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| Entity Registrant Name | AMERICAN AIRLINES INC |
| CIK | 0000004515 |
| Accession number | 0001193125-13-155505 |
| Link to XBRL instance | http://www.sec.gov/Archives/edgar/data/4515/000119312513155505/ck0000004515-20121231.xml |
| Fiscal year end | --12-31 |
| Fiscal year focus | 2012 |
| Fiscal period focus | FY |
| Current balance sheet date | 2012-12-31 |
| Current year-to-date income statement start date | 2012-01-01 |
| Commentary | All disclosures seem appropriate. |
| NATURE OF BUSINESS concept | us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock |
Basis of
Presentation The accompanying
consolidated financial statements as of
December 31, 2012 and for the three years
ended
December 31, 2012 include the accounts of AMR
and its wholly owned subsidiaries, including (i) its principal
subsidiary, American Airlines, Inc. (American) and (ii) its
regional airline subsidiary, AMR Eagle Holding Corporation (AMR
Eagle), which has two primary subsidiaries, American Eagle
Airlines, Inc. and Executive Airlines, Inc. . The consolidated
financial statements as of and for the years ended
December 31, 2012,
2011 and
2010 include the accounts of the Company and its wholly owned
subsidiaries as well as variable interest entities (VIEs) for which
the Company is the primary beneficiary. All significant
intercompany transactions have been eliminated.
The
accompanying consolidated financial statements have been prepared
in accordance with U.S. generally accepted accounting principles
(GAAP), including the provisions of ASC 852
“Reorganizations” (ASC 852). ASC 852 requires that the
financial statements of the Company, for periods subsequent to the
filing of the Chapter 11 Cases, distinguish transactions and events
that are directly associated with the reorganization from the
ongoing operations of the business. Accordingly, certain revenues,
expenses (including professional fees), realized gains and losses
and provisions for losses that are realized or incurred in the
Chapter 11 Cases are recorded in reorganization items, net on the
accompanying Consolidated Statement of Operations. In addition,
prepetition obligations that may be impacted by the Chapter 11
reorganization process have been classified on the Consolidated
Balance Sheet in liabilities subject to compromise. These
liabilities are reported at the amounts expected to be allowed by
the Bankruptcy Court, even if they may be settled for lesser
amounts.
Certain of our
non-U.S. subsidiaries are not part of the Chapter 11 Cases. Since
the non-US subsidiaries not part of the bankruptcy filing do not
have significant transactions, we do not separately disclose the
condensed combined financial statements of such non-U.S.
subsidiaries s in accordance with the requirements of
reorganization accounting.
The Company has
also prepared these consolidated financial statements on a going
concern basis, which contemplates continuity of operations,
realization of assets and satisfaction of liabilities in the
ordinary course of business. Accordingly, the Company’s
consolidated financial statements do not include any adjustments
relating to the recoverability of assets and classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern.
As a result of
the Chapter 11 proceedings, the satisfaction of our liabilities and
funding of ongoing operations are subject to uncertainty and,
accordingly, there is a substantial doubt of the Company’s
ability to continue as a going concern.
The
accompanying consolidated financial statements do not purport to
reflect or provide for the consequences of the Chapter 11 Cases,
other than as set forth under “liabilities subject to
compromise” on the accompanying Consolidated Balance Sheets
and “income (loss) before reorganization items, net”
and “reorganization items, net” on the accompanying
Consolidated Statements of Operations (see Note 1 to the
consolidated financial statements). In particular, the financial
statements do not purport to show (1) as to assets, their
realizable value on a liquidation basis or their availability to
satisfy liabilities; (2) as to prepetition liabilities, the
amounts that may be allowed for claims or contingencies, or the
status and priority thereof; (3) as to shareowners’
equity accounts, the effect of any changes that may be made to the
Debtors' capitalization; or (4) as to operations, the effect
of any changes that may be made to the Debtors'
business.
While operating
as debtors-in-possession under Chapter 11 of the Bankruptcy Code,
the Debtors may sell or otherwise dispose of or liquidate assets or
settle liabilities, subject to the approval of the Bankruptcy Court
or otherwise as permitted in the ordinary course of business.
