Investment Report: AMR Corporation (AAMRQ)

Adam R. Wolken BADM2003W 4/1/2013

Investor Report: AMR Corporation

Table of Contents
Introduction 3 Qualitative Analysis SWOT 5 PEST 7 Modernizing the Fleet 10 Building the New American 11 Quantitative Analysis Trend Analysis 12 Forward P/E Ratio 12 PEG Ratio 13 RPM Metrics 14 Recommendation 15 Executive Summary 16 Works Cited 17 Appendix 18

Investor Report: AMR Corporation

Introduction and Investing Thesis

Warren Buffett, long time venture capitalist and billionaire, once said, Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down1. This statement, while true to the airline industry as a whole, does not encompass the possibility of a good short-term position in an airline stock. A good airline investment is grounded in both qualitative and quantitative analysis. Because of the volatility in the travel industry, investing in an airline requires an in-depth analysis of factors ranging from load reports and revenue miles to fleet modernization along with the typical financial statement analysis. Before addressing various qualitative analytics on AMR reorganization one must look at the bigger picture and the industry as a whole. Airlines are an abysmal financial industry from the start. The margins are slim, fuel costs are high and competition is fierce. In fact, that is the reason that most airlines have to include a clause in their annual report and 10-K that reads, 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 control2. The report then goes on to list over five pages of various risk factors including: environmental, political, price control, economic security and even terrorism2. September 11, 2001 had a profound effect on an already plagued industry as passenger load percentage decreased annually over the next five years after2. American Airlines was originally founded in 19342. All of their stock is owned by the parent company AMR2. At year-end of 2012, American provided jet service to over 160 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. AMR also owns American Eagle Holding Corporation, which operates two regional airlines that do business under the American Eagle Brand. American, combined with American Eagle and other third-party regional feeder jets, provide service to over 250 cities in 50 countries with over 3,400 flights a day2. Combined, the fleet exceeds over 900 aircraft2. American Airlines was also the founding member of the OneWorld Alliance, which is the largest airline alliance in the world. Finally, American is also one of the largest scheduled air freight carriers in the world, providing a wide range of both freight and mail service to shippers onboard Americans passenger fleet2. Currently, AMR Corporation is undergoing bankruptcy proceedings through their filing of Chapter 11 in September of 20113. This process continues to be ongoing but the airline made significant progress in February by announcing their merger with US Airways3. This merger provides many benefits, many of which we will look into more detail later. American,
"Best Warren Buffett Quotes | Editor's Desk at Equities.com." Best Warren Buffett Quotes | Editor's Desk at Equities.com . N.p., n.d. Web. 29 Apr. 2013. 2 AMR Co., 2012 Annual Report, Feb. 20, 2013, from AMR Co. investor relations website, http://phx.corporateir.net/phoenix.zhtml?c=117098&p=irol-irhome, accessed April 29th, 2013 3 "AMR Files Bankruptcy-Exit Plan Based on US Airways Merger." Bloomberg. N.p., n.d. Web. 29 Apr. 2013
1

Investor Report: AMR Corporation

the United States oldest and most storied carrier, is at one of their lowest points during their history. This primes them as a potential value penny stock for investors. The rest of this paper will outline both qualitative and quantitative trigger points on why an investment in American Airlines at this stage is the correct one. This investor report will strive to address the potential benefits of a short-term investment holding in AMR Corporation stock (OTC: AAMRQ) and will discuss the current implications of the merger between US Airways Holding Company (LCC.NYSE) and AMR.

