the	future	effects	of	known	trends	or	uncertainties	cannot	be	predicted,	guaranteed	or	assured.	All	forward-looking	statements	in	this	report	are	based upon	information	available	to	the	Company	on	the	date	of	this	report.	The	Company	undertakes	no	obligation	to	publicly	update	or	revise	any	forward-looking	statement,	whether	as	a	result	of	new information,	future	events,	or	otherwise.	Guidance	given	in	this	report	regarding	capacity,	fuel	consumption,	fuel	prices,	fuel	hedging	and	unit	costs	are	forward-looking	statements.	Forward-looking statements	are	subject	to	a	number	of	factors	that	could	cause	the	Company's	actual	results	to	differ	materially	from	the	Company's	expectations.	The	Risk	Factors	listed	in	Item	1A	could	cause	the Company's	actual	results	to	differ	materially	from	historical	results	and	from	those	expressed	in	forward-looking	statements.

# Recent	Events

In	late	2009,	the	Company	unveiled	a	new	business	plan	—	FlightPlan	2020,	which	is	an	evolution	of	the	Turnaround	Plan	that	guided	the	Company	through	the	last	decade.	FlightPlan	2020	is	a strategic	framework	developed	to	secure	the	Company's	future	by	focusing	on	what	will	be	required	to	succeed	in	the	airline	business	over	the	next	decade.	It	establishes	the	Company's	priorities	and	a clear	plan	to	better	position	the	Company	to	meet	the	challenges	of	the	coming	years.	This	plan	for	achieving	sustained	profitability	has	five	tenets:	(i)	Invest	Wisely,	(ii)	Earn	Customer	Loyalty, (iii)	Strengthen	and	Defend	our	Global	Network,	(iv)	Be	a	Good	Place	for	Good	People	and	(v)	Fly	Profitably.	All	strategic	actions	by	the	Company	going	forward	are	expected	to	be	designed	to	realize the	goals	of	FlightPlan	2020.

Under	FlightPlan	2020,	the	Company	has	launched	its	network	strategy	that	focuses	resources	in	its	cornerstone	markets	of	Dallas/Fort	Worth	(DFW),	Chicago	O'Hare,	Miami,	New	York	City and	Los	Angeles,	and	has	continued	to	execute	its	fleet	renewal	and	replacement	plan.	Further,	the	Company	continues	to	pursue	its	strategy	to	form	cooperative	agreements	with	oneworld	members	and other	airlines.

In	2008,	American	entered	into	a	joint	business	agreement	(JBA)	and	related	marketing	arrangements	with	British	Airways	and	Iberia.	These	agreements	provide	for	commercial	cooperation	on flights	between	North	America	and	most	countries	in	Europe,	pooling	and	sharing	of	certain	revenues	and	costs,	expanded	codesharing,	enhanced	frequent	flyer	program	reciprocity,	and	cooperation	in other	areas.

In	July	2010,	American	obtained	clearance	from	the	European	Commission	(EC)	and	approval	by	the	Department	of	Transportation	(DOT)	for	antitrust	immunity	(ATI)	for	its	planned cooperation	with	British	Airways,	Iberia,	Finnair	and	Royal	Jordanian.	Regulatory	conditions	for	ATI	approval	for	the	British	Airways,	Iberia,	Finnair	and	Royal	Jordanian	cooperative	agreement	include a	collective	obligation	of	the	Company,	British	Airways,	and

Iberia	to	lease	to	other	carriers	up	to	seven	takeoff	and	landing	slot	pairs	at	London	Heathrow	airport	and	up	to	three	John	F.	Kennedy	airport	operational	authorities,	depending	on	market	conditions. American	began	implementation	of	the	JBA	with	British	Airways	and	Iberia	and	expanded	cooperation	with	Finnair	and	Royal	Jordanian	in	October	2010.	No	assurances	can	be	given	as	to	any arrangements	that	may	ultimately	be	implemented	or	any	benefits	that	we	may	derive	from	such	arrangements.

In	February	2010,	American	and	JAL	announced	the	decision	to	strengthen	their	relationship.	The	carriers,	entered	into	a	JBA	which	will	enhance	their	scope	of	cooperation	on	routes	between North	America	and	Asia	through	adjustments	to	their	respective	networks,	flight	schedules,	and	other	business	activities.	This,	in	turn,	will	allow	both	carriers	to	better	complement	each	other's	operations and	to	develop	and	offer	competitive	products	and	quality	service	to	their	customers.

As	a	part	of	these	commercial	benefits,	American	determined	that	with	ATI	and	by	participating	in	a	joint	business	agreement	with	American,	JAL	could	realize	approximately	$100	million	in annual	incremental	revenue.	American	has	given	JAL	a	guarantee	to	that	effect	covering	the	first	three	years	following	implementation	of	the	joint	business	agreement,	subject	to	certain	terms	and conditions.	At	this	time,	the	amount	(if	any)	that	AMR	may	ultimately	owe	under	the	agreement	is	unclear.	The	Company	and	other	oneworld	members	have	also	discussed	various	possible	financing arrangements	with	JAL.	The	Company	has	agreed	to	negotiate	in	good	faith	towards	a	capital	investment	in	JAL	by	American,	oneworld	and	a	private	investment	firm	in	the	future	if	invited	by	JAL	and the	Government	of	Japan.	To	date,	the	Government	of	Japan	has	declined	any	such	investment,	and	the	Company	does	not	expect	that	any	such	investment	will	be	made	in	the	near	term.	Any	such investment	would	be	on	and	subject	to	terms	and	conditions	customary	to	such	an	arrangement.	The	Company	also	expects	that	the	amount	of	such	a	capital	investment,	if	any,	by	American	and	other oneworld	carriers,	would	not	exceed	$300	million,	with	additional	investment	from	private	partners.

In	the	fourth	quarter	of	2010,	American	and	JAL	received	approval	for	ATI	on	certain	routes	between	North	America	and	Asia	from	the	DOT	and	MLIT.	Implementation	of	the	JBA	is	subject	to successful	negotiation	of	certain	detailed	financial	and	commercial	arrangements	and	other	approvals.	American	expects	to	begin	implementing	the	JBA	with	JAL	in	2011.	No	assurances	can	be	given	as to	any	arrangements	that	may	ultimately	be	implemented	or	any	benefits	that	the	Company	may	derive	from	such	arrangements.

In	2010,	American	also	commenced	commercial	collaboration	in	New	York	and	Boston	with	JetBlue.	American's	agreement	with	JetBlue	provides	customers	with	interline	service	in	non- overlapping	markets,	letting	customers	connect	between	15	of	American's	international	destinations	from	New	York	and	Boston	and	26	domestic	cities	flown	by	JetBlue.	Further,	American	expanded	its relationship	with	JetBlue	so	that	AAdvantage	members	and	members	of	JetBlue's	customer	loyalty	program	will	be	able	to	earn	AAdvantage	miles	or	JetBlue	points,	respectively,	when	they	fly	on American	and	JetBlue	cooperative	interline	routes.	Under	the	terms	of	the	agreements	for	commercial	collaboration,	American	transferred	eight	slot	pairs	at	Ronald	Reagan	National	Airport	in Washington,	D.C.	(which	were	owned	by	American)	and	one	slot	pair	at	White	Plains,	New	York	(which	were	owned	by	AMR	Eagle)	to	JetBlue,	and	JetBlue	transferred	twelve	slot	pairs	at	JFK	to American.	The	reciprocal	frequent	flyer	earning	benefits	and	slot	transfers	became	effective	in	the	fourth	quarter	of	2010.

Further	in	2010,	the	Company	announced	that	it	plans	to	extend	its	network	through	new	commercial	collaboration	agreements	with	several	airlines,	including	Air	Berlin,	Europe's	fifth	largest airline,	GOL	Airlines	of	Brazil,	Jetstar	Airways,	which	is	an	affiliate	airline	of	Qantas	Airways	(a	oneworld	alliance	member),	and	Canada's	WestJet.	These	agreements	include	both	interline	and codeshare	arrangements	that	allow	customers	of	the	Company	and	the	respective	airline	to	book	and	travel	on	the	other's	network.	Selected	agreements	are	subject	to	regulatory	approval	and	no assurances	can	be	given	as	to	any	arrangements	that	may	ultimately	be	implemented	or	any	benefits	that	the	Company	may	derive	from	such	arrangements.

The	Company	currently	estimates	that	the	implementation	of	its	cornerstone	strategy,	the	implementation	of	the	Company's	JBA	with	British	Airways/Iberia	and	proposed	cooperation	with	JAL, and	various	other	alliance	and	network	activities	will	result	in	incremental	revenues	and	cost	savings	of	over	$500	million	per	year.	The	Company	expects	that	it	will	realize	the	majority	of	these incremental	revenues	and	cost	savings	in	2011,	and	the	remainder	by	year	end	2012.	This	estimate	is	based	on	a	number	of	assumptions	that	are	inherently	uncertain,	and	the	Company's	ability	to	realize these	benefits	depends	on	various	factors,	some	of	which	are	beyond	the	Company's	control,	such

as	factors	referred	to	above	in	"Forward-Looking	Information."	No	assurances	can	be	given	as	to	any	benefits	the	Company	may	derive	from	such	arrangements.

The	Company	is	in	active	labor	contract	negotiations	with	each	of	its	organized	labor	groups.	The	Company	negotiated	tentative	agreements	with	several	workgroups	within	the	Transport Workers	Union	of	American	AFL-CIO	(TWU)	including	the	Maintenance	Control	Technician	group,	the	Material	Logistics	Specialists	group	and	the	Mechanic	and	Related	group.	Agreements	with	the TWU	groups	are	subject	to	ratification	by	the	relevant	membership	of	TWU,	and	while	the	Maintenance	Control	Technician	group	ratified	their	agreement,	the	Material	Logistics	Specialists	group	and the	Mechanic	and	Related	group	tentative	agreements	were	not	ratified.	Mediated	negotiation	continues	under	the	auspices	of	the	National	Mediation	Board	with	the	TWU,	the	Allied	Pilots	Association (APA)	and	the	Association	of	Professional	Flight	Attendants	(APFA).

Based	on	analysis	of	airline	industry	labor	contracts,	the	Company	currently	estimates	that	American's	labor	cost	disadvantage	(the	amount	by	which	its	labor	costs	exceed	what	such	costs	would be	if	they	were	determined	based	on	the	average	of	other	network	carrier	labor	contracts)	is	approximately	$600	million	per	year.	The	Company	expects	this	gap	to	narrow	as	open	industry	labor	contracts are	settled.	This	expectation	is	based	on	a	number	of	assumptions.	The	airline	industry	labor	contract	negotiation	process	is	inherently	uncertain	and	the	results	of	labor	contract	negotiations	are	difficult to	predict.

In	June	2010,	AMR	reiterated	its	intent	to	evaluate	the	possible	divestiture	of	AMR	Eagle,	its	wholly-owned	regional	carrier.	The	AMR	Eagle	fleet	is	operated	to	feed	passenger	traffic	to American	pursuant	to	a	capacity	purchase	agreement	between	American	and	AMR	Eagle	under	which	American	receives	all	passenger	revenue	from	AMR	Eagle	flights	and	pays	AMR	Eagle	a	fee	for each	flight.	The	capacity	purchase	agreement	reflects	what	AMR	believes	are	current	market	rates	received	by	other	regional	carriers	for	similar	flying.	Amounts	paid	to	AMR	Eagle	under	the	capacity purchase	agreement	are	available	to	pay	for	various	operating	expenses	of	AMR	Eagle,	such	as	crew	expenses,	maintenance,	aircraft	ownership	(including	the	debt	service	on	the	loans	made	to	finance	the AMR	Eagle	fleet	of	jet	aircraft),	and	aircraft	lease	payments	for	the	AMR	Eagle	fleet	of	turboprop	aircraft.	AMR	continues	to	evaluate	both	the	desirability	and	the	form	of	such	a	divestiture,	which	may include	a	spin-off	to	AMR	shareholders,	a	sale	to	a	third	party,	or	some	other	form	of	separation.	Any	divestiture	of	AMR	Eagle	could	involve	the	restructuring	of	some	or	all	of	AMR	Eagle's	assets	and liabilities,	and	the	assumption	of	certain	of	AMR	Eagle's	liabilities	by	American.	If	AMR	were	to	decide	to	pursue	a	divestiture	of	AMR	Eagle,	no	prediction	can	be	made	as	to	whether	any	such divestiture	would	be	completed,	and	the	completion	of	any	divestiture	transaction	and	its	timing	would	depend	upon	a	number	of	factors,	including	general	economic,	industry	and	financial	market conditions,	as	well	as	the	ultimate	form	and	structure	of	the	divestiture.	In	addition,	no	prediction	can	be	made	as	to	the	potential	impacts	on	AMR	or	American	of	any	divestiture	of	AMR	Eagle	due	to, among	others,	uncertainties	regarding	the	form	and	structure	of	any	divestiture,	the	potential	restructuring	of	assets	and	liabilities,	and	the	nature	and	scope	of	any	resulting	amendments	to	the	capacity purchase	agreement	between	American	and	AMR	Eagle.

During	2010,	Congress	passed	and	the	President	signed	new	healthcare	legislation.	While	the	new	law	did	and	will	continue	to	impact	certain	of	our	active	employee	healthcare	plans,	according to	recently	released	interim	final	regulations	promulgated	under	the	legislation,	the	Company's	retiree	medical	benefits	will	be	exempt	from	many	of	the	mandates	of	the	legislation.	Thus,	we	currently believe	this	impact	will	not	be	material.	We	will	continue	to	review	the	impact	of	the	new	law	as	governmental	agencies	issue	interpretations	regarding	its	meaning	and	scope.	Also	in	2010,	the	President signed	the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	which	could	impact	the	Company,	but	those	effects	cannot	be	predicted	at	this	time	as	the	related	rules	and	regulations	have	not been	finalized.

# Contingencies

The	Company	has	certain	contingencies	resulting	from	litigation	and	claims	incident	to	the	ordinary	course	of	business.	Management	believes,	after	considering	a	number	of	factors,	including (but	not	limited	to)	the	information	currently	available,	the	views	of	legal	counsel,	the	nature	of	contingencies	to	which	the	Company	is	subject	and	prior	experience,	that	the	ultimate	disposition	of	the litigation	(except	as	noted	in	"Legal	Proceedings"	in	item	3)	and	claims	will	not	materially	affect	the	Company's	consolidated	financial	position	or	results	of	operations.	When	appropriate,	the	Company accrues	for	these	contingencies	based	on	its	assessments	of	the	likely	outcomes	of	the

related	matters.	The	amounts	of	these	contingencies	could	increase	or	decrease	in	the	near	term,	based	on	revisions	to	those	assessments.

The	Company	files	its	tax	returns	as	prescribed	by	the	tax	laws	of	the	jurisdictions	in	which	it	operates.	The	Company's	2004	through	2009	tax	years	are	still	subject	to	examination	by	the	Internal Revenue	Service.	Various	state	and	foreign	jurisdiction	tax	years	remain	open	to	examination,	and	the	Company	is	under	examination,	in	administrative	appeals,	or	engaged	in	tax	litigation	in	certain jurisdictions.	See	Income	Taxes	under	"Critical	Accounting	Policies	and	Estimates"	under	Item	7.

On	August	26,	2010,	the	Federal	Aviation	Administration	(FAA)	proposed	a	$24.2	million	civil	penalty	against	American,	claiming	that	American	failed	to	properly	perform	certain	portions	of an	FAA	Airworthiness	Directive	concerning	certain	wiring	to	the	McDonnell	Douglas	MD-80	aircraft	auxiliary	hydraulic	pump.	American	plans	to	challenge	the	proposed	civil	penalty.	The	Company has	concluded	that	the	amount	of	the	penalty,	if	any,	that	may	be	paid	is	not	estimable	at	December	31,	2010.

# GDS	Discussion

Over	the	past	several	years,	American	has	been	developing	a	direct	connection	technology,	designed	to	distribute	its	fare	content	and	bookings	capability	directly	to	travel	agents	in	order	to achieve	greater	efficiencies,	cost	savings,	and	technological	advances	in	the	distribution	of	our	services.	Historically,	approximately	60%	of	American's	bookings	are	booked	through	travel	agencies, which	typically	use	one	or	more	global	distribution	systems,	or	"GDSs",	to	view	fare	content	from	American	and	other	industry	participants.	American	is	currently	in	litigation	with	two	of	the	GDSs, Sabre	and	Travelport,	and	is	in	business	discussions	with	two	large	online	travel	agencies,	Orbitz	and	Expedia,	related	to	American's	efforts	to	implement	its	direct	connection	technology.

On	November	5,	2010,	Travelport,	the	GDS	used	by	Orbitz,	filed	a	lawsuit	against	American	seeking	a	ruling	that	a	notice	of	termination	delivered	by	American	to	Orbitz	breached	American's content	distribution	agreement	with	Travelport.	Subsequently,	on	December	2,	2010,	Travelport	doubled	the	booking	fees	it	charges	American	for	some	international	point-of-sale	bookings	through Travelport,	and	made	it	more	difficult	for	travel	agents	to	find	American's	fares	on	the	Travelport	system	display.	We	believe	these	actions	violate	our	agreement	with	Travelport.	In	response,	American filed	counterclaims	against	Travelport	for	breach	of	contract,	and	implemented	a	charge	on	bookings	through	Travelport	in	an	effort	to	offset	the	booking	fee	increase.	There	can	be	no	assurance	that	we will	be	successful	in	offsetting	this	expense	completely,	or	that	we	will	ultimately	prevail	in	the	lawsuit	filed	by	Travelport	or	on	our	counterclaims.	We	are	vigorously	pursuing	our	counterclaims	and rights	in	the	litigation,	as	well	as	engaged	in	active	negotiations	with	Travelport	to	resolve	the	lawsuit	and	our	counterclaims.

On	December	21,	2010,	American	terminated	its	agreement	with	Orbitz.	Prior	to	termination	of	such	agreement,	approximately	3%	of	American's	passenger	revenue,	on	an	annualized	basis,	was generated	from	bookings	made	via	Orbitz.	We	are	engaged	in	active	negotiations	with	Orbitz	to	enter	into	a	new	agreement.

On	December	31,	2010,	American's	agreement	with	Expedia	expired,	and	Expedia	discontinued	selling	American	tickets	on	its	website.	Prior	to	expiration	of	that	agreement,	approximately	5.4% of	American's	passenger	revenue,	on	an	annualized	basis,	was	booked	through	Expedia.	We	are	engaged	in	active	negotiations	with	Expedia	to	enter	into	a	new	agreement.

On	January	5,	2011,	Sabre	made	it	more	difficult	for	travel	agents	to	find	American's	fares	on	the	Sabre	system	display	and	doubled	the	fees	it	charges	American	for	bookings	through	its	GDS. Sabre	also	terminated	portions	of	its	GDS	agreements	with	American,	effective	July	2011.	This	termination,	if	valid,	would	entitle	Sabre	to	make	it	more	difficult	for	travel	agents	to	find	American's	fares through	its	GDS	and	materially	increase	the	fees	it	charges	American	for	bookings	through	its	GDS,	as	well	as	allowing	Sabre	to	terminate	its	GDS	agreements	with	American	entirely	in	August	2011. Sabre	alleges	that	our	contract	allowed	it	to	take	these	actions	in	response	to	statements	that	American	made	in	the	press	concerning	our	direct	connection	technology.	Sabre	is	the	largest	non-direct source	of	American's	bookings.	In	2010,	over	$7	billion	of	American's	passenger	revenues	were	generated	from	bookings	made	through	the	Sabre	GDS.	In	response	to	Sabre's	actions,	on	January	10, 2011,	American	filed	a	lawsuit	against	Sabre	in	Texas	state	court	on	several	grounds.	The	court	temporarily	enjoined	Sabre	from	"biasing"	or	making	it	more	difficult	to	find	American's	fares	on	the Sabre	GDS,	and	set	a	preliminary	injunction	hearing	for	February	14,

2011.	On	January	23,	2011,	American	and	Sabre	entered	into	a	Stand	Down	Agreement	that	suspended	the	litigation	until	June	1,	2011	and	vacated	the	February	14	hearing	date.	During	this	period,	Sabre agreed	(1)	not	to	take	any	actions	to	bias	the	display	of	American's	services;	(2)	to	return	to	the	pricing	in	effect	on	January	4,	2011;	and	(3)	withdraw	its	notice	of	termination	of	certain	parts	of	the agreement.	We	can	give	no	assurances	that	we	will	resolve	our	disputes	with	Sabre	or	prevail	in	a	temporary	injunction	hearing	should	such	a	hearing	become	necessary	after	the	Stand	Down	Agreement with	Sabre	expires	on	June	1,	2011.	The	failure	to	resolve	these	issues	or	prevail	in	a	subsequent	hearing	could	have	a	material	adverse	impact	on	our	level	of	bookings,	business	and	results	of	operations.

While	we	believe	that	some	of	the	bookings	through	Orbitz,	Travelport,	Expedia	and	Sabre	have	transitioned	or	will	transition	to	other	distribution	channels,	such	as	other	travel	agencies, metasearch	sites	and	American's	AA.com	web	site,	it	is	not	possible	at	this	time	to	estimate	what	the	ultimate	impact	would	be	to	our	business	if	we	are	unsuccessful	in	resolving	one	or	more	of	these matters.	If	as	a	result	of	these	matters	it	becomes	more	difficult	for	our	customers	to	find	and	book	flights	on	American,	we	could	be	put	at	a	competitive	disadvantage	against	our	competitors	and	this may	result	in	lower	bookings.	If	we	are	unable	to	sell	American	inventory	through	any	or	all	of	these	channels,	our	level	of	bookings,	business	and	results	of	operations	could	be	materially	adversely affected.	We	also	believe	the	actions	taken	by	Travelport	and	Sabre	described	above	are	not	permitted	by	the	applicable	contracts.	We	intend	to	vigorously	pursue	our	claims	and	defenses	in	the	lawsuits described	above,	but	there	can	be	no	assurance	of	the	outcome	of	any	such	lawsuit.

# Financial	Highlights

The	Company	recorded	a	net	loss	of	$471	million	in	2010	compared	to	a	net	loss	of	$1.5	billion	in	2009.	The	Company's	smaller	net	loss	in	2010	reflects	an	improvement	in	a	weak	global economy;	which	led	to	higher	passenger	revenues,	partially	offset	by	higher	fuel	prices.	Mainline	passenger	revenue	increased	by	$1.7	billion	to	$16.8	billion	for	the	year	ended	December	31,	2010 compared	to	2009.	Mainline	passenger	unit	revenues	increased	10.4	percent	in	2010	due	to	an	8.7	percent	increase	in	passenger	yield	compared	to	2009	and	a	load	factor	increase	of	approximately	1.2 points.	Passenger	yield	remains	below	the	Company's	peak	yield	set	in	the	year	2000,	despite	cumulative	inflation	of	approximately	27	percent	over	the	same	time	frame.	The	Company	believes	this	is the	result	of	a	fragmented	industry	with	numerous	competitors	and	excess	capacity,	increased	low	cost	carrier	competition,	increased	price	competition	due	to	the	internet,	and	other	factors.	Since deregulation	in	1978,	the	Company's	passenger	yield	has	increased	78	percent,	while	the	Consumer	Price	Index	(CPI),	as	measured	by	the	U.S.	Department	of	Labor	Bureau	of	Labor	Statistics,	has	grown by	over	225	percent.	The	Company	believes	increases	in	passenger	yield	will	continue	to	significantly	lag	CPI	indefinitely.

The	increase	in	total	passenger	revenue	was	partially	offset	by	significantly	higher	year-over-year	fuel	prices.	Fuel	expense,	taking	into	account	the	impact	of	fuel	hedging,	increased	by $847	million	to	$6.4	billion	for	the	year	ended	December	31,	2010	compared	to	2009.	Hedging	losses	accounted	for	approximately	$142	million	of	the	overall	increase	in	fuel	expense.	The	Company	paid an	average	of	$2.32	per	gallon	in	2010	compared	to	an	average	of	$2.01	per	gallon	in	2009,	including	effects	of	hedging.	Although	fuel	prices	have	abated	considerably	from	the	record	high	prices recorded	in	July	2008,	they	have	increased	since	the	first	quarter	of	2009,	particularly	recently,	and	remain	high	and	extremely	volatile	by	historical	standards.	In	addition,	the	Company's	unit	costs, excluding	fuel	and	special	charges,	were	greater	for	the	year	ended	December	31,	2010	than	for	the	same	period	in	2009.	Factors	driving	the	increase	include	revenue	related	costs,	such	as	credit	card	fees and	booking	fees	and	commissions,	and	higher	aircraft	rent	related	to	the	Company's	fleet	renewal	plan.	The	Company	remains	focused	on	cost	reductions,	but	expects	such	factors	to	result	in	continuing cost	pressures	in	2011.

In	addition,	the	Company's	2010	results	were	negatively	impacted	by	a	net	amount	of	$81	million	in	special	items	related	to	the	Venezuelan	currency	remeasurement	in	January	2010	and	a	non- cash	impairment	charge	to	write	down	certain	routes	and	slot	authorities	in	Latin	America	as	a	result	of	open	skies	agreements.	Comparatively,	the	Company's	2009	operating	results	were	negatively impacted	by	a	net	amount	of	$107	million	in	special	items,	restructuring	charges	and	a	non-cash	tax	item,	including	$184	million	from	the	impairment	of	certain	route	and	slot	authorities,	primarily	in Latin	America,	and	losses	on	certain	sale	leaseback	transactions.	Restructuring	charges	for	2009	were	$171	million	and	related	to	announced	capacity	reductions,	including	the	grounding	of	the	Airbus A300	fleet	and	the	impairment	of	certain	Embraer	RJ-135	aircraft.	Also	included	in	2009	results	is	a	$248	million	non-

cash	tax	benefit	resulting	from	the	allocation	of	the	tax	expense	to	other	comprehensive	income	items	recognized	during	2009.	The	2009	restructuring	charges,	the	2009	non-cash	tax	item	and	the	2010 and	2009	route	impairments	are	described	in	Notes	2,	8	and	11,	respectively,	to	the	consolidated	financial	statements.

The	Company's	ability	to	become	profitable	and	its	ability	to	continue	to	fund	its	obligations	on	an	ongoing	basis	will	depend	on	a	number	of	factors,	many	of	which	are	largely	beyond	the Company's	control.	Certain	risk	factors	that	affect	the	Company's	business	and	financial	results	are	discussed	in	the	Risk	Factors	listed	in	Item	1A.

In	order	to	remain	competitive	and	to	improve	its	financial	condition,	the	Company	must	continue	to	take	steps	to	generate	additional	revenues	and	to	reduce	its	costs.	Although	the	Company	has a	number	of	initiatives	underway	to	address	its	cost	and	revenue	challenges,	some	of	these	initiatives	involve	changes	to	the	Company's	business	which	it	may	be	unable	to	implement.	It	has	become increasingly	difficult	to	identify	and	implement	significant	revenue	enhancement	and	cost	savings	initiatives.	The	adequacy	and	ultimate	success	of	the	Company's	initiatives	to	generate	additional revenues	and	reduce	costs	cannot	be	assured.	Moreover,	whether	the	Company's	initiatives	will	be	adequate	or	successful	depends	in	large	measure	on	factors	beyond	its	control,	notably	the	overall industry	environment,	including	passenger	demand,	yield	and	industry	capacity	growth,	and	fuel	prices.	It	will	be	very	difficult	for	the	Company	to	continue	to	fund	its	obligations	on	an	ongoing	basis, and	to	return	to	profitability,	if	the	overall	industry	revenue	environment	does	not	continue	to	improve	or	if	fuel	prices	were	to	increase	and	persist	for	an	extended	period	at	high	levels.

# Liquidity	and	Capital	Resources

Cash,	Short-Term	Investments	and	Restricted	Assets		At	December	31,	2010,	the	Company	had	$4.5	billion	in	unrestricted	cash	and	short-term	investments	and	$450	million	in	Restricted	cash and	short-term	investments,	both	at	fair	value,	versus	$4.4	billion	in	unrestricted	cash	and	short-term	investments	and	$460	million	in	Restricted	cash	and	short-term	investments	in	2009.

The	Company's	unrestricted	short-term	investment	portfolio	consist	of	a	variety	of	what	the	Company	believes	are	highly	liquid,	low	risk	instruments	including	money	market	funds,	government agency	investments,	repurchase	investments,	short-term	obligations,	corporate	obligations,	bank	notes,	certificates	of	deposit	and	time	deposits.	AMR's	objectives	for	its	investment	portfolio	are	(1)	the safety	of	principal,	(2)	liquidity	maintenance,	(3)	yield	maximization,	and	(4)	the	full	investment	of	all	available	funds.	The	Company's	risk	management	policy	further	emphasizes	superior	credit	quality (primarily	based	on	short-term	ratings	by	nationally	recognized	statistical	rating	organizations)	in	selecting	and	maintaining	investments	in	its	portfolio	and	enforces	limits	on	the	proportion	of	funds invested	with	one	issuer,	one	industry,	or	one	type	of	instrument.	The	Company	regularly	assesses	the	market	risks	of	its	portfolio,	and	believes	that	its	established	policies	and	business	practices adequately	limit	those	risks.	As	a	result,	the	Company	does	not	anticipate	any	material	adverse	impact	from	these	risks.

Significant	Indebtedness	and	Future	Financing		Indebtedness	is	a	significant	risk	to	the	Company	as	discussed	in	the	Risk	Factors	listed	in	Item	1A.	During	the	last	five	years,	the	Company	raised an	aggregate	of	approximately	$8.8	billion	in	financing	to	fund	operating	losses,	capital	commitments	(mainly	for	aircraft	and	ground	properties),	debt	maturities,	employee	pension	obligations	and	to bolster	its	liquidity.	As	of	the	date	of	this	Form	10-K,	the	Company	believes	that	it	should	have	sufficient	liquidity	to	fund	its	operations,	including	repayment	of	debt	and	capital	leases,	capital expenditures	and	other	contractual	obligations;	however,	there	can	be	no	assurances	to	that	effect.

In	addition,	the	Company	has	financing	commitments	covering	all	aircraft	scheduled	to	be	delivered	to	the	Company	in	2011	and	2012,	except	for	the	two	Boeing	777-300ER	aircraft	recently ordered.	Such	financing	commitments	are	subject	to	certain	terms	and	conditions,	including	in	some	instances	a	condition	that	the	Company	have	at	least	a	certain	minimum	amount	of	liquidity.

In	2011,	the	Company	will	be	required	to	make	approximately	$2.4	billion	of	principal	payments	on	long-term	debt	and	approximately	$100	million	in	principal	payments	on	capital	leases,	and the	Company	expects	to	spend	approximately	$1.6	billion	on	capital	expenditures,	including	aircraft	commitments.	In	addition,	the	fragile	economy,	rising	fuel	prices,	the	possibility	of	being	required	to post	reserves	under	credit	card	processing

agreements,	and	the	obligation	to	post	cash	collateral	on	fuel	hedging	contracts	and	fund	pension	plan	contributions,	among	other	things,	may	in	the	future	negatively	impact	the	Company's	liquidity.	To maintain	sufficient	liquidity,	and	because	the	Company	has	significant	debt,	lease	and	other	obligations	in	the	next	several	years,	including	commitments	to	purchase	aircraft,	as	well	as	significant pension	funding	obligations	(refer	to	"Contractual	Obligations"	in	Item	7),	the	Company	will	need	access	to	substantial	additional	funding.	An	inability	to	obtain	necessary	additional	funding	on acceptable	terms	would	have	a	material	adverse	impact	on	the	Company	and	on	its	ability	to	sustain	its	operations.

On	January	25,	2011,	American	closed	on	a	$657	million	offering	of	Class	A	and	Class	B	Pass	Through	Trust	Certificates	(the	Certificates).	The	equipment	notes	expected	to	be	held	by	each	pass through	trust	will	be	issued	for	each	of	(a)	15	Boeing	737-823	aircraft	delivered	new	to	American	from	1999	to	2001,	(b)	six	Boeing	757-223	aircraft	delivered	new	to	American	in	1999	and	2001, (c)	two	Boeing	767-323ER	aircraft	delivered	new	to	American	in	1999	and	(d)	seven	Boeing	777-223ER	aircraft	delivered	new	to	American	from	1999	to	2000.	At	closing,	27	of	the	aircraft	were encumbered	by	either	private	mortgages	or	by	liens	to	secure	debt	incurred	in	connection	with	the	issuance	of	enhanced	equipment	trust	certificates	in	2001,	all	of	which	mature	in	2011.	As	a	result,	the proceeds	from	the	sale	of	the	Certificates	of	each	trust	will	initially	be	held	in	escrow	with	a	depositary,	pending	the	financing	of	each	aircraft	under	an	indenture	relating	to	the	Certificates.	Interest	of 5.25%	and	7.00%	per	annum	on	the	issued	and	outstanding	Series	A	equipment	notes	and	Series	B	equipment	notes,	respectively,	will	be	payable	semiannually	on	January	31	and	July	31	of	each	year, commencing	on	July	31,	2011,	and	principal	on	such	equipment	notes	is	scheduled	for	payment	on	January	31	and	July	31	of	certain	years,	commencing	on	July	31,	2011.	The	payment	obligations	of American	under	the	equipment	notes	will	be	fully	and	unconditionally	guaranteed	by	AMR	Corporation.