Moreover, the ultimate plan of reorganization for the Debtors could
materially change the amounts and classifications in the historical
consolidated financial statements.
New
Accounting Pronouncements In December 2011, the FASB
issued ASU 2011-11, “Disclosures About Offsetting Assets
and
Liabilities.” This
update creates new disclosure requirements about the nature of an
entity’s rights of setoff and related arrangements associated
with its financial instruments and derivative instruments. The
disclosure requirements in this update are effective for annual
reporting periods, and interim periods within those years,
beginning on or after January 1, 2013. The Company is
currently evaluating the impact this update will have on its
disclosures.
In July 2012,
the FASB issued ASU 2012-02, “Testing Indefinite-Lived
Intangible Assets for Impairment.” This update amends
ASC 350, “Intangibles—Goodwill and Other” to
allow entities an option to first assess qualitative factors to
determine whether it is necessary to perform the quantitative
impairment test. Under that option, an entity no longer
would be required to calculate the fair value of the intangible
asset unless the entity determines, based on that qualitative
assessment, that it is more likely than not that its fair value is
less than its carrying amount. The amendments in this
update are effective for annual and interim impairment tests
performed for fiscal years beginning after September 15,
2012. The Company is currently evaluating the impact
this update may have on its indefinite-lived intangibles impairment
testing.
In August of
2012, the SEC issued a final rule implementing Section 1502 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act that
imposes reporting requirements on issuers who use or may use
“Conflict Minerals,” defined as columbite-tantalite
(the metal ore from which tantalum is extracted), cassiterite (the
metal ore from which tin is extracted), gold, and wolframite (the
metal ore from which tungsten is extracted), or their derivatives,
originating from the Democratic Republic of the Congo and
neighboring countries (collectively, “covered
countries”). The rule was mandated in response to
humanitarian concerns that trade in conflict minerals are used to
finance armed groups in the covered countries. The rule describes
assessment and reporting requirements for all issuers for which
conflict minerals originating in a covered country are necessary to
the functionality or production of a product manufactured, or
contracted to be manufactured, by the issuer. Such issuers are
required to file a newly created Form SD annually by May 31
for the prior calendar year. Initial Form SDs are required to be
filed by May 31, 2014 for the calendar year 2013. The Company
is currently in the process of assessing whether it will be
required to file a Form SD for calendar year 2013 and determining
necessary processes and procedures to collect information necessary
to make any required filing. The Company does not anticipate that
any requirement to file this new Form SD will have a material
impact on its consolidated financial statements.
|
| BASIS OF REPORTING concept | us-gaap:BasisOfPresentationAndSignificantAccountingPoliciesTextBlock |
2. Summary of Accounting
Policies
Basis of
Presentation The accompanying
consolidated financial statements as of
December 31, 2012 and for the three years
ended
December 31, 2012 include the accounts of AMR
and its wholly owned subsidiaries, including (i) its principal
subsidiary, American Airlines, Inc. (American) and (ii) its
regional airline subsidiary, AMR Eagle Holding Corporation (AMR
Eagle), which has two primary subsidiaries, American Eagle
Airlines, Inc. and Executive Airlines, Inc. . The consolidated
financial statements as of and for the years ended
December 31, 2012,
2011 and
2010 include the accounts of the Company and its wholly owned
subsidiaries as well as variable interest entities (VIEs) for which
the Company is the primary beneficiary. All significant
intercompany transactions have been eliminated.
The
accompanying consolidated financial statements have been prepared
in accordance with U.S. generally accepted accounting principles
(GAAP), including the provisions of ASC 852
“Reorganizations” (ASC 852). ASC 852 requires that the
financial statements of the Company, for periods subsequent to the
filing of the Chapter 11 Cases, distinguish transactions and events
that are directly associated with the reorganization from the
ongoing operations of the business. Accordingly, certain revenues,
expenses (including professional fees), realized gains and losses
and provisions for losses that are realized or incurred in the
Chapter 11 Cases are recorded in reorganization items, net on the
accompanying Consolidated Statement of Operations. In addition,
prepetition obligations that may be impacted by the Chapter 11
reorganization process have been classified on the Consolidated
Balance Sheet in liabilities subject to compromise. These
liabilities are reported at the amounts expected to be allowed by
the Bankruptcy Court, even if they may be settled for lesser
amounts.