Investor Report: AMR Corporation

Qualitative Analysis
SWOT We Know Why You Fly has been the slogan of American Airlines, the premier carrier of the United States, for over ten years now. During that period, American has experienced an extreme financial cycle that has left it struggling to reform itself. Stiff competition from lowcost carriers combined with hard economic times have forced American into Chapter 11 proceedings to ultimately merge with US Airways (LCC). In order to better understand the full situation of the airline we can break down its market position into strengths, weaknesses, opportunities and threats. Strengths American Airlines has been one of the longest running carriers in the United States (over 60 years) and has arguably the best brand recognition among the major airlines2. Its brand livery, the steel airframes punctuated by patriotic red and white colors, is widely recognized among premium flyers as a staple of the industry. Besides the brand, American has built an extremely strong and dependent airline hub system situated at both Dallas Fort-Worth Airport and Chicago Ohare. Both hubs have grown over the past 10 years and have placed AA as a strong domestic carrier with one of the largest route systems in the country. Both hubs have also opened up international routes (DFW to South America and ORD to Canada and Europe)2. Finally, American has one of the strongest customer loyalty programs in AAdvantage4. The program has connections to almost every major credit and travel agency while also continuing the same brand recognition as the airline4. It is the largest frequent flier program and was the first such one to be enacted for a US Domestic Carrier. Weaknesses While AA has a strong foothold in certain cities (DFW, ORD and BOS for example) they are continuing to lose market share to other competitive players5. More specifically, low cost airlines like Southwest and JetBlue have continued to be a major player in smaller cities that open up American to some major competition5. Other carriers (including the new merger partner US Airways) continue to compete in major cities and are thus applying significant financial pressure on American to up their load factors and seat revenue on their large routes. Finally, Americans current Chapter 11 proceedings are causing significant financial strain on the company2. The lack of working capital to grow over time is stretching the company thin combined with the legal proceedings are both putting pressure on the airline to perform. It has also recently made significant commitments to purchasing a younger fleet, which although is a great investment, costs significant capital that American just doesnt have right now.

"American Airlines AAdvantage Program Named Airline Program Of The Year At The 2013 Freddie Awards - Seeking Alpha." American Airlines AAdvantage Program Named Airline Program Of The Year At The 2013 Freddie Awards - Seeking Alpha. N.p., n.d. Web. 1 May 2013. 5 "Legacy vs. Low-Cost Carriers: Spot the Difference." The Economist. The Economist Newspaper, n.d. Web. 1 May 2013.
4

Investor Report: AMR Corporation

Opportunities There are many opportunities for growth at American. First, they are in the midst of a merger with another large carrier (US Airways)2. This merger will also be discussed at length later but will provide significant opportunity for the company to grow its routes and become a larger player in the international market. Second, they are in the process of purchasing a younger fleet from both Airbus and Boeing2. This fleet will consist of newer 737-800s along with A320s with the hope of phasing out the fuel workhorse MD-83s. This will give American an edge in terms of fuel efficiency in a time that saving every penny can literally mean the difference between profit and bankruptcy. Finally, the company can capitalize on new code share agreements with some of US Airways partners after the merger. These new agreements will provide more flexibility to Americans customers and also give a better allaround service to AAdvantage members. Threats There are three main threats facing American currently. First, increasing fuel and labor costs over the past few years have caused significant financial hardship on the industry as a whole. American has been hit extremely hard already but with significant economic instability in the future, the company faces much uncertainty in terms of fuel. Second, pressure from regulatory bodies and government organizations has the potential to hurt the airline industry further than it already has. This will have a significant impact on the terms of the merger with US Airways (mainly in terms of union and merger agreements) and also on the regulation of the industry as a whole. Finally, low-fare service providers continue to demonstrate a threat to premium brands like American and United. Southwest and JetBlue (as examples) provide the same or similar route service at a much cheaper cost which (especially in a down economy) provides a major threat to an expensive carrier. American must find a way to differentiate themselves in the months and years to come.

Investor Report: AMR Corporation

PEST Another important qualitative indicator of growth is the PEST breakdown. This breaks a companies various problems into a Political, Economic, Social and Technological analysis. In doing this, it allows investors to look deeper into various qualitative growth indicators that a SWOT analysis wouldnt normally show. Political According to the 2013 10-K, the Company is subject to extensive domestic and international regulatory requirements. 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 carriers2. This clause is indicative of a much larger problem plaguing the airline industry as a whole. After the Deregulation Act of 1978, the industry has faced stiff competition causing multiple bankruptcies and significant financial trouble. More recently however, airlines are facing stiffer regulation due to recent budget cuts due to the sequestration6. According to NPR, if the spending cuts, known in Washington-speak as sequestration, start taking effect on schedule, the importance of that backstage work will move front and center6. This backstage work will affect the airline industry in multiple ways, most noticeably being the amount and length of delays6. Delays cause significant financial hardship on an airlines operations because the company simply isnt moving their aircraft around and injecting revenue miles into their operation. This decreasing revenue can cause other hardship on an industry where the difference between profitability and loss can be two or three full flights6.