The	Company's	substantial	indebtedness	and	other	obligations	have	important	consequences.	For	example,	they:	(i)	limit	the	Company's	ability	to	obtain	additional	funding	for	working	capital, capital	expenditures,	acquisitions,	investments	and	general	corporate	purposes,	as	well	as	adversely	affect	the	terms	on	which	such	funding	could	be	obtained;	(ii)	require	the	Company	to	dedicate	a substantial	portion	of	its	cash	flow	from	operations	to	payments	on	its	indebtedness	and	other	obligations,	thereby	reducing	the	funds	available	for	other	purposes;	(iii)	make	the	Company	more vulnerable	to	economic	downturns	and	catastrophic	external	events;	and	(iv)	limit	the	Company's	ability	to	withstand	competitive	pressures	and	reduce	its	flexibility	in	responding	to	changing	business and	economic	conditions.

The	Company's	possible	remaining	financing	sources	primarily	include:	(i)	a	very	limited	amount	of	additional	secured	aircraft	debt	or	sale	leaseback	transactions	involving	owned	aircraft; (ii)	debt	secured	by	other	assets;	(iii)	securitization	of	future	operating	receipts;	(iv)	the	sale	or	monetization	of	certain	assets;	(v)	unsecured	debt;	and	(vi)	issuance	of	equity	or	equity-like	securities. Besides	unencumbered	aircraft,	the	Company's	most	likely	sources	of	liquidity	include	the	financing	of	route	authorities,	takeoff	and	landing	slots,	spare	parts,	and	the	sale	or	financing	of	certain	of AMR's	business	units	and	subsidiaries,	such	as	AMR	Eagle.	The	Company's	ability	to	obtain	future	financing	is	limited	by	the	value	of	its	unencumbered	assets.	Almost	all	of	the	Company's	aircraft assets	(including	aircraft	eligible	for	the	benefits	of	Section	1110	of	the	U.S.	Bankruptcy	Code)	are	encumbered.	Also,	the	market	value	of	these	aircraft	assets	has	declined	in	recent	years,	and	may continue	to	decline.	The	Company	believes	it	has	at	least	$2	billion	in	assets	that	could	be	used	as	possible	financing	sources	as	of	the	date	of	this	filing.	However,	many	of	these	assets	may	be	difficult	to finance,	and	the	availability	and	level	of	the	financing	sources	described	above	cannot	be	assured.	The	Company	also	believes	it	has	the	ability	to	refinance	aircraft	as	those	aircraft	become unencumbered.

In	July	2010,	the	Company	entered	into	an	amendment	to	Purchase	Agreement	No.	1977	with	The	Boeing	Company	(Boeing)	to	exercise	rights	to	acquire	additional	Boeing	737-800	aircraft. Pursuant	to	the	amendment,	American	exercised	rights	to	purchase	35	Boeing	737-800	aircraft	for	delivery	in	2011	and	2012.	In	conjunction	with	this	transaction,	American	has	arranged	for	backstop financing	of	the	additional	Boeing	737-800	aircraft	deliveries,	subject	to	certain	terms	and	conditions.

As	of	December	31,	2010,	American	had	15	Boeing	737-800	purchase	commitments	for	2011	and	28	Boeing	737-800	purchase	commitments	in	2012	and	in	addition	to	those	commitments, American	had	firm	commitments	for	eleven	Boeing	737-800	aircraft	and	seven	Boeing	777-200	aircraft	scheduled	to	be	delivered	in	2013-2016.

AMR	Eagle	has	firm	commitments	for	8	Bombardier	CRJ-700	aircraft	scheduled	to	be	delivered	in	2011.	Payments	for	the	Company's	aircraft	purchase	commitments	will	approximate	$884	million	in 2011,	$951	million	in	2012,	$491	million	in	2013,	$291	million	in	2014,	$169	million	for	2015,	and	$79	million	for	2016.	These	amounts	are	net	of	purchase	deposits	currently	held	by	the	manufacturers.

On	January	14,	2011,	the	Company	entered	into	an	amendment	to	Purchase	Agreement	No.	1980	with	Boeing	to	exercise	rights	to	acquire	two	Boeing	777-300ER	aircraft	for	delivery	in	2012. The	Company's	total	purchase	commitments	are	expected	to	be	approximately	$2.8	billion	as	of	the	end	of	the	first	quarter	2011,	reflecting	this	transaction	and	aircraft	purchase	deposits	paid	during	that period.

In	2008,	the	Company	entered	into	a	new	purchase	agreement	with	Boeing	for	the	acquisition	of	42	firm	Boeing	787-9	aircraft	and	purchase	rights	to	acquire	up	to	58	additional	B787	aircraft.	Per the	purchase	agreement,	the	first	such	aircraft	was	scheduled	to	be	delivered	in	2012,	and	the	last	firm	aircraft	was	scheduled	to	be	delivered	in	2018	with	deliveries	of	additional	aircraft,	if	any,	scheduled between	2015	and	2020.	In	July	2010,	the	Company	and	Boeing	agreed	upon	a	revised	delivery	schedule	due	to	the	impact	of	the	overall	Boeing	787	program	delay	on	American's	delivery	positions.	The first	aircraft	is	currently	scheduled	to	be	delivered	in	2014,	and	the	last	firm	aircraft	is	scheduled	to	be	delivered	in	2018	with	deliveries	of	additional	aircraft,	if	any,	scheduled	between	2016	and	2021. Additionally,	the	revised	delivery	schedule	includes	terms	and	conditions	consistent	with	the	original	agreement	and	allows	the	Company	the	confirmation	rights	described	below.

Under	the	current	787-9	purchase	agreement	and	supplemental	agreement,	except	as	described	below,	American	will	not	be	obligated	to	purchase	a	787-9	aircraft	unless	it	gives	Boeing	notice confirming	its	election	to	do	so	at	least	18	months	prior	to	the	scheduled	delivery	date	for	that	aircraft.	If	American	does	not	give	that	notice	with	respect	to	an	aircraft,	the	aircraft	will	no	longer	be subject	to	the	787-9	purchase	agreement.	These	confirmation	rights	may	be	exercised	until	a	specified	date	(May	1,	2014	under	the	current	agreement)	provided	that	those	rights	will	terminate	earlier	if American	reaches	a	collective	bargaining	agreement	with	its	pilot	union	that	includes	provisions	enabling	American	to	utilize	the	787-9	to	American's	satisfaction	in	the	operations	desired	by	American, or	if	American	confirms	its	election	to	purchase	any	of	the	initial	42	787-9	aircraft.	While	there	can	be	no	assurances,	American	expects	that	it	will	have	reached	an	agreement	as	described	above	with	its pilots	union	prior	to	the	first	notification	date.	In	either	of	those	events,	American	would	become	obligated	to	purchase	all	of	the	initial	42	aircraft	then	subject	to	the	purchase	agreement.	If	neither	of those	events	occurs	prior	to	the	specified	date	(May	1,	2014	under	the	current	agreement)	then	on	that	date	American	may	elect	to	purchase	all	of	the	initial	42	aircraft	then	subject	to	the	purchase agreement,	and	if	it	does	not	elect	to	do	so,	the	purchase	agreement	will	terminate	in	its	entirety.

Credit	Ratings		AMR's	and	American's	credit	ratings	are	significantly	below	investment	grade.	Additional	reductions	in	AMR's	or	American's	credit	ratings	could	further	increase	the Company's	borrowing	or	other	costs	and	further	restrict	the	availability	of	future	financing.

Credit	Card	Processing	and	Other	Reserves		American	has	agreements	with	a	number	of	credit	card	companies	and	processors	to	accept	credit	cards	for	the	sale	of	air	travel	and	other	services. Under	certain	of	these	agreements,	the	credit	card	processor	may	hold	back	a	reserve	from	American's	credit	card	receivables	following	the	occurrence	of	certain	events,	including	the	failure	of American	to	maintain	certain	levels	of	liquidity	(as	specified	in	each	agreement).

Under	such	agreements,	the	amount	of	the	reserve	that	may	be	required	generally	is	based	on	the	processor's	exposure	to	the	Company	under	the	applicable	agreement	and,	in	the	case	a	reserve	is required	because	of	AMR's	failure	to	maintain	a	certain	level	of	liquidity,	the	amount	of	such	liquidity.	As	of	December	31,	2010,	the	Company	was	not	required	to	maintain	any	reserve	under	such agreements.	If	circumstances	were	to	occur	that	would	allow	the	credit	card	processor	to	require	the	Company	to	maintain	a	reserve,	the	Company's	liquidity	would	be	negatively	impacted.

Cash	Flow	Activity		The	Company's	cash	flow	from	operating	activities	during	the	year	ended	December	31,	2010	generated	$1.2	billion,	which	is	an	increase	of	$311	million	from	the	same period	in	2009	primarily	due	to	an	improved	revenue	environment	in	2010	as	compared	to	2009.

The	Company	made	debt	and	capital	lease	payments	of	$1.2	billion	in	2010	while	capital	expenditures	during	2010	were	$2.0	billion	and	primarily	included	new	aircraft	and	aircraft modifications.	Substantially	all	of	the	aircraft	were	financed	through	previously	arranged	financing	transactions.

Due	to	the	current	value	of	the	Company's	derivative	contracts,	some	agreements	with	counterparties	require	collateral	to	be	deposited	by	the	counterparty.	As	of	December	31,	2010,	the	cash collateral	held	by	AMR	from	such	counterparties	was	$73	million	as	compared	to	$14	million	held	by	such	counterparties	at	December	31,	2009.	Cash	held	at	December	31,	2010	from	counterparties	is included	in	short-term	investments.	As	a	result	of	movements	in	fuel	prices,	the	cash	collateral	amounts	held	by	AMR	or	the	counterparties	to	such	contracts,	as	the	case	may	be,	can	vary	significantly.

In	the	past,	the	Company	has	from	time	to	time	refinanced,	redeemed	or	repurchased	its	debt	and	taken	other	steps	to	reduce	its	debt	or	lease	obligations	or	otherwise	improve	its	balance	sheet. Going	forward,	depending	on	market	conditions,	its	cash	positions	and	other	considerations,	the	Company	may	continue	to	take	such	actions.

Certain	of	the	Company's	debt	financing	agreements	contain	loan	to	value	ratio	covenants	and	require	the	Company	to	periodically	appraise	the	collateral.	Pursuant	to	such	agreements,	if	the	loan to	value	ratio	exceeds	a	specified	threshold,	the	Company	may	be	required	to	subject	additional	qualifying	collateral	(which	in	some	cases	may	include	cash	collateral)	or,	in	the	alternative,	to	pay	down such	financing,	in	whole	or	in	part,	with	premium	(if	any).

Compensation		On	January	18,	2011,	the	Company	approved	the	2011	Annual	Incentive	Plan	(AIP)	for	American.	All	U.S.	based	employees	of	American	are	eligible	to	participate	in	the	AIP.	The AIP	is	American's	annual	bonus	plan	and	provides	for	the	payment	of	awards	in	the	event	certain	financial	and/or	customer	service	metrics	are	satisfied.

Working	Capital		AMR	(principally	American)	historically	operates	with	a	working	capital	deficit,	as	do	most	other	airline	companies.	In	addition,	the	Company	has	historically	relied	heavily	on external	financing	to	fund	capital	expenditures.	More	recently,	the	Company	has	also	relied	on	external	financing	to	fund	operating	losses,	employee	pension	obligations	and	debt	maturities.

Off	Balance	Sheet	Arrangements		American	has	determined	that	it	holds	a	significant	variable	interest	in,	but	is	not	the	primary	beneficiary	of,	certain	trusts	that	are	the	lessors	under	83	of	its aircraft	operating	leases.	These	leases	contain	a	fixed	price	purchase	option,	which	allows	American	to	purchase	the	aircraft	at	a	predetermined	price	on	a	specified	date.	However,	American	does	not guarantee	the	residual	value	of	the	aircraft.	As	of	December	31,	2010,	future	lease	payments	required	under	these	leases	totaled	$1.1	billion.

Certain	special	facility	revenue	bonds	have	been	issued	by	certain	municipalities	primarily	to	purchase	equipment	and	improve	airport	facilities	that	are	leased	by	American	and	accounted	for	as operating	leases.	Approximately	$1.5	billion	of	these	bonds	(with	total	future	payments	of	approximately	$3.2	billion	as	of	December	31,	2010)	are	guaranteed	by	American,	AMR,	or	both. Approximately	$177	million	of	these	special	facility	revenue	bonds	contain	mandatory	tender	provisions	that	require	American	to	make	operating	lease	payments	sufficient	to	repurchase	the	bonds	at various	times:	$112	million	in	2014	and	$65	million	in	2015.	Although	American	has	the	right	to	remarket	the	bonds,	there	can	be	no	assurance	that	these	bonds	will	be	successfully	remarketed.	Any payments	to	redeem	or	purchase	bonds	that	are	not	remarketed	would	generally	reduce	existing	rent	leveling	accruals	or	are	considered	prepaid	facility	rentals	and	would	reduce	future	operating	lease commitments.

In	addition,	the	Company	had	other	operating	leases,	primarily	for	aircraft	and	airport	facilities,	with	total	future	lease	payments	of	$6.5	billion	as	of	December	31,	2010.	Entering	into	aircraft leases	allows	the	Company	to	obtain	aircraft	without	immediate	cash	outflows.

# Contractual	Obligations

The	following	table	summarizes	the	Company's	obligations	and	commitments	as	of	December	31,	2010	(in	millions):

| Contractual	Obligations | Total | 2011 | 2012<br>and<br>2013 | 2014<br>and<br>2015 | 2016	and<br>Beyond |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\tlease\tpayments\tfor\taircraft\tand\tfacility\tobligations(1) | $10,804 | $1,254 | $2,041 | $1,503 | $6,006 |
| Firm\taircraft\tcommitments(2) | 2,865 | 884 | 1,442 | 460 | 79 |
| Capacity\tpurchase\tagreement(3) | 71 | 56 | 15 | — | — |
| Long-term\tdebt(4) | 14,558 | 2,997 | 3,654 | 2,778 | 5,129 |
| Capital\tlease\tobligations | 976 | 186 | 256 | 185 | 349 |
| Other\tpurchase\tobligations(5) | 1,030 | 238 | 247 | 169 | 376 |
| Other\tlong-term\tliabilities(6) | 7,624 | 700 | 1,330 | 1,259 | 4,335 |
| Total\tobligations\tand\tcommitments(7) | $37,928 | $6,315 | $8,985 | $6,354 | $16,274 |

(1) Certain	special	facility	revenue	bonds	issued	by	municipalities	—	which	are	supported	by	operating	leases	executed	by	American	—	are	guaranteed	by	AMR	and/or	American.	The	special	facility revenue	bonds	with	mandatory	tender	provisions	discussed	above	are	included	in	this	table	based	on	lease	payment	terms	rather	than	their	mandatory	tender	provision	date.	See	Note	5	to	the consolidated	financial	statements	for	additional	information.

(2) As	of	December	31,	2010,	the	Company	had	firm	commitments	to	acquire	15	Boeing	737-800s	in	2011	and	28	Boeing	737-800	aircraft	in	2012,	and	in	addition	to	those	commitments,	the Company	had	firm	commitments	for	eleven	Boeing	737-800	aircraft	and	seven	Boeing	777	aircraft	scheduled	to	be	delivered	in	2013	—	2016.	AMR	Eagle	has	firm	commitments	for	8 Bombardier	CRJ-700	aircraft	scheduled	to	be	delivered	in	2011.	Future	payments	for	all	aircraft,	including	the	estimated	amounts	for	price	escalation,	are	currently	estimated	to	be	approximately $2.9	billion,	with	the	majority	occurring	in	2011	through	2013.	Additional	information	about	the	Company's	obligations	is	included	in	Note	4	to	the	consolidated	financial	statements.

(3) The	table	reflects	minimum	required	payments	under	the	capacity	purchase	agreement	between	American	and	a	regional	airline,	Chautauqua	Airlines,	Inc.	(Chautauqua).	If	the	Company	terminates its	contract	with	Chautauqua	without	cause,	Chautauqua	has	the	right	to	put	its	15	Embraer	aircraft	to	the	Company.	If	this	were	to	happen,	the	Company	would	take	possession	of	the	aircraft	and become	liable	for	lease	obligations	totaling	approximately	$21	million	per	year	with	lease	expirations	in	2018	and	2019.	These	lease	obligations	are	not	included	in	the	table	above.	See	Note	4	to the	consolidated	financial	statements	for	additional	information.

(4) Amounts	represent	contractual	amounts	due,	including	interest.	Interest	on	variable	rate	debt	was	estimated	based	on	the	current	rate	at	December	31,	2010.

(5) Includes	noncancelable	commitments	to	purchase	goods	or	services,	primarily	information	technology	related	support.	The	Company	has	made	estimates	as	to	the	timing	of	certain	payments primarily	for	construction	related	costs.	The	actual	timing	of	payments	may	vary	from	these	estimates.	Substantially	all	of	the	Company's	purchase	orders	issued	for	other	purchases	in	the	ordinary course	of	business	contain	a	30-day	cancellation	clause	that	allows	the	Company	to	cancel	an	order	with	30	days	notice.

(6) Includes	minimum	pension	contributions	based	on	actuarially	determined	estimates	and	other	postretirement	benefit	payments	based	on	estimated	payments	through	2020.	See	Note	10	to	the consolidated	financial	statements.

(7) Total	contractual	obligations	do	not	include	long-term	contracts	that	represent	a	variable	expense	(based	on	levels	of	operation)	or	where	short-term	cancellation	provisions	exist.

Pension	Obligations		The	Company	is	required	to	make	minimum	contributions	to	its	defined	benefit	pension	plans	under	the	minimum	funding	requirements	of	the	Employee	Retirement Income	Security	Act	(ERISA),	the	Pension	Funding	Equity	Act	of	2004,	the	Pension	Protection	Act	of	2006,	and	the	Pension	Relief	Act	of	2010.	The	Company	estimates	its	2011	required	contribution	to its	defined	benefit	pension	plans	to	be	approximately	$520	million	under	the	provisions	of	these	acts.

The	Company's	obligation	for	pension	and	retiree	medical	and	other	benefits	increased	from	$7.4	billion	at	December	31,	2009	to	$7.9	billion	at	December	31,	2010,	largely	the	result	of	a	lower discount	rate	associated	with	declining	interest	rates	in	the	bond	markets	in	2010.	A	significant	portion	of	this	increase	is	recorded	in	Accumulated	other	comprehensive	loss,	a	component	of stockholders'	equity.

# Results	of	Operations

The	Company	recorded	a	net	loss	of	$471	million	in	2010	compared	to	a	net	loss	of	$1.5	billion	in	2009.	The	Company's	smaller	net	loss	in	2010	reflects	a	strengthening	of	the	revenue environment	in	a	weak	global	economy	which	led	to	higher	passenger	revenues,	partially	offset	by	higher	fuel	prices.	In	addition	to	higher	fuel	expenses,	the	Company's	2010	results	were	negatively impacted	by	$81	million	in	special	items.	The	special	items	consist	of	$53	million	related	to	the	Venezuelan	currency	remeasurement	in	January	2010	and	a	$28	million	non-cash	impairment	of	certain routes	in	Latin	America.

The	Company	recorded	a	net	loss	of	$1.5	billion	in	2009	compared	to	a	net	loss	of	$2.1	billion	in	2008.	The	Company's	2009	loss	was	primarily	attributable	to	a	significant	decrease	in	passenger revenue	due	to	lower	traffic	and	passenger	yield.	The	2009	results	were	also	negatively	impacted	by	a	net	amount	of	$107	million	in	special	items,	restructuring	charges	and	a	non-cash	tax	item.	2009 special	items	of	$184	million	included	the	impairment	of	certain	route	and	slot	authorities,	primarily	in	Latin	America,	and	losses	on	certain	sale	leaseback	transactions.	Restructuring	charges	for	2009 were	$171	million	and	related	to	announced	capacity	reductions,	including	the	grounding	of	the	Airbus	A300	fleet	and	the	impairment	of	certain	Embraer	RJ-135	aircraft.	Also	included	in	2009	results	is a	$248	million	non-cash	tax	benefit	resulting	from	the	allocation	of	the	tax	expense	to	other	comprehensive	income	items	recognized	during	2009.	The	2009	restructuring	charges,	the	2009	non-cash	tax item	and	the	2010	and	2009	route	impairments	are	described	in	Notes	2,	8	and	11,	respectively,	to	the	consolidated	financial	statements.

The	Company	recorded	a	net	loss	of	$2.1	billion	in	2008.	The	Company's	2008	results	included	an	impairment	charge	of	$1.1	billion	to	write	the	McDonnell	Douglas	MD-80	and	Embraer	RJ- 135	fleets	and	certain	related	long-lived	assets	down	to	their	estimated	fair	values,	a	$71	million	accrual	for	employee	severance	cost	and	a	$33	million	expense	related	to	the	grounding	of	leased	Airbus A300	aircraft	prior	to	lease	expiration,	all	in	connection	with	announced	capacity	reductions	and	included	in	Special	charges	in	the	Consolidated	Statements	of	Operations.	In	addition,	the	Company's 2008	results	included	the	sale	of	American	Beacon	for	a	net	gain	of	$432	million	included	in	Miscellaneous-net	on	the	Consolidated	Statements	of	Operations	and	the	impact	of	a	pension	settlement charge	of	$103	million	for	one	of	the	Company's	defined	benefit	plans	included	in	Wages,	salaries	and	benefits	on	the	Consolidated	Statements	of	Operations.

# Revenues

2010	Compared	to	2009		The	Company's	revenues	increased	approximately	$2.3	billion,	or	11.3	percent,	to	$22.2	billion	in	2010	compared	to	2009	due	to	increased	traffic	and	higher	average fares.	American's	passenger	revenues	increased	by	11.5	percent,	or	$1.7	billion,	on	a	capacity	(ASM)	increase	of	1.0	percent.	American's	passenger	load	factor	increased	approximately	1.2	points	to 81.9	percent	and	passenger	revenue	yield	per	passenger	mile	increased	8.7	percent	to	13.36	cents.	This	resulted	in	an	increase	in	passenger	revenue	per	available	seat	mile	(RASM)	of	10.4	percent	to	10.94 cents.	In	2010,	American	derived	approximately	60	percent	of	its	passenger	revenues	from	domestic	operations	and	approximately	40	percent	from	international	operations	(flights	serving

international	destinations).	Following	is	additional	information	regarding	American's	domestic	and	international	RASM	and	capacity:

|  |  | Year	Ended	December	31,	2010 | Year	Ended	December	31,	2010 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | RASM\n(Cents) | Y-O-Y\nChange | ASMs\n(Billions) | Y-O-Y\nChange |
| DOT\tDomestic | \t10.80 | 9.5% | 93.2 | 0.2% |
| International | \t11.14 | \t11.8 | 60.0 | 2.2 |
| DOT\tLatin\tAmerica | \t11.80 | 8.1 | 29.4 | 3.7 |
| DOT\tAtlantic | \t10.58 | \t15.9 | 23.2 | \t(1.9) |
| DOT\tPacific | \t10.29 | \t15.7 | 7.4 | 9.8 |

Regional	Affiliates'	passenger	revenues,	which	are	based	on	industry	standard	proration	agreements	for	flights	connecting	to	American	flights,	increased	$315	million	or	15.7	percent	as	a	result	of passenger	yield	increase	of	8.4	percent.	Regional	Affiliates'	traffic	increased	6.7	percent	to	8.8	billion	revenue	passenger	miles	(RPMs),	while	capacity	increased	5.3	percent	to	12.2	billion	ASMs, resulting	in	a	1.0	point	increase	in	passenger	load	factor	to	72.4	percent.

Cargo	revenues	increased	16.3	percent,	or	$94	million,	primarily	as	a	result	of	increased	volume,	particularly	in	the	Latin	America	and	Pacific	regions.

Other	revenues	increased	5.3	percent,	or	$121	million,	to	$2.4	billion	due	to	increases	in	certain	passenger	service	charge	volumes	and	fees	and	increased	revenue	associated	with	the	sale	of mileage	credits	in	the	AAdvantage	frequent	flyer	program.

2009	Compared	to	2008		The	Company's	revenues	decreased	approximately	$3.8	billion,	or	16.2	percent,	to	$19.9	billion	in	2009	compared	to	2008.	American's	passenger	revenues	decreased	by 17.5	percent,	or	$3.2	billion,	on	a	capacity	decrease	of	approximately	7.2	percent	year	over	year.	Mainline	passenger	load	factor	increased	approximately	0.1	points	to	80.7	percent	and	passenger	revenue yield	per	passenger	mile	decreased	11.2	percent	to	12.28	cents.	This	resulted	in	a	decrease	in	passenger	revenue	per	available	seat	mile	(RASM)	of	11.1	percent	to	9.91	cents.	In	2009,	American	derived approximately	60	percent	of	its	passenger	revenues	from	domestic	operations	and	approximately	40	percent	from	international	operations	(flights	serving	international	destinations).	Following	is additional	information	regarding	American's	domestic	and	international	RASM	and	capacity:

|  |  | Year	Ended	December	31,	2009 | Year	Ended	December	31,	2009 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | RASM\n(Cents) | Y-O-Y\nChange | ASMs\n(Billions) | Y-O-Y\nChange |
| DOT\tDomestic | 9.87 | (8.7)% | 93.0 | \t(8.7)% |
| International | 9.96 | \t(14.9) | 58.8 | \t(4.7) |
| DOT\tLatin\tAmerica | \t10.91 | \t(12.5) | 28.4 | \t(6.5) |
| DOT\tAtlantic | 9.13 | \t(16.7) | 23.7 | \t(3.7) |
| DOT\tPacific | 8.90 | \t(19.4) | 6.7 | 0.1 |

Regional	Affiliates'	passenger	revenues,	which	are	based	on	industry	standard	proration	agreements	for	flights	connecting	to	American	flights,	decreased	by	$474	million,	or	19.1	percent,	to $2.0	billion	as	a	result	of	a	reduction	in	capacity,	decreased	passenger	traffic	and	lower	yield.	Regional	Affiliates'	traffic	decreased	6.7	percent	to	8.3	billion	revenue	passenger	miles	(RPMs),	while capacity	decreased	8.2	percent	to	11.6	billion	ASMs,	resulting	in	a	1.2	point	increase	in	passenger	load	factor	to	71.4	percent.

Cargo	revenues	decreased	by	33.9	percent,	or	$296	million,	primarily	due	to	decreases	in	advertising	mail	and	freight	traffic	resulting	from	the	current	economic	downturn.

Other	revenues	increased	5.4	percent,	or	$118	million,	to	$2.3	billion	due	to	increases	in	certain	passenger	service	charges	instituted	throughout	the	year	in	2008.

# Operating	Expenses

2010	Compared	to	2009		The	Company's	total	operating	expenses	increased	4.5	percent,	or	$941	million,	to	$21.9	billion	in	2010	compared	to	2009.	American's	mainline	operating	expenses	per ASM	in	2010	increased	3.2	percent	compared	to	2009	to	12.62	cents.	The	increase	in	operating	expense	was	largely	due	to	a	year-over-year	increase	in	fuel	prices	from	$2.01	per	gallon	in	2009	to	$2.32 per	gallon	in	2010,	including	the	impact	of	fuel	hedging.	Fuel	expense	was	the	Company's	second	largest	single	expense	category	in	2010	and	the	price	increase	resulted	in	$847	million	in	incremental year-over-year	fuel	expense	in	2010	(based	on	the	year-over-year	increase	in	the	average	price	per	gallon	multiplied	by	gallons	consumed,	inclusive	of	the	impact	of	fuel	hedging).	A	return	to	the	recent historically	high	fuel	prices	and/or	disruptions	in	the	supply	of	fuel	would	further	materially	adversely	affect	the	Company's	financial	condition	and	results	of	operations.	The	remaining	increase	in operating	expense	was	primarily	due	to	revenue	related	expenses,	such	as	credit	card	fees	and	booking	fees	and	commissions,	and	increased	aircraft	rent	related	to	the	Company's	fleet	renewal	plan.

|  | Year	Ended | Change |  |
| :--- | :--- | :--- | :--- |
|  | December\t31, | from | Percentage |
| Operating\tExpenses | 2010 | 2009 | Change |
|  |  | (In\tmillions) |  |
| Wages,\tsalaries\tand\tbenefits | $6,847 | $40 | 0.6% |
| Aircraft\tfuel | 6,400 | 847 | 15.3(a) |
| Other\trentals\tand\tlanding\tfees | 1,418 | 65 | 4.8 |
| Depreciation\tand\tamortization | 1,093 | (11) | (1.0) |
| Maintenance,\tmaterials\tand\trepairs | 1,329 | 49 | 3.8 |
| Commissions,\tbooking\tfees\tand\tcredit\tcard\texpense | 976 | 123 | 14.5(b) |
| Aircraft\trentals | 580 | 75 | 14.9(c) |
| Food\tservice | 490 | 3 | 0.6 |
| Special\tcharges | — | (171) | *(d) |
| Other\toperating\texpenses | 2,729 | (79) | (2.8) |
| Total\toperating\texpenses | $21,862 | $941 | 4.5% |

(a) Aircraft	fuel	expense	increased	primarily	due	to	a	15.2	percent	increase	in	the	Company's	price	per	gallon	of	fuel	(net	of	the	impact	of	hedging	losses	of	$142	million).

(b) Commissions,	booking	fees	and	credit	card	expenses	increased	due	to	an	11.3	percent	increase	in	operating	revenues.

(c) Aircraft	rental	expense	increased	principally	due	to	new	aircraft	deliveries	in	2009	and	2010.

(d) Special	charges	in	2009	related	to	announced	capacity	reductions,	the	grounding	of	the	Airbus	A300	fleet	and	the	write	down	of	certain	Embraer	RJ-135	aircraft	to	their	estimated	fair	values.

2009	Compared	to	2008		The	Company's	total	operating	expenses	decreased	18.5	percent,	or	$4.7	billion,	to	$20.9	billion	in	2009	compared	to	2008.	American's	mainline	operating	expenses	per ASM	in	2009	decreased	11.9	percent	compared	to	2008	to	12.22	cents.	The	decrease	in	operating	expense	was	largely	due	to	a	year-over-year	decrease	in	AMR's	fuel	prices	from	$3.03	per	gallon	in	2008 to	$2.01	per	gallon	in	2009,	including	the	impact	of	fuel	hedging.	The	Company's	unit	costs	excluding	fuel	and	special	charges	were	greater	for	the	year	ended	December	31,	2009	than	the	year	ended December	31,	2008.	Factors	driving	the	increase	include	increased	defined	benefit	pension	expenses	(due	to	the	stock	market	decline	in	2008),	higher	airport	rent	and	landing	fees	and

cost	pressures	associated	with	the	Company's	capacity	reductions	announced	in	2008	and	2009	and	dependability	initiatives.

|  | Year	Ended | Change |  |
| :--- | :--- | :--- | :--- |
|  | December\t31, | from | Percentage |
| Operating\tExpenses | 2009 | 2008 | Change |
|  |  | (In\tmillions) |  |
| Wages,\tsalaries\tand\tbenefits | $6,807 | $152 | 2.3% |
| Aircraft\tfuel | 5,553 | (3,461) | (38.4)(a) |
| Other\trentals\tand\tlanding\tfees | 1,353 | 55 | 4.2 |
| Depreciation\tand\tamortization | 1,104 | (103) | (8.5) |
| Maintenance,\tmaterials\tand\trepairs | 1,280 | 43 | 3.5 |
| Commissions,\tbooking\tfees\tand\tcredit\tcard\texpense | 853 | (144) | (14.4)(b) |
| Aircraft\trentals | 505 | 13 | 2.6 |
| Food\tservice | 487 | (31) | (6.0) |
| Special\tcharges | 171 | (1,042) | (85.9)(c) |
| Other\toperating\texpenses | 2,808 | (216) | (7.1)(d) |
| Total\toperating\texpenses | $20,921 | $(4,734) | (18.5)% |

(a) Aircraft	fuel	expense	decreased	primarily	due	to	a	33.7	percent	decrease	in	the	Company's	price	per	gallon	of	fuel	(net	of	the	impact	of	fuel	hedging)	and	a	7.0	percent	decrease	in	the	Company's fuel	consumption.	The	Company	recorded	$651	million	in	net	losses	and	$380	million	in	net	gains	on	its	fuel	hedging	contracts	for	the	years	ended	December	31,	2009	and	2008,	respectively.

(b) Commissions,	booking	fees	and	credit	card	expense	decreased	in	conjunction	with	the	16.2	percent	decrease	in	the	Company's	revenues.

(c) Special	charges	in	2008	are	related	to	an	impairment	charge	of	$1.1	billion	to	write	down	the	Company's	McDonnell	Douglas	MD-80	and	Embraer	RJ-135	fleets	and	certain	related	long-lived assets	to	their	estimated	fair	values.	Special	charges	in	2009	relate	to	announced	capacity	reductions,	the	grounding	of	the	Airbus	A300	fleet	and	the	write	down	of	certain	Embraer	RJ-135	aircraft to	their	estimated	fair	values.

(d) Other	operating	expenses	in	2009	include	$184	million	for	the	impairment	of	certain	route	and	slot	authorities,	primarily	in	Latin	America,	and	losses	on	certain	sale	leaseback	transactions.

# Other	Income	(Expense)

Other	income	(expense)	consists	of	Interest	income	and	expense,	Interest	capitalized	and	Miscellaneous	—	net.

2010	Compared	to	2009		Decreases	in	both	short-term	investment	balances	and	interest	rates	caused	a	decrease	in	Interest	income	of	$8	million,	or	23.1	percent,	to	$26	million.	Interest	expense increased	$79	million,	or	10.7	percent,	to	$823	million	primarily	as	a	result	of	an	increase	in	the	Company's	long-term	debt	balance.