Certain of our
non-U.S. subsidiaries are not part of the Chapter 11 Cases. Since
the non-US subsidiaries not part of the bankruptcy filing do not
have significant transactions, we do not separately disclose the
condensed combined financial statements of such non-U.S.
subsidiaries s in accordance with the requirements of
reorganization accounting.
The Company has
also prepared these consolidated financial statements on a going
concern basis, which contemplates continuity of operations,
realization of assets and satisfaction of liabilities in the
ordinary course of business. Accordingly, the Company’s
consolidated financial statements do not include any adjustments
relating to the recoverability of assets and classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern.
As a result of
the Chapter 11 proceedings, the satisfaction of our liabilities and
funding of ongoing operations are subject to uncertainty and,
accordingly, there is a substantial doubt of the Company’s
ability to continue as a going concern.
The
accompanying consolidated financial statements do not purport to
reflect or provide for the consequences of the Chapter 11 Cases,
other than as set forth under “liabilities subject to
compromise” on the accompanying Consolidated Balance Sheets
and “income (loss) before reorganization items, net”
and “reorganization items, net” on the accompanying
Consolidated Statements of Operations (see Note 1 to the
consolidated financial statements). In particular, the financial
statements do not purport to show (1) as to assets, their
realizable value on a liquidation basis or their availability to
satisfy liabilities; (2) as to prepetition liabilities, the
amounts that may be allowed for claims or contingencies, or the
status and priority thereof; (3) as to shareowners’
equity accounts, the effect of any changes that may be made to the
Debtors' capitalization; or (4) as to operations, the effect
of any changes that may be made to the Debtors'
business.
While operating
as debtors-in-possession under Chapter 11 of the Bankruptcy Code,
the Debtors may sell or otherwise dispose of or liquidate assets or
settle liabilities, subject to the approval of the Bankruptcy Court
or otherwise as permitted in the ordinary course of business.
Moreover, the ultimate plan of reorganization for the Debtors could
materially change the amounts and classifications in the historical
consolidated financial statements.
New
Accounting Pronouncements In December 2011, the FASB
issued ASU 2011-11, “Disclosures About Offsetting Assets
and
Liabilities.” This
update creates new disclosure requirements about the nature of an
entity’s rights of setoff and related arrangements associated
with its financial instruments and derivative instruments. The
disclosure requirements in this update are effective for annual
reporting periods, and interim periods within those years,
beginning on or after January 1, 2013. The Company is
currently evaluating the impact this update will have on its
disclosures.
In July 2012,
the FASB issued ASU 2012-02, “Testing Indefinite-Lived
Intangible Assets for Impairment.” This update amends
ASC 350, “Intangibles—Goodwill and Other” to
allow entities an option to first assess qualitative factors to
determine whether it is necessary to perform the quantitative
impairment test. Under that option, an entity no longer
would be required to calculate the fair value of the intangible
asset unless the entity determines, based on that qualitative
assessment, that it is more likely than not that its fair value is
less than its carrying amount. The amendments in this
update are effective for annual and interim impairment tests
performed for fiscal years beginning after September 15,
2012. The Company is currently evaluating the impact
this update may have on its indefinite-lived intangibles impairment
testing.