Economical

Figure 17

The economics surrounding the airline industry make it extremely competitive to even stay
Naylor, Brian. "One Place You May Notice The Sequester: At The Airport." NPR. NPR, 21 Feb. 2013. Web. 1 May 2013. 7 "The Future Economics of the Airline Industry: A Changing Vernacular." Massachusetts Institute of Technology. MIT International Center for Air Transportation, n.d. Web. <http://www.acina.org/sites/default/files/swelbar_stateofindustry_6-5-12.pdf>.
6

Investor Report: AMR Corporation

afloat. The sheer volatility of the industry, as indicated in Figure 1, has made the industry extremely variable to oil shocks and other natural disasters. This volatility affects AMR even more so than other airlines because of their current Chapter 11 proceedings2. Aircraft fuel has been AMRs largest single operating expense in recent years, and income 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 the firms control. Key to solving some of the economic problems associated with price volatility is going to be the diversification of route portfolios7. As indicated in Figure 2, there will be a higher demand for international routes, specifically trans-pacific ones, in the next 15 years. This high demand will allow modern airlines to capitalize on gains internationally and supplement their losses in the US domestic market.

Figure 27

Social Social threats are alive and exist significantly in the airline industry. Post-September 11th fliers are defined by a more realistic economic man as discussed by behavioral economics. September 11th, a day that changed so much around our country hit one industry the hardest. After 9/11, we were on our knees within one hour8. Between 2001 and 2011, the nations 10 largest airlines lost a combined $29 billion attributed to a decreased demand in air travel. A rational economic man would not factor in the events of 9/11 and chalk them up solely to the risk of flying in general but a non-economic man has the choice. The fears after 9/11 were real and caused such a deep decline in the industry that the nations five largest carriers all filed for bankruptcy9. 9/11 indicated a much larger threat to the airline industry that even AMR includes in their 10-K each filing, Actual or threatened U.S. military involvement in overseas operations has, on occasion, had an adverse impact on our business, financial condition (including access to capital markets) and results of operations, and on the airline industry in general.2

Martn, Hugo. "10 Years after 9/11, the Airline Industry Is Looking up." Los Angeles Times. Los Angeles Times, 10 Sept. 2011. Web. 29 Jan. 2013.
8

Investor Report: AMR Corporation

Technological AMR Corporation and American Airlines have been pioneers in the usage of world-class technology within the cockpit to reduce expenses and increase safety9. In late 2012, AMR filed a proceeding with the FAA to allow their pilots to use an electronic flight bag9 which consisted of an iPad for pilots holding all charts and information contained in their normal 30+ pound bag. This change will reduce fuel expenses by about 500,000 gallons of fuel per year9. How? Each bag weighs 40 pounds and is reduced to a 3-pound electronic machine containing all the same information as before. This reduction will actually lead to an increase in safety measures, as the iPads will have access to more updated charts and real-time weather information than previously accessible9. AMRs move to a more tech-savvy airline isnt going unnoticed and is part of their transition to becoming a new American which we will discuss next2.

"American Airlines Pilots Get Nod to Use IPad During Landings, Takeoffs." Fox Business. N.p., n.d. Web. 1 May 2013. <http://www.foxbusiness.com/industries/2011/12/14/american-airlines-pilots-get-nod-to-use-ipad-during-landingstakeoffs/>.
9

Investor Report: AMR Corporation

Modernizing the Fleet For airlines, fuel efficiency and speed is the name of the game. Revenue is built on hedging fuel costs versus number of paying passengers and is thus maximized if an airline can conserve fuel while serving more customers. In recent years, major manufacturers (namely Airbus and Boeing) have been competing to roll out the future of fuel-efficient aircraft10. Fuel prices make up a significant portion of Americans operating expenses and eat away at net revenue. In fact, in 2012 35.2% of Americans operating expenses were the price of jet fuel. According to Bloomberg News, American is seeking to replace more than half the 190 Boeing MD-80s in its fleet with more fuel-efficient 737s and Airbus A320s by 201710. The MD-80, workhorse of the old American, went out of production in 1999 and the 737-800 is around 25% more efficient10. American has ordered the most advanced new jets to date, including a recent order of 42 new 787 Dreamliner wide-body aircraft. This new, fuelefficient airline will help to reduce costs as fuel prices skyrocket (See Figure 3). Modernization is not a new concept and has been around since the beginning of the airline industry. It has become more prevalent in recent years as airlines have attempted to cut costs. Americans primary jet total sits at 608 (year end Dec. 31st) combined with 340 of US Airways aircraft. This gives the new American the largest fleet in the world by over 200 jets. It also will give the new airline an edge in terms of fuel efficiency and seat capacity, making it extremely competitive against the likes of United (NYSE: UAL) and Southwest (NYSE: LUV).