2009	Compared	to	2008		Decreases	in	both	short-term	investment	balances	throughout	most	of	2009	and	decreases	in	interest	rates	caused	a	decrease	in	Interest	income	of	$147	million,	or 81.2	percent,	to	$34	million.	Interest	expense	decreased	$59	million,	or	7.3	percent,	to	$744	million	primarily	as	a	result	of	a	decrease	in	the	Company's	long-term	debt	balance	throughout	most	of	2009 and	decreases	in	interest	rates	on	variable	rate	debt.

# Income	Tax	Benefit

The	Company	has	recorded	in	2010	and	2009	an	income	tax	expense	credit	of	approximately	$30	million	and	$36	million,	respectively,	resulting	from	the	Company's	anticipated	election	under applicable	sections	of	the	Tax	Relief,	Unemployment	Insurance	Reauthorization,	and	Job	Creation	Act	of	2010	and	Section	3081	of	the	Housing	and	Economic	Recovery	Act	of	2008	(as	extended	by	the American	Recovery	and	Reinvestment	Act	of	2009),

allowing	corporations	to	accelerate	utilization	of	certain	research	and	alternative	minimum	tax	(AMT)	credit	carryforwards	in	lieu	of	applicable	bonus	depreciation	on	certain	qualifying	capital investments.

The	Company	did	not	record	a	net	tax	provision	(benefit)	associated	with	2008	net	loss	due	to	the	Company	providing	a	valuation	allowance,	as	discussed	in	Note	8	to	the	consolidated	financial statements.	However,	during	2009,	the	Company	generated	a	pre-tax	loss	of	$1.8	billion	and	other	comprehensive	income	of	approximately	$701	million.	In	accordance	with	accounting	standards,	the	net zero	tax	provision	is	required	to	be	allocated	between	Operating	loss	and	Accumulated	other	comprehensive	income.	Application	of	this	guidance	during	2009	resulted	in	a	non-cash	income	tax	benefit	of $248	million,	offset	by	a	$248	million	charge	to	other	comprehensive	income	related	to	such	items	being	recognized	in	2009.	See	Note	8	for	additional	information	regarding	the	allocation	of	income	tax benefit	to	Operating	income	and	Accumulated	other	comprehensive	income.

# Operating	Statistics

The	following	table	provides	statistical	information	for	American	and	Regional	Affiliates	for	the	years	ended	December	31,	2010,	2009	and	2008.

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| American\tAirlines,\tInc.\tMainline\tJet\tOperations |  |  |  |
| Revenue\tpassenger\tmiles\t(millions) | \t125,486 | \t122,418 | \t131,757 |
| Available\tseat\tmiles\t(millions) | \t153,241 | \t151,774 | \t163,532 |
| Cargo\tton\tmiles\t(millions) | 1,886 | 1,656 | 2,005 |
| Passenger\tload\tfactor | 81.9% | 80.7% | 80.6% |
| Passenger\trevenue\tyield\tper\tpassenger\tmile\t(cents) | 13.36 | 12.28 | 13.84 |
| Passenger\trevenue\tper\tavailable\tseat\tmile\t(cents) | 10.94 | 9.91 | 11.15 |
| Cargo\trevenue\tyield\tper\tton\tmile\t(cents) | 35.65 | 34.91 | 43.59 |
| Operating\texpenses\tper\tavailable\tseat\tmile,\texcluding\tRegional\tAffiliates\t(cents)(*) | 12.62 | 12.22 | 13.87 |
| Fuel\tconsumption\t(gallons,\tin\tmillions) | 2,481 | 2,499 | 2,694 |
| Fuel\tprice\tper\tgallon\t(cents) | 231.0 | 200.7 | 302.6 |
| Operating\taircraft\tat\tyear-end | 620 | 610 | 626 |
| Regional\tAffiliates |  |  |  |
| Revenue\tpassenger\tmiles\t(millions) | 8,812 | 8,255 | 8,846 |
| Available\tseat\tmiles\t(millions) | 12,179 | 11,566 | 12,603 |
| Passenger\tload\tfactor | 72.4% | 71.4% | 70.2% |

# Outlook

The	Company	currently	expects	capacity	for	American's	mainline	jet	operations	to	increase	by	approximately	3.8%	in	the	first	quarter	of	2011	versus	first	quarter	2010.	American's	mainline capacity	for	the	full	year	2011	is	expected	to	increase	approximately	3.6%	from	2010	with	a	1%	increase	in	domestic	capacity	and	a	7.7%	growth	in	international	capacity.

The	Company	expects	first	quarter	2011	mainline	unit	costs	to	increase	approximately	1.6	percent	year	over	year.	The	first	quarter	2011	unit	cost	expectations	reflect	the	increase	in	the	cost	of fuel	during	the	second	half	of	2010	and	projected	fuel	prices	in	2011.	Despite	anticipated	higher	revenue-related	expenses	(such	as	booking	fees	and	commissions)	and	financing	costs	related	to	the Company's	new	Boeing	737-800	aircraft,	the	Company	expects	first	quarter	mainline	unit	costs	excluding	fuel	to	be	3.2%	lower	than	the	prior	year	periods.

The	Company's	results	are	significantly	affected	by	the	price	of	jet	fuel,	which	is	in	turn	affected	by	a	number	of	factors	beyond	the	Company's	control.	Although	fuel	prices	abated	considerably from	the	record	high	prices	recorded	in	July	2008,	they	have	increased	since	the	first	quarter	of	2009,	particularly	recently,	and	remain	high	and	extremely	volatile	by	historical	standards.

# Other	Information

Critical	Accounting	Policies	and	Estimates		The	preparation	of	the	Company's	financial	statements	in	conformity	with	U.S.	Generally	Accepted	Accounting	Principles	(U.S.	GAAP)	requires management	to	make	estimates	and	assumptions	that	affect	the	amounts	reported	in	the	consolidated	financial	statements	and	accompanying	notes.	The	Company	believes	its	estimates	and	assumptions are	reasonable;	however,	actual	results	and	the	timing	of	the	recognition	of	such	amounts	could	differ	from	those	estimates.	The	Company	has	identified	the	following	critical	accounting	policies	and estimates	used	by	management	in	the	preparation	of	the	Company's	financial	statements:	long-lived	assets,	routes,	passenger	revenue,	frequent	flyer	program,	stock	compensation,	pensions	and	retiree medical	and	other	benefits,	income	taxes	and	derivatives	accounting.

Long-lived	assets		—	The	Company	has	approximately	$16	billion	of	long-lived	assets	as	of	December	31,	2010,	including	approximately	$15	billion	related	to	flight	equipment	and	other	fixed assets.	In	addition	to	the	original	cost	of	these	assets,	the	recorded	value	of	the	Company's	fixed	assets	is	impacted	by	a	number	of	estimates	made	by	the	Company,	including	estimated	useful	lives, salvage	values	and	the	Company's	determination	as	to	whether	aircraft	are	temporarily	or	permanently	grounded.	In	accordance	with	U.S.	GAAP,	the	Company	records	impairment	charges	on	long-lived assets	used	in	operations	when	events	and	circumstances	indicate	that	the	assets	may	be	impaired,	the	undiscounted	cash	flows	estimated	to	be	generated	by	those	assets	are	less	than	the	carrying	amount of	those	assets	and	the	net	book	value	of	the	assets	exceeds	their	estimated	fair	value.	In	making	these	determinations,	the	Company	uses	certain	assumptions,	including,	but	not	limited	to:	(i)	estimated fair	value	of	the	assets;	and	(ii)	estimated	future	cash	flows	expected	to	be	generated	by	the	assets,	generally	evaluated	at	a	fleet	level,	which	are	based	on	additional	assumptions	such	as	asset	utilization, length	of	service	and	estimated	salvage	values.	A	change	in	the	Company's	fleet	plan	has	been	the	primary	indicator	that	has	resulted	in	an	impairment	charge	in	the	past.

The	majority	of	American's	fleet	types	are	depreciated	over	30	years.	It	is	possible	that	the	ultimate	lives	of	the	Company's	aircraft	will	be	significantly	different	than	the	current	estimate	due	to unforeseen	events	in	the	future	that	impact	the	Company's	fleet	plan,	including	positive	or	negative	developments	in	the	areas	described	above.	For	example,	operating	the	aircraft	for	a	longer	period	will result	in	higher	maintenance,	fuel	and	other	operating	costs	than	if	the	Company	replaced	the	aircraft.	At	some	point	in	the	future,	higher	operating	costs,	including	higher	fuel	expense,	and/or improvement	in	the	Company's	economic	condition,	could	change	the	Company's	analysis	of	the	impact	of	retaining	aircraft	versus	replacing	them	with	new	aircraft.

In	the	fourth	quarter	of	2009,	due	to	the	continuing	severe	downturn	in	the	global	economy	and	weakness	in	the	regional	jet	aircraft	market,	the	Company's	plan	to	sell	certain	of	its	Embraer	RJ- 135	aircraft	was	no	longer	feasible	at	the	amount	for	which	these	aircraft	had	been	valued.	Consequently,	the	Company	reclassified	these	aircraft	from	held	for	sale	to	held	for	use,	tested	them	for impairment	and	concluded	the	carrying	values	of	certain	of	its	Embraer	RJ-135	aircraft	were	no	longer	recoverable.

In	the	second	quarter	of	2008,	due	to	the	Company's	capacity	reduction	announcement,	the	Company	concluded	a	triggering	event	had	occurred	and	required	that	fixed	assets	be	tested	for impairment.	As	a	result	of	that	testing,	the	Company	recorded	impairment	charges	related	to	its	McDonnell	Douglas	MD-80	aircraft	and	Embraer	RJ-135	aircraft.	See	Note	2	to	the	consolidated	financial statements	for	more	information.

International	Slots	and	Route	Authorities	—	AMR	performs	annual	impairment	tests	on	its	international	slots	and	route	authorities,	which	are	indefinite	life	intangible	assets	and	as	a	result	they are	not	amortized.	As	discussed	above,	the	Company	also	performs	impairment	tests	when	events	and	circumstances	indicate	that	the	assets	might	be	impaired.	These	tests	are	primarily	based	on estimates	of	discounted	future	cash	flows,	using	assumptions	based	on	historical	results	adjusted	to	reflect	the	Company's	best	estimate	of	future	market	and	operating	conditions	and	also	consideration	of markets	for	these	assets.	The	net	carrying	value	of	assets	not	recoverable	is	reduced	to	fair

value.	The	Company's	estimates	of	fair	value	represent	its	best	estimate	based	on	industry	trends	and	reference	to	market	rates	and	transactions.

During	2009,	the	Company	adopted	guidance	on	measuring	the	fair	value	of	assets	and	liabilities.	The	guidance	introduces	a	framework	for	measuring	fair	value	primarily	based	on	exit	prices	and expands	required	disclosure	about	fair	value	measurements	of	assets	and	liabilities.

The	Company	had	recorded	international	slots	and	route	authorities	of	$708	million	as	of	December	31,	2010.	The	Company	estimates	the	fair	value	of	these	assets	based	on	market	information and	estimated	future	cash	flows.	The	Company	believes	its	estimates	and	assumptions	are	reasonable;	however,	given	the	significant	uncertainty	regarding	how	open	skies	agreements	will	ultimately affect	the	Company's	operations	at	Heathrow	and	Narita,	and	other	international	locations	that	are	evaluating	"open	skies",	as	well	as	volatility	in	the	revenue	and	fuel	environment,	the	actual	results could	differ	from	those	estimates.	Further,	as	a	part	of	the	annual	impairment	test,	it	was	determined	that	the	fair	value	of	certain	routes	in	Latin	America	was	less	than	the	carrying	value,	and	therefore, the	Company	recorded	an	impairment	charge.	See	Note	11	to	the	consolidated	financial	statements	for	additional	information	regarding	the	valuation	of	the	Company's	routes.

Passenger	revenue	—	Passenger	ticket	sales	are	initially	recorded	as	a	component	of	Air	traffic	liability.	Revenue	derived	from	ticket	sales	is	recognized	at	the	time	service	is	provided.	However, due	to	various	factors,	including	the	industry's	pricing	structure	and	interline	agreements	throughout	the	industry,	certain	amounts	are	recognized	in	revenue	using	estimates	regarding	both	the	timing	of the	revenue	recognition	and	the	amount	of	revenue	to	be	recognized,	including	breakage.	These	estimates	are	generally	based	upon	the	evaluation	of	historical	trends,	including	the	use	of	regression analysis	and	other	methods	to	model	the	outcome	of	future	events	based	on	the	Company's	historical	experience,	and	are	recognized	at	the	scheduled	time	of	departure.	The	Company's	estimation techniques	have	been	applied	consistently	from	year	to	year.	However,	due	to	changes	in	the	Company's	ticket	refund	policy	and	changes	in	the	travel	profile	of	customers,	historical	trends	may	not	be representative	of	future	results.

Frequent	flyer	program	—	American	uses	the	incremental	cost	method	to	account	for	the	portion	of	its	frequent	flyer	liability	incurred	when	AAdvantage	members	earn	mileage	credits	by	flying on	American	or	its	regional	affiliates.

The	Company	considers	breakage	in	its	incremental	cost	calculation	and	recognizes	breakage	on	AAdvantage	miles	sold	over	the	estimated	period	of	usage	for	sold	miles	that	are	ultimately redeemed.	The	Company	calculates	its	breakage	estimate	using	separate	breakage	rates	for	miles	earned	by	flying	on	American	and	miles	earned	through	other	companies	who	have	purchased AAdvantage	miles	for	distribution	to	their	customers,	due	to	differing	behavior	patterns.	Management	considers	historical	patterns	of	account	breakage	to	be	a	useful	indicator	when	estimating	future breakage.	Future	program	redemption	opportunities	can	significantly	alter	customer	behavior	from	historical	patterns	with	respect	to	inactive	accounts.	Such	changes	may	result	in	material	changes	to	the frequent	flyer	liability,	as	well	as	recognized	revenues	from	the	program.

American	includes	fuel,	food,	and	passenger	insurance	costs	in	the	calculation	of	incremental	cost.	These	estimates	are	generally	updated	based	upon	the	Company's	12-month	historical	average of	such	costs.	American	also	accrues	a	frequent	flyer	liability	for	the	mileage	credits	expected	to	be	used	for	travel	on	participating	airlines	based	on	historical	usage	patterns	and	contractual	rates.

Revenue	earned	from	selling	AAdvantage	miles	to	other	companies	is	recognized	in	two	components.	The	first	component	represents	the	revenue	for	air	transportation	sold	and	is	valued	at	fair value.	This	revenue	is	deferred	along	with	revenue	related	to	expected	breakage	of	sold	miles	and	recognized	over	the	period	the	mileage	is	expected	to	be	used,	which	is	currently	estimated	to	be 28	months.	The	second	revenue	component,	based	on	the	residual	method	and	representing	the	marketing	services	sold,	is	recognized	as	related	services	are	provided.

The	Company's	total	liability	for	future	AAdvantage	award	redemptions	for	free,	discounted	or	upgraded	travel	on	American,	American	Eagle	or	participating	airlines,	as	well	as	unrecognized revenue	from	selling	AAdvantage	miles	to	other	companies,	was	approximately	$1.4	billion	and	$1.5	billion	at	December	31,	2010	and	2009,	respectively	(and	is	recorded	as	a	component	of	Air	traffic liability	in	the	consolidated	balance	sheets),

representing	16.3	percent	and	19.2	percent	of	AMR's	total	current	liabilities,	at	December	31,	2010	and	2009,	respectively.

The	approximate	number	of	free	travel	awards	used	for	travel	on	American	and	American	Eagle	was	5.6	million	one-way	travel	awards	in	2010	(or	2.8	million	round	trip	awards)	and	5.2	million one-way	travel	awards	in	2009	(or	2.6	million	round	trip	travel	awards)	representing	approximately	8.8	and	8.9	percent	of	passengers	boarded	in	each	year,	respectively.	The	Company	believes displacement	of	revenue	passengers	is	minimal	given	the	Company's	load	factors,	its	ability	to	manage	frequent	flyer	seat	inventory,	and	the	relatively	low	ratio	of	free	award	usage	to	total	passengers boarded.

Changes	to	the	percentage	of	the	amount	of	revenue	deferred,	deferred	recognition	period,	percentage	of	awards	expected	to	be	redeemed	for	travel	on	participating	airlines,	breakage	or	cost	per mile	estimates	could	have	a	significant	impact	on	the	Company's	revenues	or	incremental	cost	accrual	in	the	year	of	the	change	as	well	as	in	future	years.

Stock	Compensation			—	The	Company	grants	awards	under	its	various	share	based	payment	plans	and	utilizes	option	pricing	models	or	fair	value	models	to	estimate	the	fair	value	of	its	awards. Certain	awards	contain	a	market	performance	condition,	which	is	taken	into	account	in	estimating	the	fair	value	on	the	date	of	grant.	The	fair	value	of	those	awards	is	calculated	by	multiplying	the	stock price	on	the	date	of	grant	by	the	expected	payout	percentage	and	the	number	of	shares	granted.	The	Company	accounts	for	these	awards	over	the	three	year	term	of	the	award	based	on	the	grant	date	fair value,	provided	adequate	shares	are	available	to	settle	the	awards.	For	awards	where	adequate	shares	are	not	anticipated	to	be	available	or	that	only	permit	settlement	in	cash,	the	fair	value	is	re-measured each	reporting	period.

Pensions	and	retiree	medical	and	other	benefits		—	The	Company	recognizes	the	funded	status	(i.e.,	the	difference	between	the	fair	value	of	plan	assets	and	the	projected	benefit	obligations)	of its	pension	and	postretirement	plans	in	the	consolidated	balance	sheet	with	a	corresponding	adjustment	to	Accumulated	other	comprehensive	income	(loss).

The	Company's	pension	and	other	postretirement	benefit	costs	and	liabilities	are	calculated	using	various	actuarial	assumptions	and	methodologies.	The	Company	uses	certain	assumptions including,	but	not	limited	to,	the	selection	of	the:	(i)	discount	rate;	(ii)	expected	return	on	plan	assets;	and	(iii)	expected	health	care	cost	trend	rate	and,	starting	in	2007	(iv)	the	estimated	age	of	pilot retirement	(as	discussed	below).

These	assumptions	as	of	December	31	were:

|  | 2010 | 2009 |
| :--- | :--- | :--- |
| Discount\trate\t(cost/liability) | 6.10%/5.80% | 6.50%/6.10% |
| Expected\treturn\ton\tplan\tassets | 8.50% | 8.50% |
| Expected\thealth\tcare\tcost\ttrend\trate: |  |  |
| Pre-65\tindividuals |  |  |
| Initial | 8.0% | 7.0% |
| Ultimate | 4.5% | 4.5% |
| Post-65\tindividuals |  |  |
| Initial | 8.0% | 7.5% |
| Ultimate\t(2010) | 4.5% | 4.5% |
| Pilot\tRetirement\tAge | 63 | 63 |

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.	Lowering	the	discount	rate	by	50	basis	points	as	of	December	31,	2010	would	increase	the	Company's	pension	and	postretirement	benefits	obligations	by	approximately	$850	million	and $170	million,	respectively,	and	increase	estimated	2011	pension	and	postretirement	benefits	expense	by	$80	million	and	less	than	$1	million,	respectively.

The	expected	return	on	plan	assets	is	based	upon	an	evaluation	of	the	Company's	historical	trends	and	experience	taking	into	account	current	and	expected	market	conditions	and	the	Company's target	asset	allocation	of

35	percent	longer	duration	corporate	and	U.S.	government/agency	bonds,	28	percent	U.S.	value	stocks,	20	percent	developed	international	stocks,	6	percent	emerging	markets	stocks	and	bonds	and 11	percent	alternative	(private)	investments.	The	expected	return	on	plan	assets	component	of	the	Company's	net	periodic	benefit	cost	is	calculated	based	on	the	fair	value	of	plan	assets	and	the Company's	target	asset	allocation.	The	Company	monitors	its	actual	asset	allocation	and	believes	that	its	long-term	asset	allocation	will	continue	to	approximate	its	target	allocation.	The	Company's historical	annualized	ten-year	rate	of	return	on	plan	assets,	calculated	using	a	geometric	compounding	of	monthly	returns,	is	approximately	7.7	percent	as	of	December	31,	2010.	Lowering	the	expected long-term	rate	of	return	on	plan	assets	by	50	basis	points	as	of	December	31,	2010	would	increase	estimated	2011	pension	expense	by	approximately	$40	million.

The	health	care	cost	trend	rate	is	based	upon	an	evaluation	of	the	Company's	historical	trends	and	experience	taking	into	account	current	and	expected	market	conditions.	Increasing	the	assumed health	care	cost	trend	rate	by	100	basis	points	would	increase	estimated	2011	postretirement	benefits	expense	by	$22	million.

Income	taxes		—	The	Company	generally	believes	that	the	positions	taken	on	previously	filed	income	tax	returns	are	more	likely	than	not	to	be	sustained	by	the	taxing	authorities.	The	Company has	recorded	income	tax	and	related	interest	liabilities	where	the	Company	believes	its	position	may	not	be	sustained	or	where	the	full	income	tax	benefit	will	not	be	recognized.	The	effects	of	potential income	tax	benefits	resulting	from	the	Company's	unrecognized	tax	positions	are	not	reflected	in	the	tax	balances	of	the	financial	statements.	Recognized	and	unrecognized	tax	positions	are	reviewed	and adjusted	as	events	occur	that	affect	the	Company's	judgment	about	the	recognizability	of	income	tax	benefits,	such	as	lapsing	of	applicable	statutes	of	limitations,	conclusion	of	tax	audits,	release	of administrative	guidance,	or	rendering	of	a	court	decision	affecting	a	particular	tax	position.	The	Company	records	a	deferred	tax	asset	valuation	allowance	when	it	is	more	likely	than	not	that	some portion	or	all	of	its	deferred	tax	assets	will	not	be	realized.	The	Company	considers	its	historical	earnings,	trends,	and	outlook	for	future	years	in	making	this	determination.	The	Company	had	a	deferred tax	valuation	allowance	of	$3.0	billion	and	$2.9	billion,	respectively,	at	December	31,	2010	and	2009.	See	Note	8	to	the	consolidated	financial	statements	for	additional	information.

Derivatives		—	As	required	by	U.S.	GAAP,	the	Company	assesses,	both	at	the	inception	of	each	hedge	and	on	an	ongoing	basis,	whether	the	derivatives	that	are	used	in	its	hedging	transactions are	highly	effective	in	offsetting	changes	in	cash	flows	of	the	hedged	items.	In	doing	so,	the	Company	uses	a	regression	model	to	determine	the	correlation	of	the	change	in	prices	of	the	commodities	used to	hedge	jet	fuel	(e.g.,	NYMEX	Heating	oil)	to	the	change	in	the	price	of	jet	fuel.	The	Company	also	monitors	the	actual	dollar	offset	of	the	hedges'	market	values	as	compared	to	hypothetical	jet	fuel hedges.	The	fuel	hedge	contracts	are	generally	deemed	to	be	"highly	effective"	if	the	R-squared	is	greater	than	80	percent	and	the	dollar	offset	correlation	is	within	80	percent	to	125	percent.	The Company	discontinues	hedge	accounting	prospectively	if	it	determines	that	a	derivative	is	no	longer	expected	to	be	highly	effective	as	a	hedge	or	if	it	decides	to	discontinue	the	hedging	relationship.	The fair	value	of	the	Company's	hedging	contracts	is	recorded	in	Current	Assets	or	Current	Liabilities	in	the	accompanying	consolidated	balance	sheets	and	is	recorded	gross	of	the	collateral	posted	and	on	a trade	basis.	As	of	December	31,	2010,	the	Company	had	derivative	contracts	in	an	asset	position	at	fair	value	of	$269	million	including	a	liability	related	to	contracts	that	settled	in	December.	A	deferred gain	of	$153	million	was	recorded	in	Accumulated	other	comprehensive	income	(OCI)	at	December	31,	2010	and	will	be	recognized	in	future	periods	as	contracts	settle.

# New	Accounting	Pronouncements

In	November	of	2009,	the	Financial	Accounting	Standards	Board	(FASB)	issued	new	guidance	that	significantly	changes	the	accounting	for	revenue	in	arrangements	with	multiple	deliverables	by requiring	entities	to	separately	account	for	individual	deliverables	in	more	of	these	arrangements	and	estimate	the	fair	value	of	each	component	individually	on	a	pro-rata	basis.	The	guidance	removes	the criterion	that	entities	must	use	vendor-specific	objective	and	reliable	evidence	of	fair	value	when	separately	accounting	for	deliverables,	allowing	for	the	recognition	of	revenue	in	a	manner	that	more closely	aligns	with	the	economics	of	certain	arrangements,	based	on	management's	estimate	of	the	selling	price.	The	standard	must	be	applied	prospectively	to	revenue	arrangements	entered	into	or materially	modified	in	fiscal	years	beginning	on	or	after	June	15,	2010.	In	addition,	the	FASB	significantly	expanded	the	disclosures	related	to	multiple	deliverable	revenue	arrangements.	Although	the Company	continues	to	evaluate	the	impact	of	the	adoption	of	this	standard	on	its	consolidated	financial	statements,	the

Company	believes	the	impact	of	adoption	will	not	be	material	in	2011,	but	could	have	a	significant	impact	on	future	results	as	new	or	materially	modified	revenue	arrangements	with	certain	partners	are established	in	the	normal	course	of	business.

# Glossary	of	Defined	Terms

ASM	—	Available	Seat	Mile.		A	measure	of	capacity.	ASMs	equal	the	total	number	of	seats	available	for	transporting	passengers	during	a	reporting	period	multiplied	by	the	total	number	of	miles flown	during	that	period.

CASM	—	(Operating)	Cost	per	Available	Seat	Mile.		The	amount	of	operating	cost	incurred	per	ASM	during	a	reporting	period,	also	referred	to	as	"unit	cost."

Passenger	Load	Factor	—	A	measure	of	utilized	available	seating	capacity	calculated	by	dividing	RPMs	by	ASMs	for	a	reporting	period.

Passenger	Mile	Yield	or	Yield	—	The	amount	of	passenger	revenue	earned	per	RPM	during	a	reporting	period.

RASM—	Passenger	Revenue	per	ASM.		The	amount	of	passenger	revenue	earned	per	ASM	during	a	reporting	period.	Passenger	RASM	is	also	referred	to	as	"unit	revenue."

RPM	—	Revenue	Passenger	Mile.		One	revenue-paying	passenger	transported	one	mile.	RPMs	equal	the	number	of	revenue	passengers	during	a	reporting	period	multiplied	by	the	number	of	miles flown	by	those	passengers	during	that	during	that	period.	RPMs	are	also	referred	to	as	"traffic."

# ITEM	7(A). QUANTITATIVE	AND	QUALITATIVE	DISCLOSURES	ABOUT	MARKET	RISK

# Market	Risk	Sensitive	Instruments	and	Positions

The	risk	inherent	in	the	Company's	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.	The	sensitivity	analyses	presented	do	not	consider	the	effects	that	such	adverse	changes	may	have	on	overall	economic	activity,	nor	do	they	consider	additional	actions management	may	take	to	mitigate	the	Company's	exposure	to	such	changes.	Therefore,	actual	results	may	differ.	The	Company	does	not	hold	or	issue	derivative	financial	instruments	for	trading purposes.	See	Note	7	to	the	consolidated	financial	statements	for	accounting	policies	and	additional	information	regarding	derivatives.

Aircraft	Fuel		The	Company's	earnings	are	substantially	affected	by	changes	in	the	price	and	availability	of	aircraft	fuel.	In	order	to	provide	a	measure	of	control	over	price	and	supply,	the Company	trades	and	ships	fuel	and	maintains	fuel	storage	facilities	to	support	its	flight	operations.	The	Company	also	manages	the	price	risk	of	fuel	costs	primarily	by	using	jet	fuel	and	heating	oil hedging	contracts.	Market	risk	is	estimated	as	a	hypothetical	10	percent	increase	in	the	December	31,	2010	and	2009	cost	per	gallon	of	fuel.	Based	on	projected	2011	fuel	usage,	such	an	increase	would result	in	an	increase	to	Aircraft	fuel	expense	of	approximately	$502	million	in	2011,	inclusive	of	the	impact	of	effective	fuel	hedge	instruments	outstanding	at	December	31,	2010,	and	assumes	the Company's	fuel	hedging	program	remains	effective.	Such	an	increase	would	have	resulted	in	an	increase	to	projected	Aircraft	fuel	expense	of	approximately	$499	million	in	2010,	inclusive	of	the	impact of	fuel	hedge	instruments	outstanding	at	December	31,	2009.	As	of	January	2011,	the	Company	had	cash	flow	hedges,	with	collars	and	options,	covering	approximately	35	percent	of	its	estimated	2011 fuel	requirements.	Comparatively,	as	of	December	31,	2009,	the	Company	had	hedged,	with	collars	and	options,	approximately	24	percent	of	its	estimated	2010	fuel	requirements.	The	consumption hedged	for	2011	by	cash	flow	hedges	is	capped	at	an	average	price	of	approximately	$2.52	per	gallon	of	jet	fuel,	and	the	Company's	collars	have	an	average	floor	price	of	approximately	$1.92	per	gallon of	jet	fuel	(both	the	capped	and	floor	price	exclude	taxes	and	transportation	costs).	The	Company's	collars	represent	approximately	30	percent	of	its	estimated	2011	fuel	requirements.	A	deterioration	of the	Company's	financial	position	could	negatively	affect	the	Company's	ability	to	hedge	fuel	in	the	future.

Ineffectiveness	is	inherent	in	hedging	jet	fuel	with	derivative	positions	based	in	crude	oil	or	other	crude	oil	related	commodities.	The	Company	assesses,	both	at	the	inception	of	each	hedge	and	on an	ongoing	basis,	whether	the	derivatives	that	are	used	in	its	hedging	transactions	are	highly	effective	in	offsetting	changes	in	cash	flows	of	the	hedged	items.	In	doing	so,	the	Company	uses	a	regression model	to	determine	the	correlation	of	the	change	in	prices

of	the	commodities	used	to	hedge	jet	fuel	(e.g.,	NYMEX	Heating	oil)	to	the	change	in	the	price	of	jet	fuel.	The	Company	also	monitors	the	actual	dollar	offset	of	the	hedges'	market	values	as	compared	to hypothetical	jet	fuel	hedges.	The	fuel	hedge	contracts	are	generally	deemed	to	be	"highly	effective"	if	the	R-squared	is	greater	than	80	percent	and	the	dollar	offset	correlation	is	within	80	percent	to 125	percent.	The	Company	discontinues	hedge	accounting	prospectively	if	it	determines	that	a	derivative	is	no	longer	expected	to	be	highly	effective	as	a	hedge	or	if	it	decides	to	discontinue	the	hedging relationship.

Foreign	Currency		The	Company	is	exposed	to	the	effect	of	foreign	exchange	rate	fluctuations	on	the	U.S.	dollar	value	of	foreign	currency-denominated	operating	revenues	and	expenses.	The Company's	largest	exposure	comes	from	the	British	pound,	Euro,	Canadian	dollar,	Japanese	yen	and	various	Latin	American	currencies.	The	Company	does	not	currently	have	a	foreign	currency	hedge program	related	to	its	foreign	currency-denominated	ticket	sales.	A	uniform	10	percent	strengthening	in	the	value	of	the	U.S.	dollar	from	December	31,	2010	and	2009	levels	relative	to	each	of	the currencies	in	which	the	Company	has	foreign	currency	exposure	would	result	in	a	decrease	in	operating	income	of	approximately	$170	million	and	$136	million	for	the	years	ending	December	31,	2010 and	2009,	respectively,	due	to	the	Company's	foreign-denominated	revenues	exceeding	its	foreign-denominated	expenses.	This	sensitivity	analysis	was	prepared	based	upon	projected	2011	and	2010 foreign	currency-denominated	revenues	and	expenses	as	of	December	31,	2010	and	2009,	respectively.

On	January	11,	2010,	the	Venezuelan	Government	devalued	its	currency	from	2.15	bolivars	per	U.S.	dollar	to	4.30	bolivars	per	U.S.	dollar	and	the	currency	was	designated	as	hyperinflationary. As	a	result,	the	Company	recognized	a	loss	of	$53	million	related	to	the	currency	remeasurement	in	January	2010.	The	Company	does	not	expect	any	significant	ongoing	impact	of	the	currency devaluation	on	its	operations	in	Venezuela,	but	there	can	be	no	assurances	to	that	effect.

Interest		The	Company's	earnings	are	also	affected	by	changes	in	interest	rates	due	to	the	impact	those	changes	have	on	its	interest	income	from	cash	and	short-term	investments,	and	its	interest expense	from	variable-rate	debt	instruments.	The	Company's	largest	exposure	with	respect	to	variable	rate	debt	comes	from	changes	in	the	London	Interbank	Offered	Rate	(LIBOR).	The	Company	had variable	rate	debt	instruments	representing	approximately	23	percent	of	its	total	long-term	debt	at	December	31,	2010	and	2009.	If	the	Company's	interest	rates	average	10	percent	more	in	2011	than they	did	at	December	31,	2010,	the	Company's	interest	expense	would	increase	by	approximately	$7	million	and	interest	income	from	cash	and	short-term	investments	would	increase	by	approximately $3	million.	In	comparison,	at	December	31,	2009,	the	Company	estimated	that	if	interest	rates	averaged	10	percent	more	in	2010	than	they	did	at	December	31,	2009,	the	Company's	interest	expense would	have	increased	by	approximately	$8	million	and	interest	income	from	cash	and	short-term	investments	would	have	increased	by	approximately	$1	million.	These	amounts	are	determined	by considering	the	impact	of	the	hypothetical	interest	rates	on	the	Company's	variable	rate	long-term	debt	and	cash	and	short-term	investment	balances	at	December	31,	2010	and	2009.