In August of
2012, the SEC issued a final rule implementing Section 1502 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act that
imposes reporting requirements on issuers who use or may use
“Conflict Minerals,” defined as columbite-tantalite
(the metal ore from which tantalum is extracted), cassiterite (the
metal ore from which tin is extracted), gold, and wolframite (the
metal ore from which tungsten is extracted), or their derivatives,
originating from the Democratic Republic of the Congo and
neighboring countries (collectively, “covered
countries”). The rule was mandated in response to
humanitarian concerns that trade in conflict minerals are used to
finance armed groups in the covered countries. The rule describes
assessment and reporting requirements for all issuers for which
conflict minerals originating in a covered country are necessary to
the functionality or production of a product manufactured, or
contracted to be manufactured, by the issuer. Such issuers are
required to file a newly created Form SD annually by May 31
for the prior calendar year. Initial Form SDs are required to be
filed by May 31, 2014 for the calendar year 2013. The Company
is currently in the process of assessing whether it will be
required to file a Form SD for calendar year 2013 and determining
necessary processes and procedures to collect information necessary
to make any required filing. The Company does not anticipate that
any requirement to file this new Form SD will have a material
impact on its consolidated financial statements.
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
and funds held for certain tax 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.
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:
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
$1.7 billion (and is recorded as a
component of Air traffic liability on the accompanying consolidated
balance sheets) at
December 31, 2012 and
$1.6 billion as of
December 31, 2011.
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
$153 million for the year ended
December 31, 2012,
$186 million for the year ended
December 31, 2011 and
$165 million for the year ended
December 31, 2010.
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, 2012 and identified items as set
forth in Note 17 to the consolidated financial
statements.
|
|||||||||||||||||||||||||||||||||
| SIGNIFICANT ACCOUNTING POLICIES concept | us-gaap:BasisOfPresentationAndSignificantAccountingPoliciesTextBlock |
2. Summary of Accounting
Policies
Basis of
Presentation The accompanying
consolidated financial statements as of
December 31, 2012 and for the three years
ended
December 31, 2012 include the accounts of AMR
and its wholly owned subsidiaries, including (i) its principal
subsidiary, American Airlines, Inc. (American) and (ii) its
regional airline subsidiary, AMR Eagle Holding Corporation (AMR
Eagle), which has two primary subsidiaries, American Eagle
Airlines, Inc. and Executive Airlines, Inc. . The consolidated
financial statements as of and for the years ended
December 31, 2012,
2011 and
2010 include the accounts of the Company and its wholly owned
subsidiaries as well as variable interest entities (VIEs) for which
the Company is the primary beneficiary. All significant
intercompany transactions have been eliminated.
The
accompanying consolidated financial statements have been prepared
in accordance with U.S. generally accepted accounting principles
(GAAP), including the provisions of ASC 852
“Reorganizations” (ASC 852). ASC 852 requires that the
financial statements of the Company, for periods subsequent to the
filing of the Chapter 11 Cases, distinguish transactions and events
that are directly associated with the reorganization from the
ongoing operations of the business. Accordingly, certain revenues,
expenses (including professional fees), realized gains and losses
and provisions for losses that are realized or incurred in the
Chapter 11 Cases are recorded in reorganization items, net on the
accompanying Consolidated Statement of Operations. In addition,
prepetition obligations that may be impacted by the Chapter 11
reorganization process have been classified on the Consolidated
Balance Sheet in liabilities subject to compromise. These
liabilities are reported at the amounts expected to be allowed by
the Bankruptcy Court, even if they may be settled for lesser
amounts.
Certain of our
non-U.S. subsidiaries are not part of the Chapter 11 Cases. Since
the non-US subsidiaries not part of the bankruptcy filing do not
have significant transactions, we do not separately disclose the
condensed combined financial statements of such non-U.S.
subsidiaries s in accordance with the requirements of
reorganization accounting.
The Company has
also prepared these consolidated financial statements on a going
concern basis, which contemplates continuity of operations,
realization of assets and satisfaction of liabilities in the
ordinary course of business. Accordingly, the Company’s
consolidated financial statements do not include any adjustments
relating to the recoverability of assets and classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern.
As a result of
the Chapter 11 proceedings, the satisfaction of our liabilities and
funding of ongoing operations are subject to uncertainty and,
accordingly, there is a substantial doubt of the Company’s
ability to continue as a going concern.