Figure 32

Building the New American On February 14, AMR Corporation and US Airways announced a long-awaited merger agreement and vowed to work together to become the worlds dominant carrier11. The agreement has been discussed in significant detail over the past year but only recently came to fruition after long talks began. The new CEO of the airline will be Doug Parker, current Chairman of the Board and CEO of US Airways. The merger was met with significant confidence from both the pilot and flight attendant unions at both airlines11. According to the Wall Street Journal, the merged airline would become the worlds largest airline by traffic and take a commanding position in eight of the busiest US airports11. The deal was an all-stock one, valued at around $11 billion11. The Wall Street Journal predicts that the
"AMR, US Airways Affirm Plane Orders in Push to Refresh Fleet." Bloomberg. N.p., n.d. Web. 1 May 2013. <http://www.bloomberg.com/news/2013-02-14/amr-us-airways-affirm-plane-orders-in-push-to-refresh-fleets.html>. 11 "AMR, US Airways Predict Clear Skies." Wall Street Journal. N.p., n.d. Web. <http://online.wsj.com/article/SB10001424127887323478004578303630011153910.html>.
10

10

Investor Report: AMR Corporation

merger will start to contribute to earnings over the next year and will make a significant, positive impact on the bottom line11. What is the New American? AMR is hailing this merger as a step in the process towards re-enhancing the foothold American has on the industry. The merger is only a part of the New American process12. The combined airline will offer 6,700 daily flights to 336 locations in 56 countries worldwide12. The airline will have the most competitive service across the Eastern seaboard as well as an expanded shuttle service to support business travelers. The merged company will maintain all hubs held by both US Airways and AMR (Charlotte, Chicago, Dallas-Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington-DC). The loyalty program, already ranked as the #1 program in the industry, will become even more enhanced with more potential benefits to customers12. Finally, customers will experience enhanced travel benefits through investments in new aircraft, modern technologies, and entertainment options aboard domestic flights. This process will happen over the next few years during the merger and will be a significant factor in profitability over the next year.

"The New American Is Arriving." US Airways-American Merger: International Benefits. N.p., n.d. Web. 1 May 2013. <http://newamericanarriving.com/customers/international-benefits/>.
12

11

Investor Report: AMR Corporation

Quantitative Analysis
Trend Analysis There are multiple ways to indicate stock growth over a period of time. The most important indicator is to look at the price of stock growth relative to a benchmark (in this case the S&P500). This gives a better overall picture of not just company growth but also investor confidence in a certain stock relative to the market as a whole13. AMR Corporation, over 52 weeks, grew its stock price 687.3% compared to an S&P500 growth of 17.9%. While this seems like a wild growth, one must remember where AMR is growing from. After filing Chapter 11 over a year ago, the stock price plummeted to a low of $.03 per share and has now grown to over $4.33. This growth is demonstrated in Figure 4. The chart shows a clear positive growth in the stock price relative to the S&P. After announcing the merger with US Airways, the stock picked up steam significantly and has been rising ever since. More recently, AMR announced higher than predicted Q1 earnings, which also provided a kick in the stock price. As of close May 1st, AAMRQ stock was at $4.33 on a close up .46% from the previous day14.

Figure 4

Forward P/E Ratio A forward looking price to earnings ratio uses forecasted earnings to calculate the price to earnings ratio. Even though the earnings are just an estimate, they are a good indication of future financial growth when low profitability currently exists13. Price to earnings indicates the valuation of a companys market value per share divided by the companys earnings per share. The calculation for forward price to earnings is shown in Figure 5.

"Forward Price To Earnings - Forward P/E." Forward Price To Earnings (Forward P/E) Definition. N.p., n.d. Web. 1 May 2013. <http://www.investopedia.com/terms/f/forwardpe.asp>.
13

12

Investor Report: AMR Corporation

Figure 513

AMR Corporations forecasted forward looking price to earnings ratio is 1.4214. While a seemingly low P/E ratio, one has to look at it in comparison to previous quarterly earnings. Fiscal Year 2012 brought an actual P/E of 0, as there were no earnings per share due to Chapter 11 proceedings14. Actual yearly revenue was up significantly from $17,947 to $18,743 (in millions) indicating a growth of around 104%. This was a similar increase from FY 2010 to FY 2011. This consistent growth combined with consolidation leads to the first ever P/E in over 4 years. This is a positive trend indicative of positive analyst reports and consolidated future growth. PEG Ratio A PEG ratio (Price to earnings to growth) is used to determine the stocks value while taking the companys earnings growth into account13. A lower PEG ratio is indicative of an undervalued stock given its expected earnings performance13. Combining this ratio with a forward-looking P/E ratio gives a good future indication of growth and the relative value of a stock. The formula for PEG is given in Figure 6.