Market	risk	for	fixed	rate	long-term	debt	is	estimated	as	the	potential	increase	in	fair	value	resulting	from	a	hypothetical	10	percent	decrease	in	interest	rates	and	amounts	to	approximately $237	million	and	$316	million	as	of	December	31,	2010	and	2009,	respectively.	The	fair	values	of	the	Company's	long-term	debt	were	estimated	using	quoted	market	prices	or	discounted	future	cash flows	based	on	the	Company's	incremental	borrowing	rates	for	similar	types	of	borrowing	arrangements.

# ITEM	8. CONSOLIDATED	FINANCIAL	STATEMENTS

|  | Page |
| :--- | :--- |
| Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 49 |
| Consolidated\tStatements\tof\tOperations | 50 |
| Consolidated\tBalance\tSheets | 51-52 |
| Consolidated\tStatements\tof\tCash\tFlows | 53 |
| Consolidated\tStatements\tof\tStockholders'\tEquity\t(Deficit) | 54 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 55-85 |

# Report	of	Independent	Registered	Public	Accounting	Firm

# The	Board	of	Directors	and	Stockholders

We	have	audited	the	accompanying	consolidated	balance	sheets	of	AMR	Corporation	as	of	December	31,	2010	and	2009,	and	the	related	consolidated	statements	of	operations,	stockholders' equity	(deficit)	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2010.	Our	audits	also	included	the	financial	statement	schedule	listed	in	the	Index	at	Item	15(a)(2).	These consolidated	financial	statements	and	schedule	are	the	responsibility	of	AMR	Corporation's	management.	Our	responsibility	is	to	express	an	opinion	on	these	financial	statements	and	schedule	based	on our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and	perform	the	audit	to obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant	estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

In	our	opinion,	the	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	consolidated	financial	position	of	AMR	Corporation	at	December	31,	2010	and	2009	and	the consolidated	results	of	its	operations	and	its	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2010,	in	conformity	with	U.S.	generally	accepted	accounting	principles.	Also,	in	our opinion,	the	related	financial	statement	schedule,	when	considered	in	relation	to	the	basic	financial	statements	taken	as	a	whole,	presents	fairly,	in	all	material	respects,	the	information	set	forth	therein.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	AMR	Corporation's	internal	control	over	financial	reporting	as	of December	31,	2010,	based	on	criteria	established	in	Internal	Control	—	Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	and	our	report	dated February	16,	2011	expressed	an	unqualified	opinion	thereon.

Dallas,	Texas

# CONSOLIDATED	STATEMENTS	OF	OPERATIONS

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions,\texcept\tper\tshare\tamounts) | (In\tmillions,\texcept\tper\tshare\tamounts) |  |
| Revenues |  |  |  |
| Passenger\t—\tAmerican\tAirlines | $16,760 | $15,037 | $18,234 |
| —\tRegional\tAffiliates | 2,327 | 2,012 | 2,486 |
| Cargo | 672 | 578 | 874 |
| Other\trevenues | 2,411 | 2,290 | 2,172 |
| Total\toperating\trevenues | 22,170 | 19,917 | 23,766 |
| Expenses |  |  |  |
| Wages,\tsalaries\tand\tbenefits | 6,847 | 6,807 | 6,655 |
| Aircraft\tfuel | 6,400 | 5,553 | 9,014 |
| Other\trentals\tand\tlanding\tfees | 1,418 | 1,353 | 1,298 |
| Depreciation\tand\tamortization | 1,093 | 1,104 | 1,207 |
| Maintenance,\tmaterials\tand\trepairs | 1,329 | 1,280 | 1,237 |
| Commissions,\tbooking\tfees\tand\tcredit\tcard\texpense | 976 | 853 | 997 |
| Aircraft\trentals | 580 | 505 | 492 |
| Food\tservice | 490 | 487 | 518 |
| Special\tcharges | — | 171 | 1,213 |
| Other\toperating\texpenses | 2,729 | 2,808 | 3,024 |
| Total\toperating\texpenses | 21,862 | 20,921 | 25,655 |
| Operating\tIncome\t(Loss) | 308 | (1,004) | (1,889) |
| Other\tIncome\t(Expense) |  |  |  |
| Interest\tincome | 26 | 34 | 181 |
| Interest\texpense | (823) | (744) | (803) |
| Interest\tcapitalized | 31 | 42 | 33 |
| Miscellaneous\t—\tnet | (48) | (80) | 360 |
|  | (814) | (748) | (229) |
| Income\t(Loss)\tBefore\tIncome\tTaxes | (506) | (1,752) | (2,118) |
| Income\ttax\t(benefit) | (35) | (284) | — |
| Net\tEarnings\t(Loss) | $(471) | $(1,468) | $(2,118) |
| Earnings\t(Loss)\tPer\tShare |  |  |  |
| Basic | $(1.41) | $(4.99) | $(8.16) |
| Diluted | $(1.41) | $(4.99) | $(8.16) |

The	accompanying	notes	are	an	integral	part	of	these	financial	statements.

# CONSOLIDATED	BALANCE	SHEETS

| Cash | $168 | $153 |
| :--- | :--- | :--- |
| Short-term\tinvestments | 4,328 | 4,246 |
| Restricted\tcash\tand\tshort-term\tinvestments | 450 | 460 |
| Receivables,\tless\tallowance\tfor\tuncollectible\taccounts\t(2010\t—\t$58;\t2009\t—\t$58) | 738 | 768 |
| Inventories,\tless\tallowance\tfor\tobsolescence\t(2010\t—\t$530;\t2009\t—\t$509) | 594 | 557 |
| Fuel\tderivative\tcontracts | 269 | 135 |
| Fuel\tderivative\tcollateral\tdeposits | — | 14 |
| Other\tcurrent\tassets | 291 | 309 |
| Total\tcurrent\tassets | 6,838 | 6,642 |
| Equipment\tand\tProperty |  |  |
| Flight\tequipment,\tat\tcost | 20,345 | 19,647 |
| Less\taccumulated\tdepreciation | 8,081 | 7,382 |
|  | 12,264 | 12,265 |
| Purchase\tdeposits\tfor\tflight\tequipment | 375 | 639 |
| Other\tequipment\tand\tproperty,\tat\tcost | 5,173 | 5,158 |
| Less\taccumulated\tdepreciation | 2,974 | 2,881 |
|  | 2,199 | 2,277 |
|  | 14,838 | 15,181 |
| Equipment\tand\tProperty\tUnder\tCapital\tLeases |  |  |
| Flight\tequipment | 605 | 651 |
| Other\tequipment\tand\tproperty | 219 | 215 |
|  | 824 | 866 |
| Less\taccumulated\tamortization | 580 | 571 |
|  | 244 | 295 |
| Other\tAssets |  |  |
| International\tslots\tand\troute\tauthorities | 708 | 736 |
| Domestic\tslots\tand\tairport\toperating\tand\tgate\tlease\trights,\tless\taccumulated\tamortization\t(2010\t—\t$473;\t2009\t\t—\t$445) | 224 | 252 |
| Other\tassets | 2,236 | 2,332 |
|  | 3,168 | 3,320 |
| Total\tAssets | $25,088 | $25,438 |

# CONSOLIDATED	BALANCE	SHEETS	—	(Continued)

| Accounts	payable | $1,156 | $1,064 |
| :--- | :--- | :--- |
| Accrued\tsalaries\tand\twages | 498 | 488 |
| Fuel\tderivative\tliability | — | 80 |
| Accrued\tliabilities | 1,587 | 1,551 |
| Air\ttraffic\tliability | 3,656 | 3,431 |
| Current\tmaturities\tof\tlong-term\tdebt | 1,776 | 1,024 |
| Current\tobligations\tunder\tcapital\tleases | 107 | 90 |
| Total\tcurrent\tliabilities | 8,780 | 7,728 |
| Long-Term\tDebt,\tLess\tCurrent\tMaturities | 8,756 | 9,984 |
| Obligations\tUnder\tCapital\tLeases,\tLess\tCurrent\tObligations | 497 | 599 |
| Other\tLiabilities\tand\tCredits |  |  |
| Deferred\tgains | 270 | 272 |
| Pension\tand\tpostretirement\tbenefits | 7,877 | 7,397 |
| Other\tliabilities\tand\tdeferred\tcredits | 2,853 | 2,947 |
|  | 11,000 | 10,616 |
| Commitments\tand\tContingencies |  |  |
| Stockholders'\tEquity\t(Deficit) |  |  |
| Preferred\tstock\t—\t20,000,000\tshares\tauthorized;\tNone\tissued | — | — |
| Common\tstock\t—\t$1\tpar\tvalue;\t750,000,000\tshares\tauthorized;\tshares\tissued:\t2010\t—\t339,389,724;\t2009\t—\t338,564,327 | 339 | 339 |
| Additional\tpaid-in\tcapital | 4,445 | 4,399 |
| Treasury\tshares\tat\tcost:\t2010\tand\t2009\t—\t5,940,399 | (367) | (367) |
| Accumulated\tother\tcomprehensive\tloss | (2,755) | (2,724) |
| Accumulated\tdeficit | (5,607) | (5,136) |
|  | (3,945) | (3,489) |
| Total\tLiabilities\tand\tStockholders'\tEquity\t(Deficit) | $25,088 | $25,438 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (In\tmillions) |  |
| Cash\tFlow\tfrom\tOperating\tActivities: |  |  |  |
| Net\tearnings\t(loss) | (471) | $(1,468) | $(2,118) |
| Adjustments\tto\treconcile\tnet\tincome\t(loss)\tto\tnet\tcash\tprovided\t(used)\tby\toperating\tactivities: |  |  |  |
| Depreciation | 967 | 979 | 1,055 |
| Amortization | 126 | 125 | 152 |
| Equity\tbased\tstock\tcompensation | 43 | 61 | 53 |
| Special\tcharges | — | 171 | 1,317 |
| Pension\tand\tpostretirement | 236 | 657 | 279 |
| Gain\ton\tsale\tof\tsubsidiary | — | — | (432) |
| Redemption\tpayments\tunder\toperating\tleases\tfor\tspecial\tfacility\trevenue\tbonds | — | — | (188) |
| Change\tin\tassets\tand\tliabilities: |  |  |  |
| Decrease\t(increase)\tin\treceivables | 29 | 43 | 217 |
| Decrease\t(increase)\tin\tinventories | (81) | (79) | 5 |
| Decrease\t(increase)\tin\tderivative\tcollateral\tand\tunwound\tderivative\tcontracts | 87 | 561 | (940) |
| Increase\t(decrease)\tin\taccounts\tpayable\tand\taccrued\tliabilities | (19) | (75) | (421) |
| Increase\t(decrease)\tin\tair\ttraffic\tliability | 225 | (277) | (277) |
| Increase\t(decrease)\tin\tother\tliabilities\tand\tdeferred\tcredits | 144 | 220 | (101) |
| Other,\tnet | (45) | 12 | 5 |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\tactivities | 1,241 | 930 | (1,394) |
| Cash\tFlow\tfrom\tInvesting\tActivities: |  |  |  |
| Capital\texpenditures,\tincluding\tpurchase\tdeposits\ton\tflight\tequipment | (1,962) | (1,521) | (876) |
| Net\tdecrease\t(increase)\tin\tshort-term\tinvestments | (82) | (1,330) | 1,471 |
| Net\tdecrease\t(increase)\tin\trestricted\tcash\tand\tshort-term\tinvestments | 10 | (1) | (31) |
| Proceeds\tfrom\tsale\tof\tequipment,\tproperty\tand\tinvestments/subsidiaries | 4 | 76 | 480 |
| Other | — | 53 | 11 |
| Net\tcash\tprovided\tby\t(used\tin)\tinvesting\tactivities | (2,030) | (2,723) | 1,055 |
| Cash\tFlow\tfrom\tFinancing\tActivities: |  |  |  |
| Payments\ton\tlong-term\tdebt\tand\tcapital\tlease\tobligations | (1,154) | (2,416) | (1,092) |
| Proceeds\tfrom: |  |  |  |
| Issuance\tof\tcommon\tstock,\tnet\tof\tissuance\tcosts | — | 412 | 294 |
| Reimbursement\tfrom\tconstruction\treserve\taccount | 7 | — | — |
| Exercise\tof\tstock\toptions | 1 | 1 | 1 |
| Issuance\tof\tlong-term\tdebt | 542 | 2,990 | 825 |
| Sale\tleaseback\ttransactions | 1,408 | 768 | 354 |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | 804 | 1,755 | 382 |
| Net\tincrease\t(decrease)\tin\tcash | 15 | (38) | 43 |
| Cash\tat\tbeginning\tof\tyear | 153 | 191 | 148 |
| Cash\tat\tend\tof\tyear | $168 | $153 | $191 |

# CONSOLIDATED	STATEMENTS	OF	STOCKHOLDERS'	EQUITY	(DEFICIT)

|  | Common<br>Stock | Additional<br>Paid-in<br>Capital | Treasury<br>Stock | Other<br>Comprehensive<br>Income	(loss) | Accumulated<br>Deficit | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (In\tmillions,\texcept\tshare\tamounts) |  |  |  |
| Balance\tat\tJanuary\t1,\t2008 | $255 | $3,696 | $(367) | $670 | $(1,550) | $2,704 |
| Net\tloss | — | — | — | — | (2,118) | (2,118) |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | (2,724) | — | (2,724) |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | (1,116) | — | (1,116) |
| Unrealized\tloss\ton\tinvestments | — | — | — | (7) | — | (7) |
| Total\tcomprehensive\tloss |  |  |  |  |  | (5,965) |
| Reclassification\tand\tamortization\tof\tstock\tcompensation\tplans | — | 30 | — | — | — | 30 |
| Issuance\tof\t27,057,554\tshares | 27 | 267 | — | — | — | 294 |
| Issuance\tof\t2,492,860\tshares\tto\temployees\tpursuant\tto\tstock\toption\tand\tdeferred\tstock\tincentive\tplans | 3 | (1) | — | — | — | 2 |
| Balance\tat\tDecember\t31,\t2008 | 285 | 3,992 | (367) | (3,177) | (3,668) | (2,935) |
| Net\tloss | — | — | — | — | (1,468) | (1,468) |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | (117) | — | (117) |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | 813 | — | 813 |
| Non-cash\ttax\tprovision | — | — | — | (248) | — | (248) |
| Unrealized\tgain\ton\tinvestments | — | — | — | 5 | — | 5 |
| Total\tcomprehensive\tloss |  |  |  |  |  | (1,015) |
| Reclassification\tand\tamortization\tof\tstock\tcompensation\tplans | — | 48 | — | — | — | 48 |
| Issuance\tof\t52,269,849\tshares | 52 | 360 | — | — | — | 412 |
| Issuance\tof\t1,399,833\tshares\tto\temployees\tpursuant\tto\tstock\toption\tand\tdeferred\tstock\tincentive\tplans | 2 | (1) | — | — | — | 1 |
| Balance\tat\tDecember\t31,\t2009 | 339 | 4,399 | (367) | (2,724) | (5,136) | (3,489) |
| Net\tloss | — | — | — | — | (471) | (471) |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | (247) | — | (247) |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | 216 | — | 216 |
| Total\tcomprehensive\tloss |  |  |  |  |  | (502) |
| Reclassification\tand\tamortization\tof\tstock\tcompensation\tplans | — | 48 | — | — | — | 48 |
| Issuance\tof\t825,397\tshares\tto\temployees\tpursuant\tto\tstock\toption\tand\tdeferred\tstock\tincentive\tplans | — | (2) | — | — | — | (2) |
| Balance\tat\tDecember\t31,\t2010 | 339 | 4,445 | (367) | (2,755) | (5,607) | (3,945) |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# 1.		Summary	of	Accounting	Policies

Basis	of	Presentation		The	accompanying	consolidated	financial	statements	as	of	December	31,	2010	and	for	the	three	years	ended	December	31,	2010	include	the	accounts	of	AMR	Corporation (AMR	or	the	Company)	and	its	wholly	owned	subsidiaries,	including	(i)	its	principal	subsidiary,	American	Airlines,	Inc.	(American)	and	(ii)	its	regional	airline	subsidiary,	AMR	Eagle	Holding Corporation	and	its	primary	subsidiaries,	American	Eagle	Airlines,	Inc.	and	Executive	Airlines,	Inc.	(collectively,	AMR	Eagle).	The	consolidated	financial	statements	as	of	and	for	the	years	ended December	31,	2010,	2009	and	2008	include	the	accounts	of	the	Company	and	its	wholly	owned	subsidiaries	as	well	as	VIEs	for	which	the	Company	is	the	primary	beneficiary.	All	significant intercompany	transactions	have	been	eliminated.

New	Accounting	Pronouncements		In	November	of	2009,	the	FASB	issued	new	guidance	that	significantly	changes	the	accounting	for	revenue	in	arrangements	with	multiple	deliverables	by requiring	entities	to	separately	account	for	individual	deliverables	in	more	of	these	arrangements.	The	guidance	removes	the	criterion	that	entities	must	use	vendor-specific	objective	and	reliable	evidence of	fair	value	when	separately	accounting	for	deliverables,	allowing	for	the	recognition	of	revenue	in	a	manner	that	more	closely	aligns	with	the	economics	of	certain	arrangements	based	on	management's estimate	of	the	selling	price.	The	standard	must	be	applied	prospectively	to	revenue	arrangements	entered	into	or	materially	modified	in	fiscal	years	beginning	on	or	after	June	15,	2010.	In	addition,	the FASB	significantly	expanded	the	disclosures	related	to	multiple	deliverable	revenue	arrangements.	Although	the	Company	continues	to	evaluate	the	impact	of	the	adoption	of	this	standard	on	its consolidated	financial	statements,	the	Company	believes	the	impact	of	adoption	will	not	be	material	in	2011,	but	could	have	a	significant	impact	on	future	results	as	new	or	materially	modified	revenue arrangements	with	certain	partners	are	established	in	the	normal	course	of	business.

Use	of	Estimates		The	preparation	of	financial	statements	in	conformity	with	U.S.	GAAP	requires	management	to	make	estimates	and	assumptions	that	affect	the	amounts	reported	in	the accompanying	consolidated	financial	statements	and	accompanying	notes.	Actual	results	could	differ	from	those	estimates.

Restricted	Cash	and	Short-term	Investments		The	Company	has	restricted	cash	and	short-term	investments	related	primarily	to	collateral	held	to	support	projected	workers'	compensation obligations.

Inventories		Spare	parts,	materials	and	supplies	relating	to	flight	equipment	are	carried	at	average	acquisition	cost	and	are	expensed	when	used	in	operations.	Allowances	for	obsolescence	are provided	—	over	the	estimated	useful	life	of	the	related	aircraft	and	engines	—	for	spare	parts	expected	to	be	on	hand	at	the	date	aircraft	are	retired	from	service.	Allowances	are	also	provided	for	spare parts	currently	identified	as	excess	and	obsolete.	These	allowances	are	based	on	management	estimates,	which	are	subject	to	change.

Maintenance	and	Repair	Costs		Maintenance	and	repair	costs	for	owned	and	leased	flight	equipment	are	charged	to	operating	expense	as	incurred,	except	costs	incurred	for	maintenance	and repair	under	flight	hour	maintenance	contract	agreements,	which	are	accrued	based	on	contractual	terms	when	an	obligation	exists.

Intangible	Assets		Route	acquisition	costs	and	airport	operating	and	gate	lease	rights	represent	the	purchase	price	attributable	to	route	authorities	(including	international	airport	take-off	and landing	slots),	domestic	airport	take-off	and	landing	slots	and	airport	gate	leasehold	rights	acquired.	Indefinite-lived	intangible	assets	(route	acquisition	costs	and	international	slots	and	related international	take-off	and	landing	slots)	are	tested	for	impairment	annually	on	December	31,	rather	than	amortized,	or	when	a	triggering	event	occurs,	in	accordance	with	U.S.	GAAP.	Such	triggering events	may	include	significant	changes	to	the	Company's	network	or	capacity,	or	the	implementation	of	open	skies	agreements	in	countries	where	the	Company	operates	flights.	Airport	operating	and gate	lease	rights	are	being	amortized	on	a	straight-line	basis	over	25	years	to	a	zero	residual	value.

Statements	of	Cash	Flows		Short-term	investments,	without	regard	to	remaining	maturity	at	acquisition,	are	not	considered	as	cash	equivalents	for	purposes	of	the	statements	of	cash	flows.

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS	—	(Continued)

Measurement	of	Asset	Impairments		The	Company	records	impairment	charges	on	long-lived	assets	used	in	operations	when	events	and	circumstances	indicate	that	the	assets	may	be	impaired. An	asset	or	group	of	assets	is	considered	impaired	when	the	undiscounted	cash	flows	estimated	to	be	generated	by	the	asset	are	less	than	the	carrying	amount	of	the	asset	and	the	net	book	value	of	the asset	exceeds	its	estimated	fair	value.	In	making	these	determinations,	the	Company	uses	certain	assumptions,	including,	but	not	limited	to:	(i)	estimated	fair	value	of	the	asset;	and	(ii)	estimated	future cash	flows	expected	to	be	generated	by	the	asset,	which	are	based	on	additional	assumptions	such	as	asset	utilization,	length	of	service	the	asset	will	be	used	in	the	Company's	operations	and	estimated salvage	values.

Equipment	and	Property		The	provision	for	depreciation	of	operating	equipment	and	property	is	computed	on	the	straight-line	method	applied	to	each	unit	of	property,	except	that	major	rotable parts,	avionics	and	assemblies	are	depreciated	on	a	group	basis.	The	depreciable	lives	used	for	the	principal	depreciable	asset	classifications	are:

# Depreciable	Life

Residual	values	for	aircraft,	engines,	major	rotable	parts,	avionics	and	assemblies	are	generally	five	to	ten	percent,	except	when	guaranteed	by	a	third	party	for	a	different	amount.

Equipment	and	property	under	capital	leases	are	amortized	over	the	term	of	the	leases	or,	in	the	case	of	certain	aircraft,	over	their	expected	useful	lives.	Lease	terms	vary	but	are	generally	six	to 25	years	for	aircraft	and	seven	to	40	years	for	other	leased	equipment	and	property.

Regional	Affiliates		Revenue	from	ticket	sales	is	generally	recognized	when	service	is	provided.	Regional	Affiliates	revenues	for	flights	connecting	to	American	flights	are	based	on	industry standard	proration	agreements.

Passenger	Revenue		Passenger	ticket	sales	are	initially	recorded	as	a	component	of	Air	traffic	liability.	Revenue	derived	from	ticket	sales	is	recognized	at	the	time	service	is	provided.	However, due	to	various	factors,	including	the	complex	pricing	structure	and	interline	agreements	throughout	the	industry,	certain	amounts	are	recognized	in	revenue	using	estimates	regarding	both	the	timing	of	the revenue	recognition	and	the	amount	of	revenue	to	be	recognized,	including	breakage.	These	estimates	are	generally	based	upon	the	evaluation	of	historical	trends,	including	the	use	of	regression	analysis and	other	methods	to	model	the	outcome	of	future	events	based	on	the	Company's	historical	experience,	and	are	recorded	at	the	scheduled	time	of	departure.

Various	taxes	and	fees	assessed	on	the	sale	of	tickets	to	end	customers	are	collected	by	the	Company	as	an	agent	and	remitted	to	taxing	authorities.	These	taxes	and	fees	have	been	presented	on	a net	basis	in	the	accompanying	consolidated	statement	of	operations	and	recorded	as	a	liability	until	remitted	to	the	appropriate	taxing	authority.

Frequent	Flyer	Program		The	estimated	incremental	cost	of	providing	free	travel	awards	is	accrued	for	mileage	credits	earned	by	using	American's	service	that	are	expected	to	be	redeemed	in	the future.	American	also	accrues	a	frequent	flyer	liability	for	the	mileage	credits	that	are	expected	to	be	used	for	travel	on	participating	airlines	based	on	historical	usage	patterns	and	contractual	rates. American	sells	mileage	credits	and	related	services

to	companies	participating	in	its	frequent	flyer	program.	The	portion	of	the	revenue	related	to	the	sale	of	mileage	credits,	representing	the	revenue	for	air	transportation	sold,	is	valued	at	fair	value	and	is deferred	and	amortized	over	28	months,	which	approximates	the	expected	period	over	which	the	mileage	credits	are	used.	Breakage	of	sold	miles	is	recognized	over	the	estimated	period	of	usage.	The remaining	portion	of	the	revenue,	representing	the	marketing	services	sold	and	administrative	costs	associated	with	operating	the	AAdvantage	program,	is	recognized	upon	sale	as	a	component	of	Other revenues,	as	the	related	services	have	been	provided.	The	Company's	total	liability	for	future	AAdvantage	award	redemptions	for	free,	discounted	or	upgraded	travel	on	American,	American	Eagle	or participating	airlines	as	well	as	unrecognized	revenue	from	selling	AAdvantage	miles	was	approximately	$1.4	billion	(and	is	recorded	as	a	component	of	Air	traffic	liability	on	the	accompanying consolidated	balance	sheets)	at	December	31,	2010	and	$1.5	billion	as	of	December	31,	2009.

Income	Taxes		The	Company	generally	believes	that	the	positions	taken	on	previously	filed	income	tax	returns	are	more	likely	than	not	to	be	sustained	by	the	taxing	authorities.	The	Company	has recorded	income	tax	and	related	interest	liabilities	where	the	Company	believes	its	position	may	not	be	sustained	or	where	the	full	income	tax	benefit	will	not	be	recognized.	Thus,	the	effects	of	potential income	tax	benefits	resulting	from	the	Company's	unrecognized	tax	positions	are	not	reflected	in	the	tax	balances	of	the	financial	statements.	Recognized	and	unrecognized	tax	positions	are	reviewed	and adjusted	as	events	occur	that	affect	the	Company's	judgment	about	the	recognizability	of	income	tax	benefits,	such	as	lapsing	of	applicable	statutes	of	limitations,	conclusion	of	tax	audits,	release	of administrative	guidance,	or	rendering	of	a	court	decision	affecting	a	particular	tax	position.

Advertising	Costs		The	Company	expenses	on	a	straight-line	basis	the	costs	of	advertising	as	incurred	throughout	the	year.	Advertising	expense	was	$165	million	for	the	year	ended	December	31, 2010,	and	$153	million	for	the	years	ended	December	31,	2009	and	December	31,	2008.

Subsequent	Events		In	connection	with	preparation	of	the	consolidated	financial	statements	and	in	accordance	U.S.	GAAP,	the	Company	evaluated	subsequent	events	after	the	balance	sheet	date of	December	31,	2010	and	determined	that	no	additional	disclosure	to	that	presented	in	this	Form	10-K	was	necessary.

# 2. Special	Charges	and	Restructuring	Activities

As	a	result	of	the	revenue	environment,	high	fuel	prices	and	the	Company's	restructuring	activities,	including	its	capacity	reductions,	the	Company	has	recorded	a	number	of	charges	during	the last	few	years.	In	2008	and	2009,	the	Company	announced	capacity	reductions	due	to	unprecedented	high	fuel	costs	at	that	time	and	the	other	challenges	facing	the	industry.	In	connection	with	these capacity	reductions,	the	Company	incurred	special	charges	related	to	aircraft,	employee	reductions	and	certain	other	charges.

# Aircraft	Charges

As	part	of	these	capacity	reductions,	the	Company	grounded	its	leased	Airbus	A300	aircraft	prior	to	lease	expiration.	In	2009,	the	Company	incurred	approximately	$94	million	in	net	present value	of	future	lease	payments	and	lease	return	costs	related	to	the	grounding	of	the	leased	Airbus	A300	fleet.	The	Company	estimates	that	virtually	all	of	these	charges	will	result	in	future	cash expenditures.	Further,	the	Company	also	wrote	down	its	owned	Airbus	A300	aircraft	and	related	inventory	to	estimated	salvage	value	in	the	fourth	quarter	of	2009,	resulting	in	a	non-cash	expense	of $20	million.	All	Airbus	A300	aircraft	were	permanently	retired	as	of	2009.

In	the	fourth	quarter	of	2009,	due	to	the	continuing	severe	downturn	in	the	global	economy	and	weakness	in	the	regional	jet	aircraft	market,	the	Company's	plan	to	sell	certain	of	its	Embraer	RJ- 135	aircraft	was	no	longer	feasible	at	the	amount	for	which	these	aircraft	had	been	valued.	Consequently,	the	Company	reclassified	these	aircraft	from	held	for	sale	to	held	for	use,	tested	them	for impairment	and	concluded	the	carrying	values	of	certain	of	its	Embraer	RJ-135	aircraft	were	no	longer	recoverable.	Therefore,	during	the	fourth	quarter	of	2009,	the	Company	recorded	an	impairment charge	of	$42	million	to	write	these	aircraft	down	to	their	estimated	fair	values.	In	addition,	these	aircraft	will	now	resume	depreciation	prospectively.	In	determining	the	fair	values	of	these	aircraft,	the Company

considered	recent	transactions	for	sales	of	similar	aircraft	and	the	value	of	the	underlying	engines.	No	portion	of	the	impairment	charge	will	result	in	future	cash	expenditures.

# Employee	Charges

In	conjunction	with	the	capacity	reductions	announced	in	2008,	the	Company	reduced	its	workforce	commensurate	with	the	announced	system-wide	capacity	reductions.	This	reduction	in workforce	was	accomplished	through	various	measures,	including	voluntary	programs,	part-time	work	schedules,	furloughs	in	accordance	with	collective	bargaining	agreements,	and	other	reductions.

The	following	table	summarizes	the	components	of	the	Company's	special	charges,	the	remaining	accruals	for	these	charges	and	the	capacity	reduction	related	charges	(in	millions)	as	of December	31,	2010:

|  | Aircraft<br>Charges | Facility	Exit<br>Costs | Employee<br>Charges | Other | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Remaining\taccrual\tat\tJanuary\t1,\t2008 | $126 | $18 | $— | $— | $144 |
| Capacity\treduction\tcharges | 1,117 | — | 71 | 25 | 1,213 |
| Non-cash\tcharges | (1,103) | — | — | (25) | (1,128) |
| Adjustments | 1 | (2) | — | — | (1) |
| Payments | (31) | — | (55) | — | (86) |
| Remaining\taccrual\tat\tDecember\t31,\t2008 | $110 | $16 | $16 | $— | $142 |
| Capacity\treduction\tcharges | 164 | 7 | — | — | 171 |
| Non-cash\tcharges | (68) | — | — | — | (68) |
| Adjustments | (2) | — | — | — | (2) |
| Payments | (49) | (3) | (16) | — | (68) |
| Remaining\taccrual\tat\tDecember\t31,\t2009 | $155 | $20 | $— | $— | $175 |
| Non-cash\tcharges |  |  |  |  |  |
| Adjustments | (8) | 11 |  |  | 3 |
| Payments | (88) | (4) |  |  | (92) |
| Remaining\taccrual\tat\tDecember\t31,\t2010 | $59 | $27 | $— | $— | $86 |

Cash	outlays	related	to	the	accruals	for	aircraft	charges	and	facility	exit	costs	will	occur	through	2017	and	2018,	respectively.

# Other

On	September	22,	2001,	the	Air	Transportation	Safety	and	System	Stabilization	Act	(the	Stabilization	Act)	was	signed	into	law.	The	Stabilization	Act	provides	that,	notwithstanding	any	other provision	of	law,	liability	for	all	claims,	whether	compensatory	or	punitive,	arising	from	the	Terrorist	Attacks,	against	any	air	carrier	shall	not	exceed	the	liability	coverage	maintained	by	the	air	carrier. Based	upon	estimates	provided	by	the	Company's	insurance	providers,	the	Company	initially	recorded	a	liability	of	approximately	$2.3	billion	for	claims	arising	from	the	Terrorist	Attacks,	after considering	the	liability	protections	provided	for	by	the	Stabilization	Act.	The	receivable	and	the	liability,	recorded	in	the	accompanying	consolidated	balance	sheet	as	Other	assets	and	Other	liabilities and	deferred	credits,	respectively,	was	$1.6	billion	and	$1.7	billion	at	December	31,	2010	and	2009,	respectively.

# 3. Investments	and	Fair	Value	Measurements

All	short-term	investments	are	classified	as	available-for-sale	and	stated	at	fair	value.	Unrealized	gains	and	losses	are	reflected	as	a	component	of	Accumulated	other	comprehensive	income (loss).

The	Company	utilizes	the	market	approach	to	measure	fair	value	for	its	financial	assets	and	liabilities.	The	market	approach	uses	prices	and	other	relevant	information	generated	by	market transactions	involving	identical	or	comparable	assets	or	liabilities.	The	Company's	short-term	investments	classified	as	Level	2	primarily	utilize	broker	quotes	in	a	non-active	market	for	valuation	of these	securities.	The	Company's	fuel	derivative	contracts,	which	consist	of	commodity	collars	and	calls,	are	valued	using	energy	and	commodity	market	data	which	is	derived	by	combining	raw	inputs with	quantitative	models	and	processes	to	generate	forward	curves	and	volatilities.	No	changes	in	valuation	techniques	or	inputs	occurred	during	the	year	ended	December	31,	2010.

Assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis	are	summarized	below:

|  |  | Quoted	Prices	in |  | Significant |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Active\tMarkets\tfor | Significant | Unobservable |
|  |  | Identical\tAssets | Observable\tInputs | Inputs |
| Description | Total | (Level\t1) | (Level\t2) | (Level\t3) |
|  |  |  | (In\tmillions) |  |
| Short-term\tinvestments(1,2) |  |  |  |  |
| Money\tmarket\tfunds | $198 | $198 | $—\t $— | $—\t $— |
| Government\tagency\tinvestments | 605 | — | 605 | — |
| Repurchase\tinvestments | 831 | — | 831 | — |
| Short-term\tobligations | 1,580 | — | 1,580 | — |
| Corporate\tobligations | 647 | — | 647 | — |
| Bank\tnotes/Certificates\tof\tdeposit/Time\tdeposits | 467 | — | 467 | — |
|  | 4,328 | 198 | 4,130 | — |
| Restricted\tcash\tand\tshort-term\tinvestments(1) |  |  |  |  |
| Money\tmarket\tfunds | 450 | 450 | — | — |
| Fuel\tderivative\tcontracts(1) | 269 | — | 269 | — |
| Total | $5,047 | $648 | $4,399 | $— |

(1) Unrealized	gains	or	losses	on	short-term	investments,	restricted	cash	and	short-term	investments	and	derivatives	qualifying	for	hedge	accounting	are	recorded	in	Accumulated	other	comprehensive income	(loss)	(OCI)	at	each	measurement	date.

(2) The	majority	of	the	Company's	short-term	investments	mature	in	one	year	or	less	except	for	$467	million	of	Bank	notes/Certificates	of	deposit/Time	deposits,	$605	million	of	U.S.	Government agency	investments	and	$647	million	of	Corporate	obligations	which	have	maturity	dates	exceeding	one	year.

No	significant	transfers	between	Level	1	and	Level	2	occurred	during	the	year	ended	December	31,	2010.	The	Company's	policy	regarding	the	recording	of	transfers	between	levels	is	to	record any	such	transfers	at	the	end	of	the	reporting	period.

# 4. Commitments,	Contingencies	and	Guarantees

As	of	December	31,	2010,	American	had	15	Boeing	737-800	aircraft	purchase	commitments	in	2011	and	28	Boeing	737-800	aircraft	purchase	commitments	in	2012	and,	in	addition	to	those commitments,	American	had	firm	purchase	commitments	for	eleven	Boeing	737-800	aircraft	and	seven	Boeing	777	aircraft	scheduled	to	be	delivered	in	2013	through	2016.	American	also	previously announced	plans	(subject	to	certain	reconfirmation	rights)	to	acquire	42	Boeing	787-9	aircraft,	with	the	right	to	acquire	an	additional	58	Boeing	787-9	aircraft.	American	has	selected	GE	Aviation	as	the exclusive	provider	of	engines	for	its	expected	order	of	Boeing	787-9	aircraft.	As	of	December	31,	2010,	AMR	Eagle	had	firm	purchase	commitments	for	8	Bombardier	CRJ-700	aircraft	scheduled	to	be delivered	in	2011.

As	of	December	31,	2010,	payments	for	the	above	purchase	commitments	will	approximate	$884	million	in	2011,	$951	million	in	2012,	$491	million	in	2013,	$291	million	in	2014,	$169	million in	2015	and	$79	million	for	2016.	These	amounts	are	net	of	purchase	deposits	currently	held	by	the	manufacturers.	American	has	granted	Boeing	a	security	interest	in	American's	purchase	deposits	with Boeing.	The	Company's	purchase	deposits	totaled	$375	million	and	$639	million	at	December	31,	2010	and	2009,	respectively.

On	January	14,	2011,	the	Company	entered	into	an	amendment	to	Purchase	Agreement	No.	1980	with	the	Boeing	Company	to	exercise	rights	to	acquire	two	Boeing	777-300ER	aircraft	for delivery	in	2012.	The	Company's	total	purchase	commitments	are	expected	to	be	approximately	$2.8	billion	at	the	end	of	the	first	quarter	2011,	reflecting	this	transaction	and	aircraft	purchase	deposits paid	during	that	period.

On	December	18,	2007,	the	European	Commission	issued	a	Statement	of	Objection	(SO)	against	26	airlines,	including	the	Company.	The	SO	alleges	that	these	carriers	participated	in	a conspiracy	to	set	surcharges	on	cargo	shipments	in	violation	of	European	Union	(EU)	law.	During	2010	the	EU	notified	the	Company	it	was	dismissing	its	investigation	against	the	Company.

The	Company	has	contracts	related	to	facility	construction	or	improvement	projects,	primarily	at	airport	locations.	The	contractual	obligations	related	to	these	projects	totaled	approximately $73	million	as	of	December	31,	2010.	The	Company	expects	to	make	payments	of	$60	million	and	$5	million	in	2011	and	2012,	respectively.	In	addition,	the	Company	has	an	information	technology support	related	contract	that	requires	minimum	annual	payments	of	$100	million	in	2011	and	declining	to	$70	million	in	2014	through	2019.

American	has	a	capacity	purchase	agreement	with	Chautauqua	Airlines,	Inc.	to	provide	Embraer	-140	regional	jet	services	to	certain	markets	under	the	brand	AmericanConnection®.	Under	these arrangements,	the	Company	pays	the	AmericanConnection®	carrier	a	fee	per	block	hour	to	operate	the	aircraft.	The	block	hour	fees	are	designed	to	cover	the	AmericanConnection®	carrier's	fully allocated	costs	plus	a	margin.	Assumptions	for	certain	costs	such	as	fuel,	landing	fees,	insurance,	and	aircraft	ownership	are	trued	up	to	actual	values	on	a	pass	through	basis.	In	consideration	for	these payments,	the	Company	retains	all	passenger	and	other	revenues	resulting	from	the	operation	of	the	AmericanConnection®	regional	jets.	Minimum	payments	under	the	contracts	are	$56	million	in	2011 and	$15	million	in	2012.	In	addition,	if	the	Company	terminates	the	Chautauqua	contract	without	cause,	Chautauqua	has	the	right	to	put	its	15	Embraer	aircraft	to	the	Company.	If	this	were	to	happen,	the Company	would	take	possession	of	the	aircraft	and	become	liable	for	lease	obligations	totaling	approximately	$21	million	per	year	with	lease	expirations	in	2018	and	2019.

The	Company	is	a	party	to	many	routine	contracts	in	which	it	provides	general	indemnities	in	the	normal	course	of	business	to	third	parties	for	various	risks.	The	Company	is	not	able	to	estimate the	potential	amount	of	any	liability	resulting	from	the	indemnities.	These	indemnities	are	discussed	in	the	following	paragraphs.

In	its	aircraft	financing	agreements,	the	Company	generally	indemnifies	the	financing	parties,	trustees	acting	on	their	behalf	and	other	relevant	parties	against	liabilities	(including	certain	taxes) resulting	from	the	financing,	manufacture,	design,	ownership,	operation	and	maintenance	of	the	aircraft	regardless	of	whether	these	liabilities	(or	taxes)	relate	to	the	negligence	of	the	indemnified	parties.

The	Company's	loan	agreements	and	other	London	Interbank	Offered	Rate	(LIBOR)-based	financing	transactions	(including	certain	leveraged	aircraft	leases)	generally	obligate	the	Company	to reimburse	the	applicable	lender	for	incremental	costs	due	to	a	change	in	law	that	imposes	(i)	any	reserve	or	special	deposit	requirement	against	assets	of,	deposits	with	or	credit	extended	by	such	lender related	to	the	loan,	(ii)	any	tax,	duty	or	other	charge	with	respect	to	the	loan	(except	standard	income	tax)	or	(iii)	capital	adequacy	requirements.	In	addition,	the	Company's	loan	agreements,	derivative contracts	and	other	financing	arrangements	typically	contain	a	withholding	tax	provision	that	requires	the	Company	to	pay	additional	amounts	to	the	applicable	lender	or	other	financing	party,	generally	if withholding	taxes	are	imposed	on	such	lender	or	other	financing	party	as	a	result	of	a	change	in	the	applicable	tax	law.

These	increased	cost	and	withholding	tax	provisions	continue	for	the	entire	term	of	the	applicable	transaction,	and	there	is	no	limitation	on	the	maximum	additional	amounts	the	Company	could be	obligated	to	pay	under	such

provisions.	Any	failure	to	pay	amounts	due	under	such	provisions	generally	would	trigger	an	event	of	default	and,	in	a	secured	financing	transaction,	would	entitle	the	lender	to	foreclose	on	the	collateral to	realize	the	amount	due.

In	certain	transactions,	including	certain	aircraft	financing	leases	and	loans	and	derivative	transactions,	the	lessors,	lenders	and/or	other	parties	have	rights	to	terminate	the	transaction	based	on changes	in	foreign	tax	law,	illegality	or	certain	other	events	or	circumstances.	In	such	a	case,	the	Company	may	be	required	to	make	a	lump	sum	payment	to	terminate	the	relevant	transaction.

The	Company	has	general	indemnity	clauses	in	many	of	its	airport	and	other	real	estate	leases	where	the	Company	as	lessee	indemnifies	the	lessor	(and	related	parties)	against	liabilities	related	to the	Company's	use	of	the	leased	property.	Generally,	these	indemnifications	cover	liabilities	resulting	from	the	negligence	of	the	indemnified	parties,	but	not	liabilities	resulting	from	the	gross negligence	or	willful	misconduct	of	the	indemnified	parties.	In	addition,	the	Company	provides	environmental	indemnities	in	many	of	these	leases	for	contamination	related	to	the	Company's	use	of	the leased	property.

Under	certain	contracts	with	third	parties,	the	Company	indemnifies	the	third	party	against	legal	liability	arising	out	of	an	action	by	the	third	party,	or	certain	other	parties.	The	terms	of	these contracts	vary	and	the	potential	exposure	under	these	indemnities	cannot	be	determined.	The	Company	has	liability	insurance	protecting	the	Company	for	some	of	the	obligations	it	has	undertaken	under these	indemnities.

AMR	and	American	have	event	risk	covenants	in	approximately	$1	billion	of	indebtedness	and	operating	leases	as	of	December	31,	2010.	These	covenants	permit	the	holders	of	such	obligations to	receive	a	higher	rate	of	return	(between	100	and	600	basis	points	above	the	state	rate)	if	a	designated	event,	as	defined,	should	occur	and	the	credit	ratings	of	such	obligations	are	downgraded	below certain	levels	within	a	certain	period	of	time.	No	designated	event,	as	defined,	had	occurred	as	of	December	31,	2010.

The	Company	is	involved	in	certain	claims	and	litigation	related	to	its	operations.	The	Company	is	also	subject	to	regulatory	assessments	in	the	ordinary	course	of	business.	AMR	establishes reserves	for	litigation	and	regulatory	matters	when	those	matters	present	loss	contingencies	that	are	both	probable	and	can	be	reasonably	estimated.	In	the	opinion	of	management,	liabilities,	if	any, arising	from	these	claims	and	litigation	will	not	have	a	material	adverse	effect	on	the	Company's	consolidated	financial	position,	results	of	operations,	or	cash	flows,	after	consideration	of	available insurance.

# 5. Leases

AMR's	subsidiaries	lease	various	types	of	equipment	and	property,	primarily	aircraft	and	airport	facilities.	The	future	minimum	lease	payments	required	under	capital	leases,	together	with	the present	value	of	such	payments,	and	future	minimum	lease	payments	required	under	operating	leases	that	have	initial	or	remaining	non-cancelable	lease	terms	in	excess	of	one	year	as	of	December	31, 2010,	were	(in	millions):

| Year	Ending	December	31, | Capital<br>Leases | Operating<br>Leases |
| :--- | :--- | :--- |
| 2011 | $186 | $1,254 |
| 2012 | 136 | 1,068 |
| 2013 | 120 | 973 |
| 2014 | 98 | 831 |
| 2015 | 87 | 672 |
| 2016\tand\tthereafter | 349 | 6,006 |
|  | $976 | $10,804(1) |
| Less\tamount\trepresenting\tinterest | 372 |  |
| Present\tvalue\tof\tnet\tminimum\tlease\tpayments | $604 |  |

(1) As	of	December	31,	2010,	included	in	Accrued	liabilities	and	Other	liabilities	and	deferred	credits	on	the	accompanying	consolidated	balance	sheet	is	approximately	$1.1	billion	relating	to	rent expense	being	recorded	in	advance	of	future	operating	lease	payments.

At	December	31,	2010,	the	Company	was	operating	202	jet	aircraft	and	39	turboprop	aircraft	under	operating	leases	and	70	jet	aircraft	under	capital	leases.	The	aircraft	leases	can	generally	be renewed	at	rates	based	on	fair	market	value	at	the	end	of	the	lease	term	for	one	to	five	years.	Some	aircraft	leases	have	purchase	options	at	or	near	the	end	of	the	lease	term	at	fair	market	value,	but generally	not	to	exceed	a	stated	percentage	of	the	defined	lessor's	cost	of	the	aircraft	or	a	predetermined	fixed	amount.

During	2010,	the	Company	financed	36	deliveries	of	Boeing	737-800	aircraft	through	sale	leaseback	transactions	resulting	in	gains	which	are	being	amortized	over	the	respective	remaining	lease terms.	During	2009	non-recurring	charges	related	to	losses	on	certain	sale	leasebacks	of	vintage	aircraft	of	$88	million	were	realized	and	included	in	Other	operating	income.

Special	facility	revenue	bonds	have	been	issued	by	certain	municipalities	primarily	to	improve	airport	facilities	and	purchase	equipment.	To	the	extent	these	transactions	were	committed	to	prior to	May	21,	1998,	they	are	accounted	for	as	operating	leases	under	U.S.	GAAP.	Approximately	$1.5	billion	of	these	bonds	(with	total	future	payments	of	approximately	$3.2	billion	as	of	December	31, 2010)	are	guaranteed	by	American,	AMR,	or	both.	Approximately	$177	million	of	these	special	facility	revenue	bonds	contain	mandatory	tender	provisions	that	require	American	to	make	operating	lease payments	sufficient	to	repurchase	the	bonds	at	various	times:	$112	million	in	2014	and	$65	million	in	2015.	Although	American	has	the	right	to	remarket	the	bonds,	there	can	be	no	assurance	that	these bonds	will	be	successfully	remarketed.	Any	payments	to	redeem	or	purchase	bonds	that	are	not	remarketed	would	generally	reduce	existing	rent	leveling	accruals	or	be	considered	prepaid	facility	rentals and	would	reduce	future	operating	lease	commitments.	The	special	facility	revenue	bonds	that	contain	mandatory	tender	provisions	are	listed	in	the	table	above	at	their	ultimate	maturity	date	rather	than their	mandatory	tender	provision	date.

American	has	determined	that	it	holds	a	significant	variable	interest	in,	but	is	not	the	primary	beneficiary	of,	certain	trusts	that	are	the	lessors	under	83	of	its	aircraft	operating	leases.	These	leases contain	a	fixed	price	purchase	option,	which	allows	American	to	purchase	the	aircraft	at	a	predetermined	price	on	a	specified	date.	However,	American	does	not	guarantee	the	residual	value	of	the	aircraft. As	of	December	31,	2010,	future	lease	payments	required	under	these	leases	totaled	$1.1	billion.

# 6. Indebtedness

Long-term	debt	consisted	of	(in	millions):

|  | 2010 | 2009 |
| :--- | :--- | :--- |
|  | $5,114 | $5,553 |
|  | 2,002 | 2,022 |
| 6.00%\t—\t8.50%\tspecial\tfacility\trevenue\tbonds\tdue\tthrough\t2036 | 1,641 | 1,658 |
|  | 890 | 890 |
| 6.25%\tsenior\tconvertible\tnotes\tdue\t2014 | 460 | 460 |
| 9.00%\t—\t10.20%\tdebentures\tdue\tthrough\t2021 | 214 | 214 |
| 7.88%\t—\t10.55%\tnotes\tdue\tthrough\t2039 | 211 | 211 |
|  | 10,532 | 11,008 |
| Less\tcurrent\tmaturities | 1,776 | 1,024 |
| Long-term\tdebt,\tless\tcurrent\tmaturities | $8,756 | $9,984 |

As	of	December	31,	2010,	AMR	had	issued	guarantees	covering	approximately	$1.6	billion	of	American's	tax-exempt	bond	debt	(and	interest	thereon)	and	$459	million	of	American's	secured debt	(and	interest	thereon).	American	had	issued	guarantees	covering	approximately	$885	million	of	AMR's	unsecured	debt	(and	interest	thereon).	In	addition,	as	of	December	31,	2010,	AMR	and American	had	issued	guarantees	covering	approximately	$216	million	of	AMR	Eagle's	secured	debt	(and	interest	thereon)	and	AMR	has	issued	additional	guarantees	covering	$2.1	billion	of	AMR Eagle's	secured	debt	(and	interest	thereon).	AMR	also	guarantees	$145	million	of	American's	leases	of	certain	Super	ATR	aircraft,	which	are	subleased	to	AMR	Eagle.

On	January	25,	2011,	American	closed	on	a	$657	million	Pass	Through	Trust	Certificates	(the	Certificates).	The	equipment	notes	expected	to	be	held	by	each	pass	through	trust	will	be	issued	for each	of	(a)	15	Boeing	737-823	aircraft	delivered	new	to	American	from	1999	to	2001,	(b)	six	Boeing	757-223	aircraft	delivered	new	to	American	in	1999	and	2001,	(c)	two	Boeing	767-323ER	aircraft delivered	new	to	American	in	1999	and	(d)	seven	Boeing	777-223ER	aircraft	delivered	new	to	American	from	1999	to	2000.	At	closing,	27	of	the	aircraft	were	encumbered	by	either	private	mortgages	or by	liens	to	secure	debt	incurred	in	connection	with	the	issuance	of	enhanced	equipment	trust	certificates	in	2001,	all	of	which	mature	in	2011.	As	a	result,	the	proceeds	from	the	sale	of	the	Certificates	of each	trust	will	initially	be	held	in	escrow	with	a	depositary,	pending	the	financing	of	each	aircraft	under	an	indenture	relating	to	the	Certificates.	Interest	of	5.25%	and	7.00%	per	annum	on	the	issued	and outstanding	Series	A	equipment	notes	and	Series	B	equipment	notes,	respectively,	will	be	payable	semiannually	on	January	31	and	July	31	of	each	year,	commencing	on	July	31,	2011,	and	principal	on such	equipment	notes	is	scheduled	for	payment	on	January	31	and	July	31	of	certain	years,	commencing	on	July	31,	2011.	The	payment	obligations	of	American	under	the	equipment	notes	will	be	fully and	unconditionally	guaranteed	by	AMR	Corporation.

In	2009,	American	entered	into	an	arrangement	under	which	Citibank	paid	to	American	$1.0	billion	in	order	to	pre-purchase	AAdvantage	Miles	(the	Advance	Purchase	Miles)	under	American's AAdvantage	frequent	flier	loyalty	program	(the	Advance	Purchase).	Approximately	$890	million	of	the	Advance	Purchase	proceeds	is	accounted	for	as	a	loan	from	Citibank	with	the	remaining $110	million	recorded	as	Deferred	Revenue	in	Other	liabilities	and	deferred	credits.

To	effect	the	Advance	Purchase,	American	and	Citibank	entered	into	an	Amended	and	Restated	AAdvantage	Participation	(as	so	amended	and	restated,	the	Amended	Participation	Agreement). Under	the	Amended	Participation	Agreement,	American	agreed	that	it	would	apply	in	equal	monthly	installments,	over	a	five	year	period	beginning	on	January	1,	2012,	the	Advance	Purchase	Miles	to Citibank	cardholders'	AAdvantage	accounts.

Pursuant	to	the	Advance	Purchase,	Citibank	has	been	granted	a	first-priority	lien	in	certain	of	American's	AAdvantage	program	assets,	and	a	lien	in	certain	of	American's	Heathrow	and	Narita routes	and	slots	that	would	be	subordinated	to	any	subsequent	first	lien.	Commencing	on	December	31,	2011,	American	has	the	right	to	repurchase,	without	premium	or	penalty,	any	or	all	of	the	Advance Purchase	Miles	that	have	not	then	been	posted	to	Citibank	cardholders'	accounts.	American	is	also	obligated,	in	certain	circumstances	(including	certain	specified	termination	events	under	the	Amended Participation	Agreement,	certain	cross	defaults	and	cross	acceleration	events,	and	if	any	Advance	Purchase	Miles	remain	at	the	end	of	the	term)	to	repurchase	for	cash	all	of	the	Advance	Purchase	Miles that	have	not	then	been	used	by	Citibank.

The	Amended	Participation	Agreement	includes	provisions	that	grant	Citibank	the	right	to	use	Advance	Purchase	Miles	on	an	accelerated	basis	under	specified	circumstances.	American	also	has the	right	under	certain	circumstances	to	release,	or	substitute	other	comparable	collateral	for,	the	Heathrow	and	Narita	route	and	slot	related	collateral.

During	2009,	American	closed	a	$520	million	Pass	Through	Trust	Certificates	(the	Certificates)	financing	covering	four	Boeing	777-200ER	aircraft	owned	by	American	and	16	of	American's Boeing	737-800	deliveries.	Equipment	notes	underlying	the	Certificates	bear	interest	at	10.375	percent	per	annum	and	principal	and	interest	on	the	notes	are	payable	in	semi-annual	installments	with	a balloon	payment	at	maturity	in	2019.	Approximately	$200	million	of	the	proceeds	from	the	sale	of	the	Certificates	were	used	by	American	during	2010	for	the	delivery	and	financing	of	Boeing	737-800 aircraft.

Also	in	2009,	American	entered	into	a	sale	leaseback	financing	transaction	with	GECAS	for	Boeing	737-800	aircraft	(the	2009	Sale	Leaseback)	delivered	in	2010	and	certain	Boeing	737-800 aircraft	deliveries	scheduled	to	be	delivered	in	2011	for	an	aggregate	commitment	of	$1.6	billion.	The	2009	sale	leaseback	is	subject	to	certain	terms	and	conditions,	including	a	condition	to	the	effect that,	at	the	time	of	entering	into	the	sale	and	leaseback	of	a	particular	Boeing	737-800	aircraft,	American	has	at	least	a	certain	amount	of	unrestricted	cash	and	short	term	investments.

At	December	31,	2010,	the	Company	had	outstanding	$460	million	principal	amount	of	its	6.25	percent	senior	convertible	notes	due	2014.	Each	note	is	convertible	by	holders	into	shares	of	AMR common	stock	at	an	initial	conversion	rate	of	101.0101	shares	per	$1,000	principal	amount	of	notes	(which	represents	an	equivalent	initial	conversion	price	of	approximately	$9.90	per	share),	subject	to adjustment	upon	the	occurrence	of	certain	events,	at	any	time	prior	to	the	close	of	business	on	the	business	day	immediately	preceding	the	maturity	date	of	the	notes.	The	Company	must	pay	the conversion	price	of	the	notes	in	common	stock.	If	the	holders	of	the	notes	do	not	convert	prior	to	maturity,	the	Company	will	retire	the	debt	in	cash.	These	notes	are	guaranteed	by	American.

Certain	of	the	Company's	debt	financing	agreements	contain	loan	to	value	ratio	covenants	and	require	the	Company	to	periodically	appraise	the	collateral.	Pursuant	to	such	agreements,	if	the	loan to	value	ratio	exceeds	a	specified	threshold,	we	may	be	required	to	subject	additional	qualifying	collateral	(which	in	some	cases	may	include	cash	collateral)	or,	in	the	alternative,	to	pay	down	such financing,	in	whole	or	in	part,	with	premium	(if	any).

Almost	all	of	the	Company's	aircraft	assets	(including	aircraft	eligible	for	the	benefits	of	Section	1110	of	the	U.S.	Bankruptcy	Code)	are	encumbered.

# 7. Financial	Instruments	and	Risk	Management

Fuel	Price	Risk	Management		As	part	of	the	Company's	risk	management	program,	it	uses	a	variety	of	financial	instruments,	primarily	heating	oil	option	and	collar	contracts,	as	cash	flow	hedges to	mitigate	commodity	price	risk.	The	Company	does	not	hold	or	issue	derivative	financial	instruments	for	trading	purposes.	As	of	December	31,	2010,	the	Company	had	fuel	derivative	contracts outstanding	covering	31	million	barrels	of	jet	fuel	that	will	be	settled	over	the	next	24	months.	A	deterioration	of	the	Company's	liquidity	position	may	negatively	affect	the	Company's	ability	to	hedge fuel	in	the	future.

In	accordance	with	U.S.	GAAP,	the	Company	assesses,	both	at	the	inception	of	each	hedge	and	on	an	ongoing	basis,	whether	the	derivatives	that	are	used	in	its	hedging	transactions	are	highly effective	in	offsetting	changes	in	cash	flows	of	the	hedged	items.	Derivatives	that	meet	the	requirements	are	granted	special	hedge	accounting	treatment,	and	the	Company's	hedges	generally	meet	these requirements.	Accordingly,	the	Company's	fuel	derivative	contracts	are	accounted	for	as	cash	flow	hedges,	and	the	fair	value	of	the	Company's	hedging	contracts	is	recorded	in	Current	Assets	or	Current Liabilities	in	the	accompanying	consolidated	balance	sheets	until	the	underlying	jet	fuel	is	purchased.	The	Company	determines	the	ineffective	portion	of	its	fuel	hedge	contracts	by	comparing	the cumulative	change	in	the	total	value	of	the	fuel	hedge	contract,	or	group	of	fuel	hedge	contracts,	to	the	cumulative	change	in	a	hypothetical	jet	fuel	hedge.	If	the	total	cumulative	change	in	value	of	the	fuel hedge	contract	more	than	offsets	the	total	cumulative	change	in	a	hypothetical	jet	fuel	hedge,	the	difference	is	considered	ineffective	and	is	immediately	recognized	as	a	component	of	Aircraft	fuel expense.	Effective	gains	or	losses	on	fuel

hedging	contracts	are	deferred	in	Accumulated	other	comprehensive	income	(loss)	and	are	recognized	in	earnings	as	a	component	of	Aircraft	fuel	expense	when	the	underlying	jet	fuel	being	hedged	is used.

Ineffectiveness	is	inherent	in	hedging	jet	fuel	with	derivative	positions	based	in	crude	oil	or	other	crude	oil	related	commodities.	In	assessing	effectiveness,	the	Company	uses	a	regression	model to	determine	the	correlation	of	the	change	in	prices	of	the	commodities	used	to	hedge	jet	fuel	(e.g.,	NYMEX	Heating	oil)	to	the	change	in	the	price	of	jet	fuel.	The	Company	also	monitors	the	actual	dollar offset	of	the	hedges'	market	values	as	compared	to	hypothetical	jet	fuel	hedges.	The	fuel	hedge	contracts	are	generally	deemed	to	be	"highly	effective"	if	the	R-squared	is	greater	than	80	percent	and dollar	offset	correlation	is	within	80	percent	to	125	percent.	The	Company	discontinues	hedge	accounting	prospectively	if	it	determines	that	a	derivative	is	no	longer	expected	to	be	highly	effective	as	a hedge	or	if	it	decides	to	discontinue	the	hedging	relationship.	Subsequently,	any	changes	in	the	fair	value	of	these	derivatives	are	marked	to	market	through	earnings	in	the	period	of	change.

For	the	years	ended	December	31,	2010,	2009	and	2008,	the	Company	recognized	net	gains	(losses)	of	approximately	($142)	million,	($651)	million	and	$380	million,	respectively,	as	a component	of	Aircraft	fuel	expense	on	the	accompanying	consolidated	statements	of	operations	related	to	its	fuel	hedging	agreements,	including	the	ineffective	portion	of	the	hedges.	The	fair	value	of	the Company's	fuel	hedging	agreements	at	December	31,	2010	and	2009,	representing	the	amount	the	Company	would	receive	upon	termination	of	the	agreements,	totaled	$257	million	and	$57	million, respectively,	which	excludes	a	payable	for	both	years	related	to	contracts	that	settled	in	December	of	each	year.	As	of	December	31,	2010,	the	Company	estimates	that	during	the	next	twelve	months	it will	reclassify	from	Accumulated	other	comprehensive	loss	into	earnings	approximately	$121	million	in	net	gains	(based	on	prices	as	of	December	31,	2010)	related	to	its	fuel	derivative	hedges.

The	impact	of	cash	flow	hedges	on	the	Company's	consolidated	financial	statements	for	the	years	ending	December	31,	2010	and	2009,	respectively,	is	depicted	below	(in	millions):

Fair	Value	of	Aircraft	Fuel	Derivative	Instruments	(all	cash	flow	hedges)

Effect	of	Aircraft	Fuel	Derivative	Instruments	on	Statements	of	Operations	(all	cash	flow	hedges)

(1) Effective	portion	of	gain	(loss)

(2) Ineffective	portion	of	gain	(loss)

The	Company	is	also	exposed	to	credit	losses	in	the	event	of	non-performance	by	counterparties	to	these	financial	instruments,	and	although	no	assurances	can	be	given,	the	Company	does	not expect	any	of	the	counterparties	to	fail	to	meet	its	obligations.	The	credit	exposure	related	to	these	financial	instruments	is	represented	by	the	fair	value	of	contracts	with	a	positive	fair	value	at	the reporting	date,	reduced	by	the	effects	of	master	netting	agreements.	To	manage	credit	risks,	the	Company	selects	counterparties	based	on	credit	ratings,	limits	its	exposure	to	a	single	counterparty	under defined	guidelines,	and	monitors	the	market	position	of	the	program	and	its	relative	market	position	with	each	counterparty.	The	Company	also	maintains	industry-standard

security	agreements	with	a	number	of	its	counterparties	which	may	require	the	Company	or	the	counterparty	to	post	collateral	if	the	value	of	selected	instruments	exceed	specified	mark-to-market thresholds	or	upon	certain	changes	in	credit	ratings.

As	of	December	31,	2010,	the	Company	had	received	collateral	of	$73	million	which	is	included	in	short-term	investments.

In	addition	to	the	Company's	qualifying	cash	flow	hedges,	American	has	hedges	that	were	effectively	unwound	in	2009	that	were	recorded	as	assets	and	liabilities	on	the	balance	sheet.	Fair	value of	these	offsetting	positions	not	designated	as	hedges	as	of	December	31,	2009	was	a	$9	million	asset	recorded	in	Fuel	derivative	contracts	and	a	$9	million	liability	recorded	in	Fuel	derivative	liability.	In January	2010,	all	of	these	contracts	were	settled	with	a	net	zero	impact	to	the	Company's	financial	statements.

Fair	Values	of	Financial	Instruments		The	fair	values	of	the	Company's	long-term	debt	were	estimated	using	quoted	market	prices	where	available.	For	long-term	debt	not	actively	traded,	fair values	were	estimated	using	discounted	cash	flow	analyses,	based	on	the	Company's	current	incremental	borrowing	rates	for	similar	types	of	borrowing	arrangements.

The	carrying	value	and	estimated	fair	values	of	the	Company's	long-term	debt,	including	current	maturities,	were	(in	millions):

|  | 2010 | 2010 | 2009 | 2009 |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying\nValue | Fair\nValue | Carrying\nValue | Fair\nValue |
| Secured\tvariable\tand\tfixed\trate\tindebtedness | $5,114 | $4,562 | $5,553 | $4,310 |
| Enhanced\tequipment\ttrust\tcertificates | 2,002 | 2,127 | 2,022 | 1,999 |
| 6.00%\t—\t8.50%\tspecial\tfacility\trevenue\tbonds | 1,641 | 1,657 | 1,658 | 1,600 |
| AAdvantage\tMiles\tadvance\tpurchase | 890 | 903 | 890 | 893 |
| 4.50%\t—\t6.25%\tsenior\tconvertible\tnotes | 460 | 526 | 460 | 476 |
| 9.00%\t—\t10.20%\tdebentures | 214 | 207 | 214 | 158 |
| 7.88%\t—\t10.55%\tnotes | 211 | 209 | 211 | 181 |
|  | $10,532 | $10,191 | $11,008 | $9,617 |

# 8. Income	Taxes

The	Company	has	an	unrecognized	tax	benefit	of	approximately	$6	million,	which	did	not	change	during	the	twelve	months	ended	December	31,	2010.	Changes	in	the	unrecognized	tax	benefit have	no	impact	on	the	effective	tax	rate	due	to	the	existence	of	the	valuation	allowance.	Accrued	interest	on	tax	positions	is	recorded	as	a	component	of	interest	expense	but	was	not	significant	at December	31,	2010.

The	reconciliation	of	the	beginning	and	ending	amounts	of	unrecognized	tax	benefit	are	(in	millions):

The	Company	estimates	that	the	unrecognized	tax	benefit	will	not	significantly	change	within	the	next	twelve	months.

The	Company	files	its	tax	returns	as	prescribed	by	the	tax	laws	of	the	jurisdictions	in	which	it	operates.	The	Company's	2004	through	2009	tax	years	are	still	subject	to	examination	by	the	Internal Revenue	Service.	Various	state	and	foreign	jurisdiction	tax	years	remain	open	to	examination	and	the	Company	is	under	examination,	in	administrative	appeals,	or	engaged	in	tax	litigation	in	certain jurisdictions.	The	Company	believes	that	the	effect	of	any	additional	assessment(s)	will	be	immaterial	to	its	consolidated	financial	statements.