The
accompanying consolidated financial statements do not purport to
reflect or provide for the consequences of the Chapter 11 Cases,
other than as set forth under “liabilities subject to
compromise” on the accompanying Consolidated Balance Sheets
and “income (loss) before reorganization items, net”
and “reorganization items, net” on the accompanying
Consolidated Statements of Operations (see Note 1 to the
consolidated financial statements). In particular, the financial
statements do not purport to show (1) as to assets, their
realizable value on a liquidation basis or their availability to
satisfy liabilities; (2) as to prepetition liabilities, the
amounts that may be allowed for claims or contingencies, or the
status and priority thereof; (3) as to shareowners’
equity accounts, the effect of any changes that may be made to the
Debtors' capitalization; or (4) as to operations, the effect
of any changes that may be made to the Debtors'
business.
While operating
as debtors-in-possession under Chapter 11 of the Bankruptcy Code,
the Debtors may sell or otherwise dispose of or liquidate assets or
settle liabilities, subject to the approval of the Bankruptcy Court
or otherwise as permitted in the ordinary course of business.
Moreover, the ultimate plan of reorganization for the Debtors could
materially change the amounts and classifications in the historical
consolidated financial statements.
New
Accounting Pronouncements In December 2011, the FASB
issued ASU 2011-11, “Disclosures About Offsetting Assets
and
Liabilities.” This
update creates new disclosure requirements about the nature of an
entity’s rights of setoff and related arrangements associated
with its financial instruments and derivative instruments. The
disclosure requirements in this update are effective for annual
reporting periods, and interim periods within those years,
beginning on or after January 1, 2013. The Company is
currently evaluating the impact this update will have on its
disclosures.
In July 2012,
the FASB issued ASU 2012-02, “Testing Indefinite-Lived
Intangible Assets for Impairment.” This update amends
ASC 350, “Intangibles—Goodwill and Other” to
allow entities an option to first assess qualitative factors to
determine whether it is necessary to perform the quantitative
impairment test. Under that option, an entity no longer
would be required to calculate the fair value of the intangible
asset unless the entity determines, based on that qualitative
assessment, that it is more likely than not that its fair value is
less than its carrying amount. The amendments in this
update are effective for annual and interim impairment tests
performed for fiscal years beginning after September 15,
2012. The Company is currently evaluating the impact
this update may have on its indefinite-lived intangibles impairment
testing.
In August of
2012, the SEC issued a final rule implementing Section 1502 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act that
imposes reporting requirements on issuers who use or may use
“Conflict Minerals,” defined as columbite-tantalite
(the metal ore from which tantalum is extracted), cassiterite (the
metal ore from which tin is extracted), gold, and wolframite (the
metal ore from which tungsten is extracted), or their derivatives,
originating from the Democratic Republic of the Congo and
neighboring countries (collectively, “covered
countries”). The rule was mandated in response to
humanitarian concerns that trade in conflict minerals are used to
finance armed groups in the covered countries. The rule describes
assessment and reporting requirements for all issuers for which
conflict minerals originating in a covered country are necessary to
the functionality or production of a product manufactured, or
contracted to be manufactured, by the issuer. Such issuers are
required to file a newly created Form SD annually by May 31
for the prior calendar year. Initial Form SDs are required to be
filed by May 31, 2014 for the calendar year 2013. The Company
is currently in the process of assessing whether it will be
required to file a Form SD for calendar year 2013 and determining
necessary processes and procedures to collect information necessary
to make any required filing. The Company does not anticipate that
any requirement to file this new Form SD will have a material
impact on its consolidated financial statements.
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
and funds held for certain tax 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.
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:
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
$1.7 billion (and is recorded as a
component of Air traffic liability on the accompanying consolidated
balance sheets) at
December 31, 2012 and
$1.6 billion as of
December 31, 2011.
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
$153 million for the year ended
December 31, 2012,
$186 million for the year ended
December 31, 2011 and
$165 million for the year ended
December 31, 2010.
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, 2012 and identified items as set
forth in Note 17 to the consolidated financial
statements.
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| REVENUE RECOGNITION concept | us-gaap:RevenueRecognitionPolicyTextBlock |
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.
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