AMR Corporation has a 5-year expected PEG ratio of .5914. A PEG ratio below 1 is typically indicative of an undervalued stock and AMRs balance sheet indicates the same. With earnings growth being over 104% in the past three fiscal years and fiscal consolidation happening due to Chapter 11, this ratio strongly demonstrates the potential future earnings per share of a stock in an extremely tough industry14. In reference to the previous forwardlooking P/E ratio, this puts American at an undervalued potential penny growth stock. Revenue Passenger Miles While it is extremely important to look at balance sheet items for any corporation, it is essential to look at niche factors for an airline in particular. One critical factor that drives revenue growth is Revenue Passenger Miles (RPM). RPM is a transportation industry metric that shows the number of miles traveled by paying passengers15. This makes up the backbone of airline revenue growth and is an essential part of an investment report15. The metric is computed by multiplying the number of paying passengers by distance traveled15.

Figure 613

14 15

"AMR Key Statistics." Bloomberg Stock Quotes. Bloomberg, n.d. Web. "Revenue Passenger Mile - RPM." Revenue Passenger Mile (RPM) Definition. N.p., n.d. Web. 1 May 2013.

13

Investor Report: AMR Corporation

Figure 7 shows the load report and change in RPM for March 2013 in comparison to March 2012. There is a consolidated growth of 1% driven by a 2.2% growth in regional RPM. International flights make up 4.4% of the consolidated growth while domestic makes a net decrease of 1.3%. This positive growth is also indicative of a higher capacity fleet and increased load factors. In fact, consolidated load factors (for the same month) were up .7% from the previous year as well16. Overall, this indicates a positive growth trend meaning the airline is making more money on more passengers.

Figure 716

"AMR Corporation Reports March 2013 Revenue And Traffic Results." AMR Corporation. N.p., n.d. Web. <http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=irol-newsArticle&ID=1804394&highlight=>.
16

14

Investor Report: AMR Corporation

Recommendation
As demonstrated via both a qualitative and quantitative analysis of AMR Corporations current stock price, it is the recommendation of this paper to purchase stock in AMR and to rank it as a future outperformer. AMR has demonstrated future growth potential and consolidation during current bankruptcy proceedings and is at a prime price to invest in. Both the SWOT and PEST analysis indicate a stiff competitive marketplace for American Airlines. All airlines face current stiff competition, as it is a tough industry to turn a profit in. That being said, both analyses demonstrate various potential opportunities that AMR is already capitalizing on. First, AMR is working to modernize their fleet through the purchasing of more fuel-efficient aircraft, which will help, negate the rising fuel costs and political pressures associated with it. Second, AMR is in the midst of a merger with US Airways, which will provide financial stability to help steer the stock out of bankruptcy. Dubbed the New American, this airline will emerge as the front-runner of not just the domestic US airline market but also the international one as a whole. It will contain the largest fleet, most routes and highest load capacity of any airline in the industry. This high room for growth provides endless opportunities for the airline moving forward. As the airline emerges from bankruptcy a more learn, fuel-efficient airline, the financial future looks bright. The 52-week trend analysis indicates a large change in the stock price from complete collapse to a stable $4 per share. Outperforming the S&P in a similar timeframe, AMR has posted a positive revenue growth over the past three years that has led to its first P/E ratio in that timeframe. Combined with a low PEG ratio, it is the opinion of this paper that AMR is an undervalued penny growth stock. That being said, load factors and Revenue Passenger Miles are up significantly as well which, in the airline industry, are indicators of solid capacity growth and future revenue. The company appears to be in solid financial shape considering its emergence from Chapter 11 proceedings and its merger with US Airways. There is lots of room for growth in the next year. At an extremely undervalued price of $4 per share, AMR is in a prime position to explode as a penny growth stock. While, on the surface, the firm appears to be barely making keeping its head above bankruptcy, there appears to be plenty of changes going on both financially and internally that will allow for growth. Investor confidence has risen (indicative of the growth in stock price) over the past year and $4 is cheap for a positive growth stock with very little downside. This report discussed both qualitative and quantitative indicators of positive health in AMR and it is our recommendation to purchase AMR at its current price.