The	significant	components	of	the	income	tax	provision	(benefit)	were	(in	millions);

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Current | $(5) | $(36) | $0 |
| Deferred | (30) | (248) | 0 |
| Income\ttax\tbenefit | $(35) | $(284) | $ — |

The	income	tax	expense	(benefit)	differed	from	amounts	computed	at	the	statutory	federal	income	tax	rate	as	follows	(in	millions):

|  | 2010 | Year	Ended	December	31,<br>2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Statutory\tincome\ttax\tprovision\texpense/(benefit) | $(177) | $(613) | $(741) |
| State\tincome\ttax\texpense/(benefit),\tnet\tof\tfederal\ttax\teffect | (1) | (41) | (49) |
| Meal\texpense | 7 | 7 | 8 |
| Change\tin\tvaluation\tallowance | 121 | 597 | 807 |
| Tax\tbenefit\tresulting\tfrom\tOCI\tallocation |  | (248) | — |
| Other,\tnet | 15 | 14 | (25) |
| Income\ttax\tbenefit | $(35) | $(284) | $— |

The	change	in	the	valuation	allowance	reflects	the	recording	by	the	Company	in	2010	and	2009	of	an	income	tax	expense	credit	of	approximately	$30	million	and	$36	million,	respectively, resulting	from	the	Company's	elections	under	applicable	sections	of	the	Tax	Relief,	Unemployment	Insurance	Reauthorization,	and	Job	Creation	Act	of	2010	and	the	Housing	and	Economic	Recovery Act	of	2008	(as	extended	by	the	American	Recovery	and	Reinvestment	Act	of	2009),	allowing	corporations	to	accelerate	utilization	of	certain	research	and	alternative	minimum	tax	(AMT)	credit carryforwards	in	lieu	of	applicable	bonus	depreciation	on	certain	qualifying	capital	investments.

In	addition	to	the	changes	in	the	valuation	allowance	from	operations	described	in	the	table	above,	the	valuation	allowance	was	also	impacted	by	the	changes	in	the	components	of	Accumulated other	comprehensive	income	(loss),	described	in	Note	12	to	the	consolidated	financial	statements.	The	total	increase	in	the	valuation	allowance	was	$121	million,	$135	million,	and	$2.1	billion	in	2010, 2009,	and	2008,	respectively.

The	Company	recorded	a	$248	million	non-cash	income	tax	benefit	from	continuing	operations	during	the	fourth	quarter	of	2009.	Under	current	accounting	rules,	the	Company	is	required	to consider	all	items	(including	items	recorded	in	other	comprehensive	income)	in	determining	the	amount	of	tax	benefit	that	results	from	a	loss	from	continuing	operations	and	that	should	be	allocated	to continuing	operations.	As	a	result,	the	Company	recorded	a	tax	benefit	on	the	loss	from	continuing	operations	for	the	year,	which	will	be	exactly	offset	by	income	tax	expense	on	other	comprehensive income.	However,	while	the	income	tax	benefit	from	continuing	operations	is	reported	on	the	income	statement,	the	income	tax	expense	on	other	comprehensive	income	is	recorded	directly	to Accumulated	other	comprehensive	income,	which	is	a	component	of	stockholders'	equity.	Because	the	income	tax	expense	on	other	comprehensive	income	is	equal	to	the	income	tax	benefit	from continuing	operations,	the	Company's	year-end	net	deferred	tax	position	is	not	impacted	by	this	tax	allocation.

The	Company	provides	a	valuation	allowance	for	deferred	tax	assets	when	it	is	more	likely	than	not	that	some	portion,	or	all	of	its	deferred	tax	assets,	will	not	be	realized.	In	assessing	the realizability	of	the	deferred	tax	assets,	management	considers	whether	it	is	more	likely	than	not	that	some	portion,	or	all	of	the	deferred	tax	assets,	will	be	realized.	The	ultimate	realization	of	deferred	tax assets	is	dependent	upon	the	generation	of	future	taxable	income	(including	reversals	of	deferred	tax	liabilities)	during	the	periods	in	which	those	temporary	differences	will	become	deductible.

The	components	of	AMR's	deferred	tax	assets	and	liabilities	were	(in	millions):

|  | 2010 | 2009 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Postretirement\tbenefits\tother\tthan\tpensions | $1,056 | $971 |
| Rent\texpense | 333 | 331 |
| Alternative\tminimum\ttax\tcredit\tcarryforwards | 392 | 397 |
| Operating\tloss\tcarryforwards | 2,271 | 2,276 |
| Pensions | 1,865 | 1,686 |
| Frequent\tflyer\tobligation | 630 | 669 |
| Gains\tfrom\tlease\ttransactions | 55 | 90 |
| Other | 583 | 787 |
| Total\tdeferred\ttax\tassets | 7,185 | 7,207 |
| Valuation\tallowance | (2,990) | (2,869) |
| Net\tdeferred\ttax\tassets | 4,195 | 4,338 |
| Deferred\ttax\tliabilities: |  |  |
| Accelerated\tdepreciation\tand\tamortization | (3,985) | (4,152) |
| Other | (185) | (186) |
| Total\tdeferred\ttax\tliabilities | (4,170) | (4,338) |
| Net\tdeferred\ttax\tasset | $25 | $— |

At	December	31,	2010,	the	Company	had	available	for	federal	income	tax	purposes	an	alternative	minimum	tax	credit	carryforward	of	approximately	$392	million,	which	is	available	for	an indefinite	period,	and	federal	net	operating	losses	of	approximately	$6.7	billion	for	regular	tax	purposes,	which	will	expire,	if	unused,	beginning	in	2022.	These	net	operating	losses	include	an	unrealized benefit	of	approximately	$666	million	related	to	the	implementation	of	share-based	compensation	accounting	guidance	that	will	be	recorded	in	equity	when	realized.	The	Company	had	available	for	state income	tax	purposes	net	operating	losses	of	$3.7	billion,	which	expire,	if	unused,	in	years	2011	through	2027.	The	amount	that	will	expire	in	2011	is	$25	million.

Under	special	tax	rules	(the	Section	382	Limitation),	cumulative	stock	ownership	changes	among	material	shareholders	exceeding	50	percent	during	a	3-year	period	can	potentially	limit	a company's	future	use	of	net	operating	losses	and	tax	credits	(NOLs).	The	Section	382	Limitation	may	be	increased	by	certain	"built-in	gains,"	as	provided	by	current	IRS	guidance.	Based	on	available information,	the	Company	believes	it	is	not	currently	subject	to	the	Section	382	Limitation.	If	triggered	under	current	conditions,	the	Section	382	Limitation	is	not	expected	to	significantly	impact	the recorded	value	of	deferred	taxes	or	timing	of	utilization	of	the	Company's	NOLs.

# 9. Share	Based	Compensation

AMR	grants,	or	has	granted,	stock	compensation	under	three	plans:	the	1998	Long	Term	Incentive	Plan	(the	1998	Plan),	the	2003	Employee	Stock	Incentive	Plan	(the	2003	Plan)	and	the	2009 Long	Term	Incentive	Plan	(the	2009	Plan).	Collectively,	the	1998	Plan	and	the	2009	Plan	are	referred	to	as	the	LTIP	Plans.

Under	the	LTIP	Plans,	officers	and	key	employees	of	AMR	and	its	subsidiaries	may	be	granted	certain	types	of	stock	or	performance	based	awards.	At	December	31,	2010,	the	Company	had stock	option	awards,	stock	appreciation	right	(SAR)	awards,	performance	share	awards,	deferred	share	awards	and	other	awards	outstanding	under	these	plans.	The	total	number	of	common	shares authorized	for	distribution	under	the	1998	Plan	and	the	2009	Plan	is	23,700,000	and	4,000,000	shares,	respectively.	The	1998	Plan	expired	by	its	terms	in	2008.

The	Company	established	the	2003	Plan	to	provide	equity	awards	to	employees.	Under	the	2003	Plan,	employees	may	be	granted	stock	options,	restricted	stock	and	deferred	stock.	At December	31,	2010,	the	Company	had	stock	options	and	deferred	awards	outstanding	under	this	plan.	The	total	number	of	shares	authorized	for	distribution	under	the	2003	Plan	is	42,680,000	shares.

In	2010,	2009	and	2008	the	total	charge	for	share-based	compensation	expense	included	in	Wages,	salaries	and	benefits	expense	was	$53	million,	$61	million	and	$53	million,	respectively.	In 2010,	2009	and	2008,	the	amount	of	cash	used	to	settle	equity	instruments	granted	under	share-based	compensation	plans	was	$2	million,	$1	million	and	$24	million,	respectively.

Stock	Options/SARs		During	2006,	the	AMR	Board	of	Directors	approved	an	amendment	covering	all	of	the	outstanding	stock	options	previously	granted	under	the	1998	Plan.	The	amendment added	to	each	of	the	outstanding	options	an	additional	SAR	in	tandem	with	each	of	the	then	outstanding	stock	options.	The	addition	of	the	SAR	did	not	impact	the	fair	value	of	the	stock	options,	but simply	allowed	the	Company	to	settle	the	exercise	of	the	option	by	issuing	the	net	number	of	shares	equal	to	the	in-the-money	value	of	the	option.	This	amendment	is	estimated	to	make	available	enough shares	to	permit	the	Company	to	settle	all	outstanding	performance	and	deferred	share	awards	under	the	1998	Plan	in	stock	rather	than	cash.

Options/SARs	granted	under	the	LTIP	Plans	and	the	2003	Plan	are	awarded	with	an	exercise	price	equal	to	the	fair	market	value	of	the	stock	on	date	of	grant,	become	exercisable	in	equal	annual installments	over	periods	ranging	from	three	to	five	years	and	expire	no	later	than	ten	years	from	the	date	of	grant.	Expense	for	the	options	is	recognized	on	a	straight-line	basis.	The	fair	value	of	each award	is	estimated	on	the	date	of	grant	using	the	modified	Black-Scholes	option	valuation	model	and	the	assumptions	noted	in	the	following	table.	Expected	volatilities	are	based	on	implied	volatilities from	traded	options	on	the	Company's	stock,	historical	volatility	of	the	Company's	stock,	and	other	factors.	The	Company	uses	historical	employee	exercise	data	to	estimate	the	expected	term	of	awards granted	used	in	the	valuation	model.	The	risk-free	rate	is	based	on	the	U.S.	Treasury	yield	curve	in	effect	at	the	time	of	grant.	The	dividend	yield	is	assumed	to	be	zero	based	on	the	Company's	history and	expectation	of	not	paying	dividends.

A	summary	of	stock	option/SARs	activity	under	the	LTIP	Plans	and	the	2003	Plan	as	of	December	31,	2010,	and	changes	during	the	year	then	ended	is	presented	below:

|  | LTIP	Plans | LTIP	Plans | The	2003	Plan | The	2003	Plan |
| :--- | :--- | :--- | :--- | :--- |
|  | Options/SARs | Weighted\nAverage\nExercise\nPrice | Options | Weighted\nAverage\nExercise\nPrice |
| Outstanding\tat\tJanuary\t1 | 15,892,528 | $19.02 | 13,526,670 | $5.66 |
| Granted | 3,165,950 | 7.07 | — | — |
| Exercised | (100,366) | 4.86 | (211,575) | 5.00 |
| Forfeited\tor\tExpired | (3,573,824) | 30.51 | (106,712) | 6.94 |
| Outstanding\tat\tDecember\t31 | 15,384,288 | $13.99 | 13,208,383 | $5.66 |
| Exercisable\tat\tDecember\t31 | 7,290,070 | $21.32 | 13,206,599 | $5.66 |
| Weighted\tAverage\tRemaining\tContractual\tTerm\tof\tOptions\tOutstanding\t(in\tyears) | 6.2 |  | 2.4 |  |
| Aggregate\tIntrinsic\tValue\tof\tOptions\tOutstanding | $14,155,359 |  | $32,871,830 |  |

The	aggregate	intrinsic	value	of	all	vested	options/SARs	is	$35	million	and	those	options	have	an	average	remaining	contractual	life	of	2.8	years.	The	weighted-average	grant	date	fair	value	of options/SARs	granted	during	2010,	2009	and	2008	was	$3.97,	$2.54	and	$3.78,	respectively.	The	total	intrinsic	value	of	options/SARs	exercised	during	2010,	2009	and	2008	was	$1	million,	less	than $1	million	and	$2	million,	respectively.

A	summary	of	the	status	of	the	Company's	non-vested	options/SARs	under	all	plans	as	of	December	31,	2010,	and	changes	during	the	year	ended	December	31,	2010,	is	presented	below:

|  | Options/SARs | Weighted<br>Average<br>Grant	Date	Fair<br>Value |
| :--- | :--- | :--- |
| Outstanding\tat\tJanuary\t1 | 6,765,581 | $4.02 |
| Granted | 3,165,950 | 3.97 |
| Vested | (1,743,271) | 4.82 |
| Forfeited | (92,258) | 3.82 |
| Outstanding\tat\tDecember\t31 | 8,096,002 | $3.83 |

As	of	December	31,	2010,	there	was	$14	million	of	total	unrecognized	compensation	cost	related	to	non-vested	stock	options/SARs	granted	under	the	LTIP	Plans	and	the	2003	Plan	that	is expected	to	be	recognized	over	a	weighted-average	period	of	3.4	years.	The	total	fair	value	of	stock	options/SARs	vested	during	the	years	ended	December	31,	2010,	2009	and	2008,	was	$11	million, $10	million	and	$9	million,	respectively.

Cash	received	by	the	Company	from	exercise	of	stock	options	for	the	years	ended	December	31,	2010,	2009	and	2008,	was	$1	million	for	each	of	those	years.	No	tax	benefit	was	realized	as	a result	of	stock	options/SARs	exercised	in	2010	due	to	the	tax	valuation	allowance	discussed	in	Note	8.

Performance	Share	Awards		Performance	share	awards	are	granted	under	the	LTIP	Plans,	generally	vest	pursuant	to	a	three	year	measurement	period	and	are	settled	on	the	vesting	date.	The number	of	awards	ultimately	issued	under	performance	share	awards	is	contingent	on	AMR's	relative	stock	price	performance	compared	to	certain	of	its	competitors	over	a	three	year	period	and	can range	from	zero	to	175	percent	of	the	awards	granted.	The

fair	value	of	performance	awards	is	calculated	by	multiplying	the	stock	price	on	the	date	of	grant	by	the	expected	payout	percentage	and	the	number	of	shares	granted.

Activity	during	2010	for	performance	awards	accounted	for	as	equity	awards	was:

| fair	value	of	performance	awards	is	calculated	by	multiplying	the	stock	price	on	the	date	of	grant	by	the	expected	payout	percentage	and	the	number	of	shares	granted.<br>Activity	during	2010	for	performance	awards	accounted	for	as	equity	awards	was: |  |  |  |
| :--- | :--- | :--- | :--- |
|  | Awards | Weighted\nAverage\nRemaining\nContractual\nTerm | Aggregate\nIntrinsic\tValue |
| Outstanding\tat\tJanuary\t1 | 7,863,455 |  |  |
| Granted | 3,057,630 |  |  |
| Settled | (324,462) |  |  |
| Forfeited\tor\tExpired | (1,306,177) |  |  |
| Outstanding\tat\tDecember\t31 | 9,290,446 | 1.3 | $72,372,574 |

The	aggregate	intrinsic	value	represents	the	Company's	current	estimate	of	the	number	of	shares	(9,290,446	shares	at	December	31,	2010)	that	will	ultimately	be	distributed	for	outstanding awards	computed	using	the	market	value	of	the	Company's	common	stock	at	December	31,	2010.	The	weighted-average	grant	date	fair	value	per	share	of	performance	share	awards	granted	during	2010, 2009,	and	2008	was	$7.01,	$4.53	and	$8.20,	respectively.	The	total	fair	value	of	equity	awards	settled	during	the	year	ended	December	31,	2010	was	$2	million.	As	of	December	31,	2010,	there	was $23	million	of	total	unrecognized	compensation	cost	related	to	performance	share	awards	that	is	expected	to	be	recognized	over	a	period	of	1.7	years.

Deferred	Share	Awards		The	distribution	of	deferred	share	awards	granted	under	the	LTIP	Plans	is	based	solely	on	a	requisite	service	period	(generally	36	months).	Career	equity	awards	granted to	certain	employees	of	the	Company	vest	upon	the	retirement	of	those	individuals.	The	fair	value	of	each	deferred	award	is	based	on	AMR's	stock	price	on	the	measurement	date.

        Activity	during	2010	for	deferred	awards	accounted	for	as	equity	awards	was:

The	weighted-average	grant	date	fair	value	per	share	of	deferred	awards	granted	during	2010,	2009	and	2008	was	$7.05,	$4.57	and	$8.23,	respectively.	The	total	fair	value	of	awards	settled	during the	years	ended	December	31,	2010,	2009	and	2008	was	$3	million,	$3	million	and	$6	million,	respectively.	As	of	December	31,	2010,	there	was	$27	million	of	total	unrecognized	compensation	cost related	to	deferred	awards	that	is	expected	to	be	recognized	over	a	weighted	average	period	of	2.6	years.

Other	Awards		As	of	December	31,	2010,	certain	performance	share	agreements	and	deferred	share	award	agreements	were	accounted	for	as	a	liability,	or	as	equity,	as	appropriate,	in	the consolidated	balance	sheet	as	the	plans	only	permit	settlement	in	cash	or	the	awards	required	that	the	employee	meet	certain	performance	conditions	which	were	not	subject	to	market	measurement.	As	a result,	awards	under	these	agreements	are	marked	to	current	market	value.	As	of	December	31,	2010,	the	aggregate	intrinsic	value	of	these	awards	was	$4	million	and	the

weighted	average	remaining	contractual	term	of	these	awards	was	2.8	years.	The	total	fair	value	of	awards	settled	during	the	years	ended	December	31,	2010,	2009	and	2008	was	$2	million,	$1	million, and	$24	million	respectively.	As	of	December	31,	2010,	there	was	$2	million	of	total	unrecognized	compensation	cost	related	to	other	awards	that	is	expected	to	be	recognized	over	a	weighted	average period	of	3.5	years.

# 10. Retirement	Benefits

All	employees	of	the	Company	may	participate	in	pension	plans	if	they	meet	the	plans'	eligibility	requirements.	The	defined	benefit	plans	provide	benefits	for	participating	employees	based	on years	of	service	and	average	compensation	for	a	specified	period	of	time	before	retirement.	The	Company	uses	a	December	31	measurement	date	for	all	of	its	defined	benefit	plans.	American's	pilots	also participate	in	a	defined	contribution	plan	for	which	Company	contributions	are	determined	as	a	percentage	(11	percent)	of	participant	compensation.	Certain	non-contract	employees	(including	all	new non-contract	employees)	participate	in	a	defined	contribution	plan	in	which	the	Company	will	match	the	employees'	before-tax	contribution	on	a	dollar-for-dollar	basis,	up	to	5.5	percent	of	their pensionable	pay.

In	addition	to	pension	benefits,	retiree	medical	and	other	postretirement	benefits,	including	certain	health	care	and	life	insurance	benefits	(which	provide	secondary	coverage	to	Medicare),	are provided	to	retired	employees.	The	amount	of	health	care	benefits	is	limited	to	lifetime	maximums	as	outlined	in	the	plan.	Certain	employees	of	American	and	employees	of	certain	other	subsidiaries	may become	eligible	for	these	benefits	if	they	satisfy	eligibility	requirements	during	their	working	lives.

Certain	employee	groups	make	contributions	toward	funding	a	portion	of	their	retiree	health	care	benefits	during	their	working	lives.	The	Company	funds	benefits	as	incurred	and	makes contributions	to	match	employee	prefunding.

The	following	table	provides	a	reconciliation	of	the	changes	in	the	pension	and	retiree	medical	and	other	benefit	obligations	and	fair	value	of	assets	for	the	years	ended	December	31,	2010	and 2009,	and	a	statement	of	funded	status	as	of	December	31,	2010	and	2009	(in	millions):

|  | Pension	Benefits | Pension	Benefits | Other	Benefits | Other	Benefits |
| :--- | :--- | :--- | :--- | :--- |
|  | 2010 | 2009 | 2010 | 2009 |
| Reconciliation\tof\tbenefit\tobligation |  |  |  |  |
| Obligation\tat\tJanuary\t1 | $12,003 | $10,884 | $2,827 | $2,779 |
| Service\tcost | 366 | 333 | 60 | 59 |
| Interest\tcost | 737 | 712 | 165 | 179 |
| Actuarial\t(gain)\tloss | 442 | 675 | 263 | 67 |
| Plan\tamendments | 1 | — | (78) | (101) |
| Benefit\tpayments | (581) | (601) | (140) | (156) |
| Obligation\tat\tDecember\t31 | $12,968 | $12,003 | $3,097 | $2,827 |
| Reconciliation\tof\tfair\tvalue\tof\tplan\tassets |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tJanuary\t1 | $7,051 | $6,714 | $206 | $161 |
| Actual\treturn\ton\tplan\tassets | 837 | 928 | 17 | 34 |
| Employer\tcontributions | 466 | 10 | 151 | 167 |
| Benefit\tpayments | (581) | (601) | (140) | (156) |
| Fair\tvalue\tof\tplan\tassets\tat\tDecember\t31 | $7,773 | $7,051 | $234 | $206 |
| Funded\tstatus\tat\tDecember\t31 | $(5,195) | $(4,952) | $(2,863) | $(2,621) |

|  | Pension	Benefits | Pension	Benefits | Other	Benefits | Other	Benefits |
| :--- | :--- | :--- | :--- | :--- |
|  | 2010 | 2009 | 2010 | 2009 |
| Amounts\trecognized\tin\tthe\tconsolidated\tbalance\tsheets |  |  |  |  |
| Current\tliability | $8 | $9 | $173 | $167 |
| Noncurrent\tliability | 5,187 | 4,943 | 2,690 | 2,454 |
|  | $5,195 | $4,952 | $2,863 | $2,621 |
| Amounts\trecognized\tin\tother\tcomprehensive\tloss |  |  |  |  |
| Net\tactuarial\tloss\t(gain) | $3,052 | $3,008 | $(128) | $(402) |
| Prior\tservice\tcost\t(credit) | 81 | 94 | (205) | (147) |
|  | $3,133 | $3,102 | $(333) | $(549) |
| For\tplans\twith\taccumulated\tbenefit\tobligations\texceeding\tthe\tfair\tvalue\tof\tplan\tassets |  |  |  |  |
| Projected\tbenefit\tobligation\t(PBO) | $12,968 | $11,977 | $—\t $— | $—\t $— |
| Accumulated\tbenefit\tobligation\t(ABO) | 11,508 | 10,558 | — | — |
| Accumulated\tpostretirement\tbenefit\tobligation\t(APBO) | — | — | 3,097 | 2,827 |
| Fair\tvalue\tof\tplan\tassets | 7,773 | 7,027 | 234 | 206 |
| ABO\tless\tfair\tvalue\tof\tplan\tassets | 3,735 | 3,531 | — | — |

At	December	31,	2010	and	2009,	pension	benefit	plan	assets	of	$264	million	and	$145	million,	respectively,	and	retiree	medical	and	other	benefit	plan	assets	of	$232	million	and	$204	million, respectively,	were	invested	in	shares	of	certain	mutual	funds.

The	following	tables	provide	the	components	of	net	periodic	benefit	cost	for	the	years	ended	December	31,	2010,	2009	and	2008	(in	millions):

|  | 2010 | Pension	Benefits<br>2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Components\tof\tnet\tperiodic\tbenefit\tcost |  |  |  |
| Defined\tbenefit\tplans: |  |  |  |
| Service\tcost | $366 | $333 | $324 |
| Interest\tcost | 737 | 712 | 684 |
| Expected\treturn\ton\tassets | (593) | (566) | (789) |
| Amortization\tof: |  |  |  |
| Prior\tservice\tcost | 13 | 13 | 16 |
| Settlement | — | — | 103 |
| Unrecognized\tnet\tloss | 154 | 145 | 3 |
| Net\tperiodic\tbenefit\tcost\tfor\tdefined\tbenefit\tplans | 677 | 637 | 341 |
| Defined\tcontribution\tplans | 168 | 168 | 170 |
|  | $845 | $805 | $511 |

|  | Retiree	Medical	and	Other	Benefits | Retiree	Medical	and	Other	Benefits | Retiree	Medical	and	Other	Benefits |
| :--- | :--- | :--- | :--- |
|  | 2010 | 2009 | 2008 |
| Components\tof\tnet\tperiodic\tbenefit\tcost |  |  |  |
| Service\tcost | $60 | $59 | $54 |
| Interest\tcost | 165 | 179 | 172 |
| Expected\treturn\ton\tassets | (18) | (14) | (20) |
| Amortization\tof: |  |  |  |
| Prior\tservice\tcost | (19) | (8) | (13) |
| Unrecognized\tnet\tloss\t(gain) | (10) | (14) | (22) |
| Net\tperiodic\tbenefit\tcost | $178 | $202 | $171 |

The	estimated	net	loss	and	prior	service	cost	for	the	defined	benefit	pension	plans	that	will	be	amortized	from	Accumulated	other	comprehensive	income	into	net	periodic	benefit	cost	over	the next	fiscal	year	are	$154	million	and	$13	million,	respectively.	The	estimated	net	gain	and	prior	service	credit	for	the	retiree	medical	and	other	postretirement	plans	that	will	be	amortized	from Accumulated	other	comprehensive	income	into	net	periodic	benefit	cost	over	the	next	fiscal	year	are	$9	million	and	$29	million,	respectively.

|  |  |  | Retiree	Medical	and	Other | Retiree	Medical	and	Other |
| :--- | :--- | :--- | :--- | :--- |
|  | Pension\tBenefits | Pension\tBenefits | Benefits | Benefits |
|  | 2010 | 2009 | 2010 | 2009 |
| Weighted-average\tassumptions\tused\tto\tdetermine\tbenefit\tobligations\tas\tof\tDecember\t31 |  |  |  |  |
| Discount\trate | \t5.80% | \t6.10% | 5.69% | 5.90% |
| Salary\tscale\t(ultimate) | \t3.78 | \t3.78 | — | — |

|  |  |  | Retiree	Medical	and	Other | Retiree	Medical	and	Other |
| :--- | :--- | :--- | :--- | :--- |
|  | Pension\tBenefits | Pension\tBenefits | Benefits | Benefits |
|  | 2010 | 2009 | 2010 | 2009 |
| Weighted-average\tassumptions\tused\tto\tdetermine\tnet\tperiodic\tbenefit\tcost\tfor\tthe\tyears\tended\tDecember\t31 |  |  |  |  |
| Discount\trate | \t6.10% | \t6.50% | 5.90% | 6.50% |
| Salary\tscale\t(ultimate) | \t3.78 | \t3.78 | — | — |
| Expected\treturn\ton\tplan\tassets | \t8.50 | \t8.75 | 8.50 | 8.75 |

As	of	December	31,	2010,	the	Company's	estimate	of	the	long-term	rate	of	return	on	plan	assets	was	8.50	percent	based	on	the	target	asset	allocation.	Expected	returns	on	longer	duration	bonds are	based	on	yields	to	maturity	of	the	bonds	held	at	year-end.	Expected	returns	on	other	assets	are	based	on	a	combination	of	long-term	historical	returns,	actual	returns	on	plan	assets	achieved	over	the last	ten	years,	current	and	expected	market	conditions,	and	expected	value	to	be	generated	through	active	management,	currency	overlay	and	securities	lending	programs.	The	Company's	annualized	ten- year	rate	of	return	on	plan	assets	as	of	December	31,	2010,	was	approximately	7.74	percent.

The	objectives	of	the	Company's	investment	policies	are	to:	maintain	sufficient	income	and	liquidity	to	pay	retirement	benefits;	produce	a	long-term	rate	of	return	that	meets	or	exceeds	the assumed	rate	of	return	for	plan	assets;	limit	the	volatility	of	asset	performance	and	funded	status;	and	diversify	assets	among	asset	classes	and	investment	managers.

Based	on	these	investment	objectives,	a	long-term	strategic	asset	allocation	has	been	established.	This	strategic	allocation	seeks	to	balance	the	potential	benefit	of	improving	funded	position	with the	potential	risk	that	the	funded	position	would	decline.	The	current	strategic	target	asset	allocation	is	as	follows:

Each	asset	class	is	actively	managed	and,	historically,	the	plans'	assets	have	produced	returns,	net	of	management	fees,	in	excess	of	the	expected	rate	of	return	over	the	last	ten	years.	Stocks	and emerging	market	bonds	are	used	to	provide	diversification	and	are	expected	to	generate	higher	returns	over	the	long-term	than	longer	duration	U.S.	bonds.	Public	stocks	are	managed	using	a	value investment	approach	in	order	to	participate	in	the	returns	generated	by	stocks	in	the	long-term,	while	reducing	year-over-year	volatility.	Longer	duration	U.S.	bonds	are	used	to	partially	hedge	the	assets from	declines	in	interest	rates.	Alternative	(private)	investments	are	used	to	provide	expected	returns	in	excess	of	the	public	markets	over	the	long-term.	Additionally,	the	Company	engages	currency overlay	managers	in	an	attempt	to	increase	returns	by	protecting	non-U.S.	dollar	denominated	assets	from	a	rise	in	the	relative	value	of	the	U.S.	dollar.	The	Company	also	participates	in	securities	lending programs	to	generate	additional	income	by	loaning	plan	assets	to	borrowers	on	a	fully	collateralized	basis.	These	programs	are	subject	to	market	risk.

Investments	in	securities	traded	on	recognized	securities	exchanges	are	valued	at	the	last	reported	sales	price	on	the	last	business	day	of	the	year.	Securities	traded	in	the	over-the-counter	market are	valued	at	the	last	bid	price.	The	money	market	fund	is	valued	at	fair	value	which	represents	the	net	asset	value	of	the	shares	of	such	fund	as	of	the	close	of	business	at	the	end	of	the	period. Investments	in	limited	partnerships	are	carried	at	estimated	net	asset	value	as	determined	by	and	reported	by	the	general	partners	of	the	partnerships	and	represent	the	proportionate	share	of	the	estimated fair	value	of	the	underlying	assets	of	the	limited	partnerships.	Common/collective	trusts	are	valued	at	net	asset	value	based	on	the	fair	values	of	the	underlying	investments	of	the	trusts	as	determined	by the	sponsor	of	the	trusts.	The	103-12	investment	trust	is	valued	at	net	asset	value	which	is	determined	by	the	issuer	at	the	end	of	each	month	and	is	based	on	the	aggregate	fair	value	of	trust	assets	less liabilities,	divided	by	the	number	of	units	outstanding.	No	changes	in	valuation	techniques	or	inputs	occurred	during	the	period.

The	fair	values	of	the	Company's	pension	plan	assets	at	December	31,	2010	and	2009,	by	asset	category	are	as	follows:

|  | Quoted	Prices	in |  | Significant |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Active\tMarkets | Significant | Unobservable |  |
|  | for\tIdentical | Observable | Inputs |  |
|  | Assets\t(Level\t1) | Inputs\t(Level\t2) | (Level\t3) | Total |
|  |  | (In\tmillions) |  |  |
| Asset\tCategory |  |  |  |  |
| Cash\tand\tcash\tequivalents | $269 | $— | $— | $269 |
| Equity\tsecurities |  |  |  |  |
| International\tmarkets(a)(b) | 2,025 | — | — | 2,025 |
| Large-cap\tcompanies(b) | 1,557 | — | — | 1,557 |
| Mid-cap\tcompanies(b) | 152 | — | — | 152 |
| Small-cap\tcompanies(b) | 37 | — | — | 37 |
| Fixed\tIncome |  |  |  |  |
| Corporate\tbonds(c) | — | 1,593 | — | 1,593 |
| Government\tsecurities(d) | — | 1,194 | — | 1,194 |
| U.S.\tmunicipal\tsecurities | — | 39 | — | 39 |
| Alternative\tinvestments |  |  |  |  |
| Private\tequity\tpartnerships(e) | — | — | 795 | 795 |
| Common/collective\tand\t103-12\tinvestment\ttrusts(f) | — | 145 | — | 145 |
| Interest\trate\tswap\tcontracts\t—\tnet(g) | — | (74) | — | (74) |
| Insurance\tgroup\tannuity\tcontracts | — | — | 3 | 3 |
| Dividend\tand\tinterest\treceivable | 37 | — | — | 37 |
| Due\tto/from\tbrokers\tfor\tsale\tof\tsecurities\t—\tnet | (11) | — | — | (11) |
| Swap\tincome\treceivable | 8 | — | — | 8 |
| Other\tassets\t—\tnet | 4 | — | — | 4 |
| Total | $4,078 | $2,897 | $798 | $7,773 |

(a) Holdings	are	diversified	as	follows:	20	percent	United	Kingdom,	14	percent	Japan,	9	percent	France,	8	percent	Switzerland,	7	percent	Germany,	5	percent	Netherlands,	11	percent	emerging markets	and	the	remaining	26	percent	with	no	concentration	greater	than	5	percent	in	any	one	country.

(b) There	are	no	significant	concentration	of	holdings	by	company	or	industry.

(c) Includes	approximately	82	percent	investments	in	corporate	debt	with	a	Standard	and	Poor's	(S&P)	rating	lower	than	A	and	18	percent	investments	in	corporate	debt	with	an	S&P	rating	A	or higher.	Holdings	include	81	percent	U.S.	companies,	16	percent	international	companies	and	3	percent	emerging	market	companies.

(d) Includes	approximately	87	percent	investments	in	domestic	government	securities	and	13	percent	in	emerging	market	government	securities.	There	are	no	significant	foreign	currency	risks	within this	classification.

(e) Includes	limited	partnerships	that	invest	primarily	in	U.S.	(92%)	and	European	(8%)	buyout	opportunities	of	a	range	of	privately	held	companies.	The	Master	Trust	does	not	have	the	right	to	redeem its	limited	partnership	investment	at	its	net	asset	value.	Instead,	the	Master	Trust	receives	distributions	as	the	underlying	assets	are	liquidated.	It	is	estimated	that	the	underlying	assets	of	these	funds will	be	gradually	liquidated	over	the	next	1	to

10	years.	Additionally,	the	Master	Trust	has	future	funding	commitments	of	approximately	$389	million	over	the	next	10	years.

(f) Investment	includes	64%	in	an	emerging	market	103-12	investment	trust	with	investments	in	emerging	country	equity	securities,	19%	in	Canadian	segregated	balanced	value,	income	growth	and diversified	pooled	funds	and	17%	in	a	common/collective	trust	investing	in	securities	of	smaller	companies	located	outside	the	U.S.,	including	developing	markets.	Requests	for	withdrawals	must meet	specific	requirements	with	advance	notice	of	redemption	preferred.

(g) Includes	four	interest	rate	swap	agreements	with	notional	value	of	$760	million	and	fair	value	of	$75	million	representing	99%	of	the	balance.

|  | Quoted	Prices	in |  | Significant |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Active\tMarkets | Significant | Unobservable |  |
|  | for\tIdentical | Observable | Inputs |  |
|  | Assets\t(Level\t1) | Inputs\t(Level\t2) | (Level\t3) | Total |
|  |  | (In\tmillions) |  |  |
| Asset\tCategory |  |  |  |  |
| Cash\tand\tcash\tequivalents | $162 | $— | $— | $162 |
| Equity\tsecurities |  |  |  |  |
| International\tmarkets(a)(e) | 1,410 | — | — | 1,410 |
| Large-cap\tcompanies(b)(e) | 1,431 | — | — | 1,431 |
| Mid-cap\tcompanies(c)(e) | 241 | — | — | 241 |
| Small-cap\tcompanies(d)(e) | 49 | — | — | 49 |
| Fixed\tIncome |  |  |  |  |
| Corporate\tbonds(f) | — | 2,023 | — | 2,023 |
| Government\tsecurities(g) | — | 793 | — | 793 |
| U.S.\tmunicipal\tsecurities | — | 40 | — | 40 |
| Alternative\tinvestments |  |  |  |  |
| Private\tequity\tpartnerships(h) | — | — | 744 | 744 |
| Common/collective\tand\t103-12\tinvestment\ttrusts(i) | — | 115 | — | 115 |
| Insurance\tgroup\tannuity\tcontracts | — | — | 3 | 3 |
| Dividend\tand\tinterest\treceivable | 40 | — | — | 40 |
| Total | $3,333 | $2,971 | $747 | $7,051 |

(a) Holdings	are	diversified	as	follows:	20	percent	United	Kingdom,	14	percent	Japan,	12	percent	France,	10	percent	Germany,	9	percent	Switzerland,	6	percent	Netherlands,	6	percent	emerging markets	and	the	remaining	23	percent	with	no	concentration	greater	than	5	percent	in	any	one	country.

(b) Holdings	include	85	percent	U.S.	companies,	11	percent	international	companies	and	4	percent	emerging	market	companies	traded	in	the	U.S.	markets.

(c) Holdings	include	85	percent	U.S.	companies,	13	percent	international	companies	and	2	percent	emerging	market	companies	traded	in	the	U.S.	markets.

(d) Holdings	include	92	percent	U.S.	companies,	5	percent	international	companies	and	3	percent	emerging	market	companies	traded	in	the	U.S.	markets.

(e) There	are	no	significant	concentration	of	holdings	by	company	or	industry.

(f) Includes	approximately	76	percent	investments	in	corporate	debt	with	a	Standard	and	Poor's	(S&P)	rating	lower	than	A	and	24	percent	investments	in	corporate	debt	with	an	S&P	rating	A	or higher.	Holdings	include	81	percent	U.S.	companies,	17	percent	international	companies	and	2	percent	emerging	market	companies.

(g) Includes	approximately	80	percent	investments	in	domestic	government	securities,	19	percent	in	emerging	market	government	securities	and	1	percent	in	other	international	government	securities. There	are	no	significant	foreign	currency	risks	within	this	classification.

(h) Includes	limited	partnerships	that	invest	primarily	in	U.S.	(93	percent)	and	European	(7	percent)	buyout	opportunities.

(i) Includes	investments	in	emerging	markets,	global	small	companies	and	Canadian	segregated	funds.

Not	included	in	the	above	tables	are	receivables	and	payables	for	foreign	currency	forward	contracts	and	futures	contracts	which	net	to	approximately	$3	million	and	collateral	held	on	loaned securities	and	the	obligation	to	return	collateral	on	loaned	securities	which	effectively	net	to	zero.

Changes	in	fair	value	measurements	of	Level	3	investments	during	the	year	ended	December	31,	2010,	were	as	follows:

|  | Private	Equity<br>Partnerships | Insurance	Group<br>Annuity	Contracts |
| :--- | :--- | :--- |
| Beginning\tbalance\tat\tDecember\t31,\t2009 | $744 | $3 |
| Actual\treturn\ton\tplan\tassets: |  |  |
| Relating\tto\tassets\tstill\theld\tat\tthe\treporting\tdate | 1 | — |
| Relating\tto\tassets\tsold\tduring\tthe\tperiod | 69 | — |
| Purchases,\tsales,\tsettlements\t(net) | (19) | — |
| Ending\tbalance\tat\tDecember\t31,\t2010 | $795 | $3 |

|  | Private	Equity<br>Partnerships | Insurance	Group<br>Annuity	Contracts |
| :--- | :--- | :--- |
| Beginning\tbalance\tat\tDecember\t31,\t2008 | $613 | $3 |
| Actual\treturn\ton\tplan\tassets: |  |  |
| Relating\tto\tassets\tstill\theld\tat\tthe\treporting\tdate | 47 | — |
| Relating\tto\tassets\tsold\tduring\tthe\tperiod | 1 | — |
| Purchases,\tsales,\tsettlements\t(net) | 83 | — |
| Ending\tbalance\tat\tDecember\t31,\t2009 | $744 | $3 |

The	fair	values	of	the	Company's	other	postretirement	benefit	plan	assets	at	December	31,	2010	by	asset	category	were	as	follows:

|  | Quoted	Prices	in |  | Significant |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Active\tMarkets\tfor | Significant | Unobservable |  |
|  | Identical\tAssets | Observable | Inputs |  |
|  | (Level\t1) | Inputs\t(Level\t2) | (Level\t3) | Total |
|  |  | (In\tmillions) |  |  |
| Asset\tCategory |  |  |  |  |
| Money\tmarket\tfund | $4 | $—\t $— | $—\t $— | $4 |
| Unitized\tmutual\tfunds | — | 230 | — | 230 |
| Total | $4 | $230 | $— | $234 |

# Fair	Value	Measurements	at	December	31,	2009

|  | Quoted	Prices	in |  |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Active\tMarkets\tfor | Significant | Significant |  |
|  | Identical\tAssets | Observable | Unobservable |  |
|  | (Level\t1) | Inputs\t(Level\t2) | Inputs\t(Level\t3) | Total |
|  |  | (In\tmillions) |  |  |
| Asset\tCategory |  |  |  |  |
| Money\tmarket\tfund | $4 | $—\t $— | $—\t $— | $4 |
| Unitized\tmutual\tfunds | — | 202 | — | 202 |
| Total | $4 | $202 | $— | $206 |

Investments	in	the	unitized	mutual	funds	are	carried	at	the	per	share	net	asset	value	and	include	approximately	27	percent	of	investments	in	non-U.S.	common	stocks	in	2010	and	approximately 25	percent	of	investments	in	non-U.S.	common	stocks	in	2009.	Net	asset	value	is	based	on	the	fair	market	value	of	the	funds'	underlying	assets	and	liabilities	at	the	date	of	determination.	Investments	in the	money	market	fund	are	valued	at	fair	value	which	represents	the	net	assets	value	of	the	shares	of	such	fund	as	of	the	close	of	business	at	the	end	of	the	period.

A	one	percentage	point	change	in	the	assumed	health	care	cost	trend	rates	would	have	the	following	effects	(in	millions):

|  | One	Percent<br>Increase | One	Percent<br>Decrease |
| :--- | :--- | :--- |
| Impact\ton\t2010\tservice\tand\tinterest\tcost | 22 | (22) |
| Impact\ton\tpostretirement\tbenefit\tobligation\tas\tof\tDecember\t31,\t2010 | 235 | (231) |

The	Company	is	required	to	make	minimum	contributions	to	its	defined	benefit	pension	plans	under	the	minimum	funding	requirements	of	ERISA,	the	Pension	Funding	Equity	Act	of	2004	and the	Pension	Protection	Act	of	2006.	The	Company	estimates	its	2011	required	contribution	to	its	defined	benefit	pension	plans	to	be	approximately	$520	million	under	the	provisions	of	these	acts	which reflects	the	Preservation	of	Access	to	Care	for	Medical	Beneficiaries	and	Pension	Relief	Act	of	2010	(the	Relief	Act),	H.R.	3962.	The	Relief	Act	provides	for

temporary,	targeted	funding	relief	(subject	to	certain	terms	and	conditions)	for	single	employer	and	multiemployer	pension	plans	that	suffered	significant	losses	in	asset	value	due	to	the	steep	market	slide in	2008.	Under	the	Relief	Act,	the	Company's	2010	minimum	required	contribution	to	its	defined	benefit	pension	plans	was	reduced	from	$525	million	to	approximately	$460	million

The	following	benefit	payments,	which	reflect	expected	future	service	as	appropriate,	are	expected	to	be	paid:

|  | Pension | and	Other |
| :--- | :--- | :--- |
| 2011 | 574 | 173 |
| 2012 | 602 | 170 |
| 2013 | 665 | 169 |
| 2014 | 729 | 170 |
| 2015 | 785 | 173 |
| 2016\t—\t2020 | \t4,959 | 989 |

During	2008,	AMR	recorded	a	settlement	charge	totaling	$103	million	related	to	lump	sum	distributions	from	the	Company's	defined	benefit	pension	plans	to	pilots	who	retired.	Pursuant	to U.S.	GAAP,	the	use	of	settlement	accounting	is	required	if,	for	a	given	year,	the	cost	of	all	settlements	exceeds,	or	is	expected	to	exceed,	the	sum	of	the	service	cost	and	interest	cost	components	of	net periodic	pension	expense	for	a	plan.	Under	settlement	accounting,	unrecognized	plan	gains	or	losses	must	be	recognized	immediately	in	proportion	to	the	percentage	reduction	of	the	plan's	projected benefit	obligation.

# 11. Intangible	Assets

The	Company	has	recorded	international	slot	and	route	authorities	of	$708	million	and	$736	million	as	of	December	31,	2010	and	2009,	respectively.	The	Company	considers	these	assets indefinite	life	assets	and	as	a	result,	they	are	not	amortized	but	instead	are	tested	for	impairment	annually	or	more	frequently	if	events	or	changes	in	circumstances	indicate	that	the	asset	might	be impaired.	Such	triggering	events	may	include	significant	changes	to	the	Company's	network	or	capacity,	or	the	implementation	of	open	skies	agreements	in	countries	where	the	Company	operates	flights.

In	the	fourth	quarter	of	2010,	the	Company	performed	its	annual	impairment	testing	on	international	slots	and	routes,	at	which	time	the	net	carrying	value	was	reassessed	for	recoverability.	It	was determined	through	this	annual	impairment	testing	that	the	fair	value	of	certain	international	routes	in	Latin	America	was	less	than	the	carrying	value.	Thus,	the	Company	incurred	an	impairment	charge of	$28	million	to	write	down	the	values	of	these	and	certain	other	slots	and	routes.

As	there	is	minimal	market	activity	for	the	valuation	of	routes	and	international	slots	and	landing	rights,	the	Company	measures	fair	value	with	inputs	using	the	income	approach.	The	income approach	uses	valuation	techniques,	such	as	future	cash	flows,	to	convert	future	amounts	to	a	single	present	discounted	amount.	The	inputs	utilized	for	these	valuations	are	unobservable	and	reflect	the Company's	assumptions	about	market	participants	and	what	they	would	use	to	value	the	routes	and	accordingly	are	considered	Level	3	in	the	fair	value	hierarchy.	The	Company's	unobservable	inputs	are developed	based	on	the	best	information	available	as	of	December	31,	2010.

The	following	tables	provide	information	relating	to	the	Company's	amortized	intangible	assets	as	of	December	31	(in	millions):

|  | Cost | Accumulated<br>Amortization | Net	Book<br>Value |
| :--- | :--- | :--- | :--- |
| Amortized\tintangible\tassets: |  |  |  |
| Airport\toperating\trights | $515 | $344 | $171 |
| Gate\tlease\trights | 182 | 129 | 53 |
| Total | $697 | $473 | $224 |

|  | Cost | 2009<br>Accumulated<br>Amortization | Net	Book<br>Value |
| :--- | :--- | :--- | :--- |
| Amortized\tintangible\tassets: |  |  |  |
| Airport\toperating\trights | $515 | $323 | $192 |
| Gate\tlease\trights | 182 | 122 | 60 |
| Total | $697 | $445 | $252 |

Airport	operating	and	gate	lease	rights	are	being	amortized	on	a	straight-line	basis	over	25	years	to	a	zero	residual	value.	The	Company	recorded	amortization	expense	related	to	these	intangible assets	of	approximately	$28	million	for	each	of	the	years	ended	December	31,	2010,	2009	and	2008,	respectively.	The	Company	expects	to	record	annual	amortization	expense	averaging	approximately $24	million	in	each	of	the	next	five	years	related	to	these	intangible	assets.

# 12. Accumulated	Other	Comprehensive	Income	(Loss)

The	components	of	Accumulated	other	comprehensive	income	(loss)	are	as	follows	(in	millions):

|  | and<br>Retiree<br>Medical<br>Liability | Unrealized<br>Gain/(Loss)<br>on<br>Investments | Derivative<br>Financial<br>Instruments | Income<br>Tax<br>Benefit/<br>(Expense) | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tJanuary\t1,\t2008 | $288 | $(3) | $240 | $145 | $670 |
| Current\tyear\tchange | (2,707) | (7) | — | — | (2,714) |
| Amortization\tof\tactuarial\tloss\tand\tprior\tservice\tcost | (17) | — | — | — | (17) |
| Reclassification\tof\tderivative\tfinancial\tinstruments\tinto\tearnings | — | — | (378) | — | (378) |
| Change\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | (738) | — | (738) |
| Balance\tat\tDecember\t31,\t2008 | $(2,436) | $(10) | $(876) | $145 | $(3,177) |
| Current\tyear\tchange | (253) | 5 | — | — | (248) |
| Amortization\tof\tactuarial\tloss\tand\tprior\tservice\tcost | 136 | — | — | — | 136 |
| Reclassification\tof\tderivative\tfinancial\tinstruments\tinto\tearnings | — | — | 662 | — | 662 |
| Non-cash\ttax\tprovision | — | — | — | (248) | (248) |
| Change\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | 151 | — | 151 |
| Balance\tat\tDecember\t31,\t2009 | $(2,553) | $(5) | $(63) | $(103) | $(2,724) |
| Current\tyear\tchange | (385) | — |  |  | (385) |
| Amortization\tof\tactuarial\tloss\tand\tprior\tservice\tcost | 138 | — | — | — | 138 |
| Reclassification\tof\tderivative\tfinancial\tinstruments\tinto\tearnings | — | — | 144 | — | 144 |
| Change\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | 72 | — | 72 |
| Balance\tat\tDecember\t31,\t2010 | $(2,800) | (5) | 153 | $(103) | $(2,755) |

As	of	December	31,	2010,	the	Company	estimates	that	during	the	next	twelve	months	it	will	reclassify	from	Accumulated	other	comprehensive	loss	into	earnings	approximately	$121	million	in net	gains	(based	on	prices	as	of	December	31,	2010)	related	to	its	fuel	derivative	hedges.

The	difference	between	Net	earnings	(loss)	and	other	comprehensive	income	(loss)	for	the	twelve	month	periods	ended	December	31,	2010	and	2009	is	due	primarily	to	the	accounting	for	the Company's	derivative	financial	instruments	and	the	actuarial	loss	on	the	pension	benefit	obligation	of	the	Company's	pension	plans.

Amounts	allocated	to	other	comprehensive	income	for	income	taxes	as	further	described	in	Note	8	will	remain	in	Accumulated	other	comprehensive	income	until	the	Company	ceases	all	related activities,	such	as	termination	of	the	pension	plan.

# 13. Earnings	(Loss)	Per	Share

The	following	table	sets	forth	the	computation	of	basic	and	diluted	earnings	(loss)	per	share	(in	millions,	except	per	share	amounts):

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Numerator: |  |  |  |
| Net\tearnings\t(loss)\t—\tnumerator\tfor\tbasic\tearnings\t(loss)\tper\tshare | $(471) | $(1,468) | $(2,118) |
| Denominator: |  |  |  |
| Denominator\tfor\tbasic\tearnings\t(loss)\tper\tshare\t—\tweighted\taverage\tshares | 333 | 294 | 259 |
| Effect\tof\tdilutive\tsecurities: |  |  |  |
| Employee\toptions\tand\tshares | — | — | — |
| Assumed\ttreasury\tshares\tpurchased | — | — | — |
| Diluted\tpotential\tcommon\tshares | — | — | — |
| Denominator\tfor\tdiluted\tearnings\tloss\tper\tshare\t—\tweighted-average\tshares | 333 | 294 | 259 |
| Basic\tearnings\t(loss)\tper\tshare | $(1.41) | $(4.99) | $(8.16) |
| Diluted\tearnings\t(loss)\tper\tshare | $(1.41) | $(4.99) | $(8.16) |
| The\tfollowing\twere\texcluded\tfrom\tthe\tcalculation: |  |  |  |
| Convertible\tnotes,\temployee\tstock\toptions\tand\tdeferred\tstock\tbecause\tinclusion\twould\tbe\tanti-dilutive | 57 | 19 | 36 |
| Employee\tstock\toptions\tbecause\tthe\toptions'\texercise\tprice\twas\tgreater\tthan\tthe\taverage\tmarket\tprice\tof\tthe\tshares | 12 | 18 | 13 |

# 14. Segment	Reporting

The	Company's	operations	of	American	and	AMR	Eagle	are	treated	as	an	integrated	route	network	and	the	route	scheduling	system	maximizes	the	operating	results	of	the	Company.	The Company's	chief	operating	decision	maker	makes	resource	allocation	decisions	to	maximize	the	Company's	consolidated	financial	results.	Based	on	the	way	the	Company	treats	the	network	and	the manner	in	which	resource	allocation	decisions	are	made,	the	Company	has	only	one	operating	segment	for	financial	reporting	purposes	consisting	of	the	operations	of	American	and	AMR	Eagle.

American,	AMR	Eagle	and	the	AmericanConnection®	airline	serve	more	than	250	cities	in	approximately	50	countries	with,	on	average,	3,400	daily	flights.	The	combined	network	fleet	numbers approximately	900	aircraft.	American	is	also	one	of	the	largest	scheduled	air	freight	carriers	in	the	world,	providing	a	wide	range	of	freight	and	mail	services	to	shippers	throughout	its	system	onboard American's	passenger	fleet.	AMR	Eagle	owns	two	regional	airlines,	which	do	business	as	"American	Eagle"	—	American	Eagle	Airlines,	Inc.	and	Executive	Airlines,	Inc.	The	American	Eagle®	carriers provide	service	from	throughout	the	U.S.,	Canada,	Mexico	and	the	Caribbean.

Revenues	from	other	segments	are	below	the	quantitative	threshold	for	determining	reportable	segments	and	consist	primarily	of	revenues	from	American	Beacon	Advisors,	Inc.	(divested	in 2008)	and	Americas	Ground	Services,	Inc.	The	difference	between	the	financial	information	of	the	Company's	one	reportable	segment	and	the	financial	information	included	in	the	accompanying consolidated	statements	of	operations	and	balance	sheets	as	a	result	of	these	entities	is	not	material.

The	Company's	operating	revenues	by	geographic	region	(as	defined	by	DOT)	are	summarized	below	(in	millions):

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| DOT\tDomestic | $13,081 | $11,974 | $14,135 |
| DOT\tLatin\tAmerica | 4,619 | 4,114 | 4,927 |
| DOT\tAtlantic | 3,365 | 2,973 | 3,671 |
| DOT\tPacific | 1,105 | 856 | 1,033 |
| Total\tconsolidated\trevenues | $22,170 | $19,917 | $23,766 |

The	Company	attributes	operating	revenues	by	geographic	region	based	upon	the	origin	and	destination	of	each	flight	segment.	The	Company's	tangible	assets	consist	primarily	of	flight equipment,	which	are	mobile	across	geographic	markets	and,	therefore,	have	not	been	allocated.

# 15. Quarterly	Financial	Data	(Unaudited)

Unaudited	summarized	financial	data	by	quarter	for	2010	and	2009	(in	millions,	except	per	share	amounts):

|  | First<br>Quarter | Second<br>Quarter | Third<br>Quarter | Fourth<br>Quarter |
| :--- | :--- | :--- | :--- | :--- |
| 2010 |  |  |  |  |
| Operating\trevenues | $5,068 | $5,674 | $5,842 | $5,586 |
| Operating\tincome\t(loss) | (298) | 196 | 342 | 68 |
| Net\tearnings\t(loss) | (505) | (11) | 143 | (97) |
| Earnings\t(loss)\tper\tshare: |  |  |  |  |
| Basic | \t(1.52) | \t(0.03) | 0.43 | \t(0.29) |
| Diluted | \t(1.52) | \t(0.03) | 0.39 | \t(0.29) |
| 2009 |  |  |  |  |
| Operating\trevenues | $4,839 | $4,889 | $5,127 | $5,062 |
| Operating\tincome\t(loss) | (194) | (226) | (194) | (390) |
| Net\tearnings\t(loss) | (375) | (390) | (359) | (344) |
| Earnings\t(loss)\tper\tshare: |  |  |  |  |
| Basic | \t(1.35) | \t(1.39) | \t(1.26) | \t(1.03) |
| Diluted | \t(1.35) | \t(1.39) | \t(1.26) | \t(1.03) |

The	first,	second	and	third	quarter	2009	results	include	the	impact	of	approximately	$13	million,	$70	million	and	$94	million,	respectively,	in	charges	related	to	the	sale	leaseback	of	certain aircraft	and	the	grounding	of	leased	Airbus	A300	aircraft	prior	to	lease	expiration.

The	results	for	the	fourth	quarter	of	2009	include	an	impairment	charge	of	approximately	$138	million	to	write	down	certain	route	and	slot	authorities,	primarily	in	Latin	America,	and	certain Embraer	RJ-135	aircraft	to	their	estimated	fair	values,	as	well	as	$30	million	in	charges	associated	with	the	grounding	of	the	Airbus	A300	fleet	and	the	sale	leaseback	of	certain	aircraft.	Also	included	in 2009	results	is	a	$248	million	non-cash	tax	benefit	resulting	from	the	allocation	of	the	tax	expense	to	other	comprehensive	income	items	recognized	during	2009.

The	first	quarter	2010	results	include	a	loss	of	$53	million	related	to	a	currency	remeasurement	due	to	the	devaluation	of	Venezuelan	currency	from	2.15	bolivars	per	U.S.	dollar	to	4.30	bolivars per	U.S.	dollar.

The	Company's	fourth	quarter	2010	performance	includes	an	impairment	charge	of	approximately	$28	million	to	write	down	certain	route	and	slot	authorities	in	Latin	America.

# ITEM	9. CHANGES	IN	AND	DISAGREEMENTS	WITH	ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL	DISCLOSURE

# None.

# ITEM	9A. CONTROLS	AND	PROCEDURES

# Management's	Evaluation	of	Disclosure	Controls	and	Procedures

The	term	"disclosure	controls	and	procedures"	is	defined	in	Rules	13a-15(e)	and	15d-15(e)	of	the	Securities	Exchange	Act	of	1934,	or	the	Exchange	Act.	This	term	refers	to	the	controls	and procedures	of	a	company	that	are	designed	to	ensure	that	information	required	to	be	disclosed	by	a	company	in	the	reports	that	it	files	under	the	Exchange	Act	is	recorded,	processed,	summarized	and reported	within	the	time	periods	specified	by	the	Securities	and	Exchange	Commission.	An	evaluation	was	performed	under	the	supervision	and	with	the	participation	of	the	Company's	management, including	the	Chief	Executive	Officer	(CEO)	and	Chief	Financial	Officer	(CFO),	of	the	effectiveness	of	the	Company's	disclosure	controls	and	procedures	as	of	December	31,	2010.	Based	on	that evaluation,	the	Company's	management,	including	the	CEO	and	CFO,	concluded	that	the	Company's	disclosure	controls	and	procedures	were	effective	as	of	December	31,	2010.	During	the	quarter ending	on	December	31,	2010,	there	was	no	change	in	the	Company's	internal	control	over	financial	reporting	that	has	materially	affected,	or	is	reasonably	likely	to	materially	affect,	the	Company's internal	control	over	financial	reporting.

# Management's	Report	on	Internal	Control	over	Financial	Reporting

Management	of	the	Company	is	responsible	for	establishing	and	maintaining	effective	internal	control	over	financial	reporting	as	defined	in	Rule	13a-15(f)	under	the	Securities	Exchange	Act	of 1934.	The	Company's	internal	control	over	financial	reporting	is	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the	preparation	of	financial	statements	for external	purposes	in	accordance	with	generally	accepted	accounting	principles.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Therefore,	even	those	systems	determined	to	be	effective	can	provide	only reasonable	assurance	with	respect	to	financial	statement	preparation	and	presentation.

Management	assessed	the	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2010	using	the	criteria	set	forth	in	Internal	Control	—	Integrated Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	Based	on	this	assessment,	management	believes	that,	as	of	December	31,	2010,	the	Company's	internal control	over	financial	reporting	was	effective	based	on	those	criteria.

The	effectiveness	of	internal	control	over	financial	reporting	as	of	December	31,	2010,	has	been	audited	by	Ernst	&	Young	LLP,	the	independent	registered	public	accounting	firm	who	also audited	the	Company's	consolidated	financial	statements.	Ernst	&	Young	LLP's	attestation	report	on	the	effectiveness	of	the	Company's	internal	control	over	financial	reporting	appears	below.

/s/		Gerard	J.	Arpey

Gerard	J.	Arpey

Chairman	and	Chief	Executive	Officer

/s/		Isabella	D.	Goren Isabella	D.	Goren Senior	Vice	President	and	Chief	Financial	Officer

# The	Board	of	Directors	and	Shareholders

We	have	audited	AMR	Corporation's	internal	control	over	financial	reporting	as	of	December	31,	2010,	based	on	criteria	established	in	Internal	Control	—	Integrated	Framework	issued	by	the Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(the	COSO	criteria).	AMR	Corporation's	management	is	responsible	for	maintaining	effective	internal	control	over	financial reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting	included	in	the	accompanying	"Management's	Report	on	Internal	Control	over	Financial	Reporting."	Our responsibility	is	to	express	an	opinion	on	the	company's	internal	control	over	financial	reporting	based	on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and	perform	the	audit	to obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit	included	obtaining	an	understanding	of	internal	control	over financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	testing	and	evaluating	the	design	and	operating	effectiveness	of	internal	control	based	upon	the	assessed	risk,	and	performing	such other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe	that	our	audit	provides	a	reasonable	basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the	preparation	of	financial statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial	reporting	includes	those	policies	and	procedures	that	(1)	pertain to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are recorded	as	necessary	to	permit	preparation	of	financial	statements	in	accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in accordance	with	authorizations	of	management	and	directors	of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of	effectiveness	to	future	periods	are subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or	procedures	may	deteriorate.

In	our	opinion,	AMR	Corporation	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2010,	based	on	the	COSO	criteria.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	balance	sheets	of	AMR	Corporation	as	of December	31,	2010	and	2009,	and	the	related	consolidated	statements	of	operations,	stockholders'	equity	(deficit)	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2010	of AMR	Corporation	and	our	report	dated	February	16,	2011	expressed	an	unqualified	opinion	thereon.

# PART	III

# ITEM	10. DIRECTORS	AND	EXECUTIVE	OFFICERS	OF	THE	REGISTRANT

Incorporated	herein	by	reference	from	the	Company's	definitive	proxy	statement	for	the	annual	meeting	of	stockholders	on	May	18,	2011.	Information	concerning	the	executive	officers	is included	in	Part	I	of	this	report	on	page	24	and	information	concerning	the	Company's	code	of	ethics	is	included	in	Part	I	of	this	report	on	page	9.	Information	concerning	the	audit	committee	and	audit committee	financial	experts	of	the	Company	and	Section	16(a)	beneficial	ownership	reporting	compliance,	is	incorporated	by	reference	herein	by	reference.

# ITEM	11. EXECUTIVE	COMPENSATION

Incorporated	herein	by	reference	from	the	Company's	definitive	proxy	statement	for	the	annual	meeting	of	stockholders	on	May	18,	2011.

# ITEM	12. SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL	OWNERS	AND	MANAGEMENT

# Equity	Compensation	Plan	Information

|  | Number	of<br>Securities	to	be<br>Issued	Upon<br>Exercise	of<br>Outstanding	Options,<br>Warrants	and	Rights | Weighted-Average<br>Exercise	Price	of<br>Outstanding	Options,<br>Warrants	and	Rights | Issuance	Under<br>Equity<br>Compensation	Plans<br>(Excluding<br>Securities	Reflected<br>in	the	First	Column) |
| :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\tholders | 15,384,288 | $13.99 | — |
| Equity\tcompensation\tplans\tnot\tapproved\tby\tsecurity\tholders | 13,208,383 | $5.66 | 841,915 |
| Total | 28,592,671 | $10.14 | 841,915 |

* Additional	shares	may	become	available	for	future	use	per	the	terms	of	the	LTIP	Plans.

See	Note	9	to	the	consolidated	financial	statements	for	additional	information	regarding	the	equity	compensation	plans	included	above.

The	information	required	by	Item	403	of	Regulation	S-K	is	incorporated	herein	by	reference	from	the	Company's	definitive	proxy	statement	for	the	annual	meeting	of	stockholders	on	May	18,

# ITEM	13. CERTAIN	RELATIONSHIPS	AND	RELATED	TRANSACTIONS

# ITEM	14. PRINCIPAL	ACCOUNTANT	FEES	AND	SERVICES

# PART	IV

# ITEM	15. EXHIBITS	AND	FINANCIAL	STATEMENT	SCHEDULES

(a)	(1)	The	following	financial	statements	and	Independent	Auditors'	Report	are	filed	as	part	of	this	report:

Schedules	not	included	have	been	omitted	because	they	are	not	applicable	or	because	the	required	information	is	included	in	the	consolidated	financial	statements	or	notes	thereto.

(3)	Exhibits	required	to	be	filed	by	Item	601	of	Regulation	S-K.	(Where	the	amount	of	securities	authorized	to	be	issued	under	any	of	AMR's	long-term	debt	agreements	does	not	exceed 10	percent	of	AMR's	assets,	pursuant	to	paragraph	(b)(4)	of	Item	601	of	Regulation	S-K,	in	lieu	of	filing	such	as	an	exhibit,	AMR	hereby	agrees	to	furnish	to	the	Commission	upon	request	a	copy	of	any agreement	with	respect	to	such	long-term	debt.)

# Exhibit

3.1 Restated	Certificate	of	Incorporation	of	AMR,	incorporated	by	reference	to	AMR's	Registration	Statement	on	Form	S-4,	file	number	33-55191.

3.2 Bylaws	of	AMR	Corporation,	amended	and	restated	as	of	January	20,	2009,	incorporated	by	reference	to	Exhibit	3.2	to	AMR's	report	on	Form	8-K	dated	January	23,	2009.

3.3 Amendments	to	the	AMR	Corporation	Certificate	of	Incorporation,	incorporated	by	reference	to	AMR's	report	on	Form	10-Q	for	the	quarterly	period	ended	September	30,	2003.

	 10.1 Description	of	informal	arrangement	relating	to	deferral	of	payment	of	directors'	fees,	incorporated	by	reference	to	Exhibit	10(c)(11)	to	American's	Registration	Statement	No.	2-76709.

	 10.2 AMR	Corporation	2004	Directors	Unit	Incentive	Plan,	as	amended,	incorporated	by	reference	to	Exhibit	10.5	to	AMR's	report	on	Form	10-Q	for	the	quarterly	period	ended	June	30, 2005;	the	successor	to	the	AMR	Corporation	1994	Directors	Stock	Incentive	Plan,	as	amended,	incorporated	by	reference	to	Exhibit	10.9	to	AMR's	report	on	Form	10-K	for	the	year ended	December	31,	1996,	and	the	AMR	Corporation	1999	Directors'	Stock	Appreciation	Rights	Plan,	incorporated	by	reference	to	Exhibit	10.1	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	March	31,	1999.

	 10.3 First	Amendment	to	AMR	Corporation	2004	Directors	Unit	Incentive	Plan,	dated	as	of	January	1,	2005,	incorporated	by	reference	to	Exhibit	10.4	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2008.

	 10.4 Deferred	Compensation	Agreement,	dated	as	of	December	18,	2001	between	AMR	and	John	W.	Bachmann,	incorporated	by	reference	to	Exhibit	10.5	to	AMR's	report	on	Form	10-Q	for the	quarterly	period	ended	June	30,	2002,	as	filed	on	July	19,	2002.