15

Investor Report: AMR Corporation

Executive Summary
Warren Buffett, long time venture capitalist and billionaire, once said, Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down. This statement, while true to the airline industry as a whole, does not encompass the possibility of a good short-term position in an airline stock. A good airline investment is grounded in both qualitative and quantitative analysis. Because of the volatility in the travel industry, investing in an airline requires an in-depth analysis of factors ranging from load reports and revenue miles to fleet modernization along with the typical financial statement analysis. Before addressing various qualitative analytics on AMR reorganization one must look at the bigger picture and the industry as a whole. As demonstrated via both a qualitative and quantitative analysis of AMR Corporations current stock price, it is the recommendation of this paper to purchase stock in AMR and to rank it as a future outperformer. AMR has demonstrated future growth potential and consolidation during current bankruptcy proceedings and is at a prime price to invest in. This report will delve into various factors to demonstrate a positive, upwards trend in AMRs stock and to pitch AMR Corporation as a positive potential penny growth stock to investors.

16

Investor Report: AMR Corporation

Works Cited
AMR Co., 2012 Annual Report, Feb. 20, 2013, from AMR Co. investor relations website, http://phx.corporateir.net/phoenix.zhtml?c=117098&p=irol-irhome, accessed April 29th, 2013 "AMR Corporation Reports March 2013 Revenue And Traffic Results." AMR Corporation. N.p., n.d. Web. <http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=irol-newsArticle&ID=1804394&highlight=>. "AMR Files Bankruptcy-Exit Plan Based on US Airways Merger." Bloomberg. N.p., n.d. Web. 29 Apr. 2013 "AMR, US Airways Affirm Plane Orders in Push to Refresh Fleet." Bloomberg. N.p., n.d. Web. 1 May 2013. <http://www.bloomberg.com/news/2013-02-14/amr-us-airways-affirm-plane-orders-in-push-to-refresh-fleets.html>. "AMR, US Airways Predict Clear Skies." Wall Street Journal. N.p., n.d. Web. <http://online.wsj.com/article/SB10001424127887323478004578303630011153910.html>. "American Airlines AAdvantage Program Named Airline Program Of The Year At The 2013 Freddie Awards - Seeking Alpha." American Airlines AAdvantage Program Named Airline Program Of The Year At The 2013 Freddie Awards - Seeking Alpha. N.p., n.d. Web. 1 May 2013. "American Airlines Pilots Get Nod to Use IPad During Landings, Takeoffs." Fox Business. N.p., n.d. Web. 1 May 2013. <http://www.foxbusiness.com/industries/2011/12/14/american-airlines-pilots-get-nod-to-use-ipad-during-landingstakeoffs/>. "Best Warren Buffett Quotes | Editor's Desk at Equities.com." Best Warren Buffett Quotes | Editor's Desk at Equities.com . N.p., n.d. Web. 29 Apr. 2013. "Forward Price To Earnings - Forward P/E." Forward Price To Earnings (Forward P/E) Definition. N.p., n.d. Web. 1 May 2013. <http://www.investopedia.com/terms/f/forwardpe.asp>. "Legacy vs. Low-Cost Carriers: Spot the Difference." The Economist. The Economist Newspaper, n.d. Web. 1 May 2013. Martn, Hugo. "10 Years after 9/11, the Airline Industry Is Looking up." Los Angeles Times. Los Angeles Times, 10 Sept. 2011. Web. 29 Jan. 2013. Naylor, Brian. "One Place You May Notice The Sequester: At The Airport." NPR. NPR, 21 Feb. 2013. Web. 1 May 2013. "The Future Economics of the Airline Industry: A Changing Vernacular." Massachusetts Institute of Technology. MIT International Center for Air Transportation, n.d. Web. <http://www.acina.org/sites/default/files/swelbar_stateofindustry_6-5-12.pdf>. "The New American Is Arriving." US Airways-American Merger: International Benefits. N.p., n.d. Web. 1 May 2013. <http://newamericanarriving.com/customers/international-benefits/>.

17

Investor Report: AMR Corporation

Appendix
The following statements are taken from the 2012 Annual Report for AMR Corporation2.

18

Investor Report: AMR Corporation

19

Investor Report: AMR Corporation

20