	 10.5 Deferred	Compensation	Agreement,	dated	as	of	November	16,	2002	between	AMR	and	John	W.	Bachmann,	incorporated	by	reference	to	Exhibit	10.27	to	AMR's	report	on	Form	10-K for	the	year	ended	December	31,	2002.

	 10.6 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2004	between	AMR	and	John	W.	Bachmann,	incorporated	by	reference	to	Exhibit	10.5	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2003.

	10.7 Deferred	Compensation	Agreement,	dated	as	of	December	8,	2004	between	AMR	and	John	W.	Bachmann,	incorporated	by	reference	to	Exhibit	10.7	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2004.

	10.10 Deferred	Compensation	Agreement,	dated	as	of	December	4,	2007	between	AMR	and	John	W.	Bachmann,	incorporated	by	reference	to	Exhibit	10.10	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2007.

	10.13 Deferred	Compensation	Agreement,	dated	as	of	December	10,	2010	between	AMR	and	John	W.	Bachmann.

	10.14 Deferred	Compensation	Agreement,	dated	as	of	April	30,	2003	between	AMR	and	David	L.	Boren,	incorporated	by	reference	to	Exhibit	10.1	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	March	31,	2003.

	10.15 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2004	between	AMR	and	David	L.	Boren,	incorporated	by	reference	to	Exhibit	10.13	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2003.

	10.16 Deferred	Compensation	Agreement,	dated	as	of	December	8,	2004	between	AMR	and	David	L.	Boren,	incorporated	by	reference	to	Exhibit	10.17	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2004.

	10.17 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2005	between	AMR	and	David	L.	Boren,	incorporated	by	reference	to	Exhibit	10.20	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2005.

	10.18 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2006	between	AMR	and	David	L.	Boren,	incorporated	by	reference	to	Exhibit	10.23	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2006.

	10.20 Deferred	Compensation	Agreement,	dated	as	of	December	4,	2008	between	AMR	and	David	L.	Boren,	incorporated	by	reference	to	Exhibit	10.19	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2008.

	10.21 Deferred	Compensation	Agreement,	dated	as	of	February	19,	1998,	between	AMR	and	Armando	M.	Codina,	incorporated	by	reference	to	Exhibit	10.15	to	AMR's	report	on	Form	10-K for	the	year	ended	December	31,	1997.

	10.22 Deferred	Compensation	Agreement,	dated	as	of	January	13,	1999,	between	AMR	and	Armando	M.	Codina,	incorporated	by	reference	to	Exhibit	10.19	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	1998.

	10.23 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2000,	between	AMR	and	Armando	M.	Codina,	incorporated	by	reference	to	Exhibit	10.20	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	1999.

	10.24 Deferred	Compensation	Agreement,	dated	as	of	January	22,	2001,	between	AMR	and	Armando	M.	Codina,	incorporated	by	reference	to	Exhibit	10.20	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2000.

	10.25 Deferred	Compensation	Agreement,	dated	as	of	December	18,	2001	between	AMR	and	Armando	M.	Codina,	incorporated	by	reference	to	Exhibit	10.6	to	AMR's	report	on	Form	10-Q	for the	quarterly	period	ended	June	30,	2002,	as	filed	on	July	19,	2002.

	10.26 Deferred	Compensation	Agreement,	dated	as	of	December	13,	2002	between	AMR	and	Armando	M.	Codina,	incorporated	by	reference	to	Exhibit	10.28	to	AMR's	report	on	Form	10-K for	the	year	ended	December	31,	2002.

	10.27 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2004	between	AMR	and	Armando	M.	Codina,	incorporated	by	reference	to	Exhibit	10.20	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2003.

	10.29 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2005	between	AMR	and	Armando	M.	Codina,	incorporated	by	reference	to	Exhibit	10.29	to	AMR's	report	on	Form	10-K for	the	year	ended	December	31,	2005.

	10.30 Deferred	Compensation	Agreement,	dated	as	of	December	21,	2006	between	AMR	and	Armando	M.	Codina,	incorporated	by	reference	to	Exhibit	10.33	to	AMR's	report	on	Form	10-K for	the	year	ended	December	31,	2006.

	10.35 Deferred	Compensation	Agreement,	dated	as	of	December	14,	2010,	between	AMR	and	Armando	M.	Codina.

	10.36 Deferred	Compensation	Agreement,	dated	as	of	April	30,	2003	between	AMR	and	Ann	M.	Korologos,	incorporated	by	reference	to	Exhibit	10.3	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	March	31,	2003.

	10.37 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2004	between	AMR	and	Ann	M.	Korologos,	incorporated	by	reference	to	Exhibit	10.24	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2003.

	10.38 Deferred	Compensation	Agreement,	dated	as	of	December	8,	2004	between	AMR	and	Ann	M.	Korologos,	incorporated	by	reference	to	Exhibit	10.31	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2004.

	10.39 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2005	between	AMR	and	Ann	M.	Korologos,	incorporated	by	reference	to	Exhibit	10.37	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2005.

	10.40 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2006	between	AMR	and	Ann	M.	Korologos	incorporated	by	reference	to	Exhibit	10.44	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2006.

	10.41 Deferred	Compensation	Agreement,	dated	as	of	December	4,	2007	between	AMR	and	Ann	M.	Korologos,	incorporated	by	reference	to	Exhibit	10.40	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2007.

	10.43 Deferred	Compensation	Agreement,	dated	as	of	April	30,	2003	between	AMR	and	Michael	A.	Miles,	incorporated	by	reference	to	Exhibit	10.4	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	March	31,	2003.

	10.44 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2004	between	AMR	and	Michael	A.	Miles,	incorporated	by	reference	to	Exhibit	10.26	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2003.

	10.45 Deferred	Compensation	Agreement,	dated	as	of	December	8,	2004	between	AMR	and	Michael	A.	Miles,	incorporated	by	reference	to	Exhibit	10.34	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2004.

	10.46 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2005	between	AMR	and	Michael	A.	Miles,	incorporated	by	reference	to	Exhibit	10.41	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2005.

	10.50 Deferred	Compensation	Agreement,	dated	as	of	January	19,	2001,	between	AMR	and	Philip	J.	Purcell,	incorporated	by	reference	to	Exhibit	10.26	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2000.

	10.51 Deferred	Compensation	Agreement,	dated	as	of	December	18,	2001	between	AMR	and	Philip	J.	Purcell,	incorporated	by	reference	to	Exhibit	10.7	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	June	30,	2002,	as	filed	on	July	19,	2002.

	10.52 Deferred	Compensation	Agreement,	dated	as	of	November	15,	2002	between	AMR	and	Philip	J.	Purcell,	incorporated	by	reference	to	Exhibit	10.29	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2002.

	10.53 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2004	between	AMR	and	Philip	J.	Purcell,	incorporated	by	reference	to	Exhibit	10.30	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2003.

	10.54 Deferred	Compensation	Agreement,	dated	as	of	December	8,	2004	between	AMR	and	Philip	J.	Purcell,	incorporated	by	reference	to	Exhibit	10.39	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2004.

	10.59 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2005	between	AMR	and	Ray	M.	Robinson,	incorporated	by	reference	to	Exhibit	10.48	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2005.

	10.60 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2006	between	AMR	and	Ray	M.	Robinson,	incorporated	by	reference	to	Exhibit	10.58	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2006.

	10.61 Deferred	Compensation	Agreement,	dated	as	of	December	4,	2007	between	AMR	and	Ray	M.	Robinson,	incorporated	by	reference	to	Exhibit	10.57	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2007.

	10.63 Deferred	Compensation	Agreement,	dated	as	of	July	16,	1997,	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.22	to	AMR's	report	on	Form	10-K	for	the	year ended	December	31,	1997.

	10.64 Deferred	Compensation	Agreement,	dated	as	of	February	19,	1998,	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.23	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	1997.

	10.65 Deferred	Compensation	Agreement,	dated	as	of	January	7,	1999,	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.30	to	AMR's	report	on	Form	10-K	for	the	year ended	December	31,	1998.

	10.66 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2000,	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.29	to	AMR's	report	on	Form	10-K	for	the	year ended	December	31,	1999.

	10.67 Deferred	Compensation	Agreement,	dated	as	of	January	22,	2001,	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.25	to	AMR's	report	on	Form	10-K	for	the	year ended	December	31,	2000.

	10.68 Deferred	Compensation	Agreement,	dated	as	of	December	18,	2001	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.4	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	June	30,	2002,	as	filed	on	July	19,	2002.

	10.69 Deferred	Compensation	Agreement,	dated	as	of	November	20,	2002	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.26	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2002.

	10.70 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2004	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.42	to	AMR's	report	on	Form	10-K	for	the	year ended	December	31,	2003.

	10.71 Deferred	Compensation	Agreement,	dated	as	of	December	8,	2004	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.53	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2004.

	10.72 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2005	between	AMR	and	Judith	Rodin,	incorporated	by	reference	to	Exhibit	10.64	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2005.

	10.77 Deferred	Compensation	Agreement,	dated	as	of	December	13,	2010,	between	AMR	and	Judith	Rodin.

	10.78 Deferred	Compensation	Agreement,	dated	as	of	December	8,	2004	between	AMR	and	Matthew	K.	Rose,	incorporated	by	reference	to	Exhibit	10.65	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2005.

	10.79 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2005	between	AMR	and	Matthew	K.	Rose,	incorporated	by	reference	to	Exhibit	10.66	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2005.

	10.80 Deferred	Compensation	Agreement,	dated	as	of	November	29,	2006	between	AMR	and	Matthew	K.	Rose,	incorporated	by	reference	to	Exhibit	10.72	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2006.

	10.83 Deferred	Compensation	Agreement,	dated	as	of	December	18,	2001	between	AMR	and	Roger	T.	Staubach,	incorporated	by	reference	to	Exhibit	10.1	to	AMR's	report	on	Form	10-Q	for the	quarterly	period	ended	June	30,	2002,	as	filed	on	July	19,	2002.

	10.84 Deferred	Compensation	Agreement,	dated	as	of	November	18,	2002	between	AMR	and	Roger	T.	Staubach,	incorporated	by	reference	to	Exhibit	10.23	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2002.

	10.85 Deferred	Compensation	Agreement,	dated	as	of	January	12,	2004	between	AMR	and	Roger	T.	Staubach,	incorporated	by	reference	to	Exhibit	10.45	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2003.

	10.86 Deferred	Compensation	Agreement,	dated	as	of	December	8,	2004	between	AMR	and	Roger	T.	Staubach,	incorporated	by	reference	to	Exhibit	10.57	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2004.

	10.89 Deferred	Compensation	Agreement,	dated	as	of	December	4,	2007	between	AMR	and	Roger	T.	Staubach,	incorporated	by	reference	to	Exhibit	10.80	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2007.

	10.90 Deferred	Compensation	Agreement,	dated	as	of	December	4,	2008	between	AMR	and	Roger	T.	Staubach,	incorporated	by	reference	to	Exhibit	10.85	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2008.

	10.91 Deferred	Compensation	Agreement,	dated	as	of	January	15,	2008	between	AMR	and	Rajat	K.	Gupta,	incorporated	by	reference	to	Exhibit	10.81	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2008.

	10.92 Deferred	Compensation	Agreement,	dated	as	of	December	4,	2008	between	AMR	and	Rajat	K.	Gupta,	incorporated	by	reference	to	Exhibit	10.87	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2008.

	10.93 Deferred	Compensation	Agreement,	dated	as	of	December	4,	2009,	between	AMR	and	Rajat	K.	Gupta,	incorporated	by	reference	to	Exhibit	10.90	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2009.

	10.94 Deferred	Compensation	Agreement,	dated	as	of	December	20,	2010,	between	AMR	and	Rajat	K.	Gupta.

	10.95 Deferred	Compensation	Agreement,	dated	as	of	January	15,	2008	between	AMR	and	Alberto	Ibargüen,	incorporated	by	reference	to	Exhibit	10.82	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2008.

	10.96 Deferred	Compensation	Agreement,	dated	as	of	December	4,	2008,	between	AMR	and	Alberto	Ibargüen,	incorporated	by	reference	to	Exhibit	10.89	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2008.

	10.98 Deferred	Compensation	Agreement,	dated	as	of	December	10,	2010,	between	AMR	and	Alberto	Ibargüen.

	10.99 Current	form	of	2003	Stock	Option	Agreement	under	the	1998	Long	Term	Incentive	Plan,	as	amended,	incorporated	by	reference	to	Exhibit	10.1	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	September	30,	2003.

	10.100 Current	form	of	2004	Stock	Option	Agreement	under	the	1998	Long	Term	Incentive	Plan,	as	amended,	incorporated	by	reference	to	Exhibit	10.64	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2004.

	10.101 Current	form	of	2005	Stock	Option	Agreement	under	the	1998	Long	Term	Incentive	Plan,	as	amended,	incorporated	by	reference	to	Exhibit	10.3	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	June	30,	2005.

	10.102 Current	form	of	2003	Stock	Option	Agreement	under	the	2003	Employee	Stock	Incentive	Plan,	incorporated	by	reference	to	Exhibit	10.49	to	AMR's	report	on	Form	10-K	for	the	year ended	December	31,	2003.

	10.104 Current	form	of	2005	Stock	Option	Agreement	under	the	2003	Employee	Stock	Incentive	Plan,	incorporated	by	reference	to	Exhibit	10.4	to	AMR's	report	on	Form	10-Q	for	the	quarterly period	ended	June	30,	2005.

	10.105 Current	form	of	Amendment	of	Stock	Option	Agreements	under	the	1998	Long	Term	Incentive	Plan	to	Add	Stock	Appreciation	Rights,	incorporated	by	reference	to	Exhibit	10.1	AMR's report	on	Form	10-Q	for	the	quarterly	period	ended	September	30,	2006.

	10.106 Career	Performance	Shares,	Deferred	Stock	Award	Agreement	between	AMR	Corporation	and	Gerard	J.	Arpey	dated	as	of	July	25,	2005,	incorporated	by	reference	to	Exhibit	10.6	to AMR's	report	on	Form	10-Q	for	the	quarterly	period	ended	June	30,	2005.

	10.107 Current	form	of	Career	Equity	Program	Deferred	Stock	Award	Agreement	for	Corporate	Officers	under	the	AMR	1998	Long	Term	Incentive	Plan,	incorporated	by	reference	to	Exhibit 10.41	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	1998.

	10.108 Current	form	of	Career	Equity	Program	Deferred	Stock	Award	Agreement	for	non-officers	under	the	AMR	1998	Long	Term	Incentive	Plan,	incorporated	by	reference	to	Exhibit	10.42	to AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	1998.

	10.109 Current	form	of	Career	Equity	Program	Deferred	Stock	Award	Agreement	for	Senior	Officers	under	the	AMR	1998	Long	Term	Incentive	Plan,	incorporated	by	reference	to	Exhibit 10.42(a)	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	1998.

	10.110 Current	form	of	Career	Equity	Program	Deferred	Stock	Award	Agreement	for	Employees	under	the	AMR	1998	Long	Term	Incentive	Plan,	incorporated	by	reference	to	Exhibit	10.44	to AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	1999.

	10.111 Form	of	amendment	to	Career	Equity	Program	Deferred	Stock	Award	Agreement	for	Employees	and	Senior	Officers	dated	as	of	January	1,	2005,	incorporated	by	reference	to	Exhibit 10.105	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2008.

	10.113 Current	form	of	2008	Deferred	Share	Award	Agreement	(with	awards	to	executive	officers	noted),	incorporated	by	reference	to	Exhibit	99.2	to	AMR's	report	on	Form	8-K	dated	May	22, 2008.

	10.114 Current	form	of	2009	Deferred	Share	Award	Agreement	(with	awards	to	executive	officers	noted),	incorporated	by	reference	to	Exhibit	10.2	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	June	30,	2009.

	10.115 Current	form	of	2010	Deferred	Share	Award	Agreement	(with	awards	to	executive	officers	noted),	incorporated	by	reference	to	AMR's	current	report	on	Form	8-K	dated	May	21,	2010. 	10.116 Current	form	of	2006	Stock	Appreciation	Right	Agreement	under	the	1998	Long	Term	Incentive	Plan,	as	Amended	(with	awards	to	executive	officers	noted),	incorporated	by	reference to	Exhibit	10.1	to	AMR's	report	on	Form	10-Q	for	the	quarterly	period	ended	June	30,	2006.

	10.117 Current	form	of	2007	Stock	Appreciation	Right	Agreement	under	the	1998	Long	Term	Incentive	Plan,	as	Amended	(with	awards	to	executive	officers	noted),	incorporated	by	reference to	Exhibit	10.2	to	AMR's	report	on	Form	10-Q	for	the	quarterly	period	ended	June	30,	2007.

	10.118 Current	form	of	2008	Stock	Appreciation	Right	Agreement	under	the	1998	Long	Term	Incentive	Plan,	as	Amended	(with	awards	to	executive	officers	noted),	incorporated	by	reference to	Exhibit	99.1	to	AMR's	report	on	Form	8-K	dated	on	May	22,	2008.

	10.120 Current	form	of	2010	Stock	Appreciation	Right	Agreement	under	the	2009	Long	Term	Incentive	Plan,	as	Amended	(with	awards	to	executive	officers	noted),	incorporated	by	reference to	AMR's	current	report	on	Form	8-K	dated	May	21,	2010.

	10.121 Amended	and	Restated	Executive	Termination	Benefits	Agreement	between	AMR,	American	Airlines	and	Gerard	J.	Arpey,	dated	May	21,	1998,	incorporated	by	reference	to	Exhibit 10.61	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	1998.

	10.122 Amended	and	Restated	Executive	Termination	Benefits	Agreement	between	AMR,	American	Airlines	and	Daniel	P.	Garton,	dated	May	21,	1998,	incorporated	by	reference	to	Exhibit 10.66	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	1998.

	10.123 Amended	and	Restated	Executive	Termination	Benefits	Agreement	between	AMR,	American	Airlines	and	Monte	E.	Ford,	dated	November	15,	2000,	incorporated	by	reference	to	Exhibit 10.74	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2000.

	10.124 Amended	and	Restated	Executive	Termination	Benefits	Agreement	between	AMR,	American	Airlines	and	William	K.	Ris,	Jr.,	dated	October	20,	1999,	incorporated	by	reference	to Exhibit	10.79	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	1999.

	10.125 Amended	and	Restated	Executive	Termination	Benefits	Agreement	between	AMR,	American	Airlines	and	Gary	F.	Kennedy	dated	February	3,	2003,	incorporated	by	reference	to	Exhibit 10.55	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2002.

	10.126 Amended	and	Restated	Executive	Termination	Benefits	Agreement	between	AMR,	American	Airlines	and	Robert	W.	Reding	dated	May	20,	2003,	incorporated	by	reference	to	Exhibit 10.71	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2003.

	10.127 Employment	agreement	between	AMR,	American	Airlines	and	William	K.	Ris,	Jr.	dated	November	11,	1999,	incorporated	by	reference	to	Exhibit	10.73	to	AMR's	report	on	Form	10-K for	the	year	ended	December	31,	2003.

	10.128 Employment	agreement	between	AMR,	American	Airlines	and	Robert	W.	Reding	dated	May	21,	2003,	incorporated	by	reference	to	Exhibit	10.94	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2004.

	10.129 Amended	and	Restated	Executive	Termination	Benefits	Agreement	between	AMR,	American	Airlines	and	Jeffrey	J.	Brundage	dated	April	1,	2004,	incorporated	by	reference	to	Exhibit 10.5	to	AMR's	report	on	Form	10-Q	for	the	quarterly	period	ended	March	31,	2004.

	10.130 Executive	Termination	Benefits	Agreement	between	AMR,	American	Airlines	and	Isabella	D.	Goren	dated	as	of	March	25,	2008	and	Form	of	Amendment	to	the	Executive	Termination Benefits	Agreement	dated	as	of	November	17,	2008.

	10.131 Form	of	Amendment	to	Executive	Termination	Benefits	Agreement	dated	as	of	January	1,	2005,	incorporated	by	reference	to	Exhibit	10.124	to	AMR's	report	on	Form	10-K	for	the	year ended	December	31,	2008.

	10.132 Employment	agreement	between	AMR,	American	Airlines	and	Thomas	W.	Horton	dated	March	29,	2006,	incorporated	by	reference	to	Exhibit	10.1	to	AMR's	current	report	on	Form	8-K dated	March	31,	2006.

	10.133 Amendment	of	employment	agreement	between	AMR,	American	Airlines	and	Thomas	W.	Horton	dated	July	15,	2008,	incorporated	by	reference	to	Exhibit	10.5	to	AMR's	report	on Form	10-Q	for	the	quarterly	period	ended	June	30,	2008.

	10.134 Employment	agreement	between	AMR,	American	Airlines,	AMR	Eagle	Holding	Corporation,	and	Daniel	P.	Garton	dated	June	10,	2010,	incorporated	by	reference	to	AMR's	current report	on	Form	8-K	dated	June	11,	2010.

	10.135 Supplemental	Executive	Retirement	Program	for	Officers	of	American	Airlines,	Inc.,	as	amended	and	restated	as	of	January	1,	2005,	incorporated	by	reference	to	Exhibit	10.127	to AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2008.

	10.136 Trust	Agreement	Under	Supplemental	Retirement	Program	for	Officers	of	American	Airlines,	Inc.,	as	amended	and	restated	as	of	June	1,	2007,	incorporated	by	reference	to	Exhibit 10.128	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2008.

	10.137 Trust	Agreement	Under	Supplemental	Executive	Retirement	Program	for	Officers	of	American	Airlines,	Inc.	Participating	in	the	$uper	$aver	Plus	Plan,	as	amended	and	restated	as	of June	1,	2007,	incorporated	by	reference	to	Exhibit	10.129	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2008.

	10.138 Aircraft	Purchase	Agreement	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	October	31,	1997,	incorporated	by	reference	to	Exhibit	10.48	to	AMR's	report	on Form	10-K	for	the	year	ended	December	31,	1997.	Confidential	treatment	was	granted	as	to	a	portion	of	this	document.

	10.139 Letter	Agreement	dated	November	17,	2004	and	Purchase	Agreement	Supplements	dated	January	11,	2005	between	the	Boeing	Company	and	American	Airlines,	Inc.,	incorporated	by reference	to	Exhibit	10.99	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2004.	Confidential	treatment	was	granted	as	to	a	portion	of	these	agreements.

	10.140 Letter	Agreement	between	the	Boeing	Company	and	American	Airlines,	Inc.	dated	May	5,	2005,	incorporated	by	reference	to	Exhibit	10.7	to	AMR's	report	on	Form	10-Q	for	the quarterly	period	ended	June	30,	2005.	Confidential	treatment	was	granted	as	to	a	portion	of	this	agreement.

	10.141 Aircraft	Purchase	Agreement	by	and	between	AMR	Eagle	Holding	Corporation	and	Bombardier	Inc.,	dated	January	31,	1998,	incorporated	by	reference	to	Exhibit	10.49	to	AMR's	report on	Form	10-K	for	the	year	ended	December	31,	1997.	Confidential	treatment	was	granted	as	to	a	portion	of	this	agreement.

	10.142 AMR	Corporation	Procedures	for	Deferral	of	Board	Retainers	and	Fees	(an	amendment	and	restatement	of	the	Directors	Stock	Equivalent	Purchase	Plan),	as	amended	and	restated	as	of January	1,	2005,	incorporated	by	reference	to	Exhibit	10.135	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2008.

	10.143 2010	Annual	Incentive	Plan	for	American,	incorporated	by	reference	to	Exhibit	99.1	to	AMR's	current	report	on	Form	8-K	dated	January	22,	2010.

	10.144 2011	Annual	Incentive	Plan	for	American,	incorporated	by	reference	to	Exhibit	99.1	to	AMR's	current	report	on	Form	8-K	dated	January	21,	2011.

	10.145 Purchase	Agreement	No.	3219	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	as	of	October	15,	2008.	Portions	of	this	Exhibit	have	been	omitted	and	filed	separately with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended,	incorporated	by reference	to	Exhibit	10.29	to	American	Airlines,	Inc.'s	report	on	Form	10-K	for	the	year	ended	December	31,	2008.

	10.146 Form	of	2008-2010	Performance	Share	Agreement	(with	awards	to	executive	officers	noted),	and	2008-2010	Performance	Share	Plan	for	Officers	and	Key	Employees,	incorporated	by reference	to	Exhibit	99.3	to	AMR's	current	report	on	Form	8-K	dated	May	22,	2008.

	10.147 Form	of	2009-2011	Performance	Share	Agreement	(with	awards	to	executive	officers	noted),	and	2009-2011	Performance	Share	Plan	for	Officers	and	Key	Employees,	incorporated	by reference	to	Exhibit	10.2	to	AMR's	current	report	on	Form	10-Q	for	the	quarterly	period	ended	June	30,	2009.

	10.148 Form	of	2010-2012	Performance	Share	Agreement	(with	awards	to	executive	officers	noted),	and	2010-2012	Performance	Share	Plan	for	Officers	and	Key	Employees	dated	May	19, 2010,	incorporated	by	reference	to	AMR's	current	report	on	Form	8-K	dated	May	21,	2010.

	10.149 AMR	Corporation	1998	Long	Term	Incentive	Plan,	as	Amended	and	Restated	as	of	January	1,	2005,	incorporated	by	reference	to	Exhibit	10.142	to	AMR's	report	on	Form	10-K	for	the year	ended	December	31,	2008.

	10.150 AMR	Corporation	2009	Long	Term	Incentive	Plan,	incorporated	by	reference	to	Exhibit	10.4	to	AMR's	report	on	Form	10-Q	for	the	quarterly	period	ended	June	30,	2009.

	10.151 Purchase	Agreement	Supplement	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	August	17,	2007.	Portions	of	this	Exhibit	have	been	omitted	and	filed separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended, incorporated	by	reference	to	Exhibit	10.133	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2007.

	10.152 Purchase	Agreement	Supplement	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	November	20,	2007.	Portions	of	this	Exhibit	have	been	omitted	and	filed separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended, incorporated	by	reference	to	Exhibit	10.134	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2007.

	10.153 Purchase	Agreement	Supplement	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	December	10,	2007.	Portions	of	this	Exhibit	have	been	omitted	and	filed separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended, incorporated	by	reference	to	Exhibit	10.135	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2007.

	10.154 Purchase	Agreement	Supplement	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	January	20,	2008.	Portions	of	this	Exhibit	have	been	omitted	and	filed separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended, incorporated	by	reference	to	Exhibit	10.136	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2007.

	10.155 Purchase	Agreement	Supplement	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	February	11,	2008.	Portions	of	this	Exhibit	have	been	omitted	and	filed separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended, incorporated	by	reference	to	Exhibit	10.137	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2007.

	10.156 Purchase	Agreement	Supplement	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	as	of	June	9,	2009.	Portions	of	this	Exhibit	have	been	omitted	and	filed separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended, incorporated	by	reference	to	Exhibit	10.5	to	AMR's	report	on	Form	10-QA	for	the	quarter	ended	June	30,	2009.

	10.157 Purchase	Agreement	Supplement	by	and	between	AMR	Eagle	Holding	Corporation	and	Bombardier	Inc.,	dated	December	2,	2009.	Portions	of	this	Exhibit	have	been	omitted	and	filed separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended, incorporated	by	reference	to	Exhibit	10.150	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2009.

	10.158 Purchase	Agreement	Supplement	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	December	18,	2009.	Portions	of	this	Exhibit	have	been	omitted	and	filed separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended, incorporated	by	reference	to	Exhibit	10.151	to	AMR's	report	on	Form	10-K	for	the	year	ended	December	31,	2009.

	10.159 Purchase	Agreement	Supplement	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company,	dated	January	14,	2011.	Portions	of	this	Exhibit	have	been	omitted	and	filed separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of	1934,	as	amended.

	10.160 Supplemental	Agreement	No.	34	to	Purchase	Agreement	No.	1977	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company	dated	as	of	July	21,	2010.	Portions	of	this	Exhibit have	been	omitted	and	filed	separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of 1934,	as	amended,	incorporated	by	reference	to	Exhibit	10.1	to	AMR's	report	on	Form	10-QA	for	the	quarter	ended	June	30,	2010.

	10.161 Supplemental	Agreement	No.	2	to	Purchase	Agreement	No.	3219	by	and	between	American	Airlines,	Inc.	and	The	Boeing	Company	dated	as	of	July	21,	2010.	Portions	of	this	Exhibit have	been	omitted	and	filed	separately	with	the	Securities	and	Exchange	Commission	pursuant	to	a	confidential	treatment	request	under	Rule	24b-2	of	the	Securities	and	Exchange	Act	of 1934,	as	amended,	incorporated	by	reference	to	Exhibit	10.2	to	AMR's	report	on	Form	10-QA	for	the	quarter	ended	June	30,	2010.

	10.162 AMR	Corporation	Amended	and	Restated	Directors	Pension	Benefits	Plan,	effective	as	of	January	1,	2005,	incorporated	by	reference	to	Exhibit	10.149	to	AMR's	report	on	Form	10-K for	the	year	ended	December	31,	2008.

	10.163 Amended	and	Restated	Air	Transportation	Plan	for	Non-Employee	Directors	of	AMR	Corporation,	effective	as	of	January	1,	2005,	incorporated	by	reference	to	Exhibit	10.150	to	AMR's report	on	Form	10-K	for	the	year	ended	December	31,	2008.

	10.164 AMR	Corporation	2003	Employee	Stock	Incentive	Plan,	as	amended	as	of	January	1,	2005,	incorporated	by	reference	to	Exhibit	10.151	to	AMR's	report	on	Form	10-K	for	the	year ended	December	31,	2008.

	10.165 First	Amendment	to	AMR	Corporation	1994	Directors	Stock	Incentive	Plan,	dated	as	of	January	1,	2005,	incorporated	by	reference	to	Exhibit	10.152	to	AMR's	report	on	Form	10-K	for the	year	ended	December	31,	2008.

	10.166 AMR	Eagle	Holding	Corporation	2011	Incentive	Compensation	Plan	for	Employees	of	Subsidiaries	of	AMR	Eagle	Holding	Corporation,	effective	as	of	January	1,	2011.

	21 Significant	subsidiaries	of	the	registrant	as	of	December	31,	2010.

	23 Consent	of	Independent	Registered	Public	Accounting	Firm.

	31.1 Certification	of	Chief	Executive	Officer	pursuant	to	Rule	13a-14(a).

	31.2 Certification	of	Chief	Financial	Officer	pursuant	to	Rule	13a-14(a).

101 The	following	materials	from	AMR	Corporation's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2010,	formatted	in	XBRL	(Extensible	Business	Reporting	Language): (i)	the	Consolidated	Statements	of	Operations,	(ii)	the	Consolidated	Balance	Sheets,	(iii)	the	Consolidated	Statements	of	Cash	Flows,	(iv)	the	Consolidated	Statements	of	Shareholders' Equity	(Deficit)	and	(v)	Notes	to	Consolidated	Financial	Statements,	tagged	as	blocks	of	text.*

* Pursuant	to	Rule	406T	of	Regulation	S-T,	the	Interactive	Data	Files	on	Exhibit	101	hereto	are	deemed	not	filed	or	part	of	a	registration	statement	or	prospectus	for	purposes	of	Sections	11	or	12	of the	Securities	Act	of	1933,	as	amended,	are	deemed	not	filed	for	purposes	of	Section	18	of	the	Securities	and	Exchange	Act	of	1934,	as	amended,	and	otherwise	are	not	subject	to	liability	under those	sections. 100

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its	behalf	by	the	undersigned,	thereunto	duly authorized.

(Principal	Executive	Officer)

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	registrant	and	in	the	capacities	and	on	the	dates

# noted:

# Schedule	II	—	Valuation	and	Qualifying	Accounts	and	Reserves

|  |  | Charged	to |  |  | Sales, |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Balance\tat | Statement\tof |  | Write-Offs | Retirements | Balance\tat |
|  | Beginning | Operations |  | (Net\tof | and | End\tof |
|  | of\tYear | Accounts | Payments | Recoveries) | Transfers | Year |
|  |  |  | (In\tmillions) |  |  |  |
| Year\tended\tDecember\t31,\t2010 |  |  |  |  |  |  |
| Allowance\tfor\tobsolescence\tof\tinventories | $509 | $32 | $— | $— | $(11) | $530 |
| Allowance\tfor\tuncollectible\taccounts | 58 | 5 | — | (5) | — | 58 |
| Reserves\tfor\tenvironmental\tremediation\tcosts | 18 | — | (1) | — | — | 17 |
| Year\tended\tDecember\t31,\t2009 |  |  |  |  |  |  |
| Allowance\tfor\tobsolescence\tof\tinventories | $488 | $40 | $— | $— | $(19) | $509 |
| Allowance\tfor\tuncollectible\taccounts | 49 | 6 | — | 3 | — | 58 |
| Reserves\tfor\tenvironmental\tremediation\tcosts | 18 | 1 | (1) | — | — | 18 |
| Year\tended\tDecember\t31,\t2008 |  |  |  |  |  |  |
| Allowance\tfor\tobsolescence\tof\tinventories | $424 | $101 | $— | $— | $(37) | $488 |
| Allowance\tfor\tuncollectible\taccounts | 41 | 6 | — | 2 | — | 49 |
| Reserves\tfor\tenvironmental\tremediation\tcosts | 21 | 2 | (5) | — | — | 18 |


what is the total amount expected to be paid for pensions and retiree medical and other in the next 12 months?
    total_pension_payments = 574 + 173
 answer = total_pension_payments