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As Of Filer Filing For·On·As Docs:Size 1/25/18 American Airlines Group Inc. 8-K:2,7 1/25/18 4:1.9M American Airlines Inc |
Document/Exhibit Description Pages Size 1: 8-K Current Report HTML 25K 2: EX-99.1 Miscellaneous Exhibit HTML 337K 3: EX-99.2 Miscellaneous Exhibit HTML 119K 4: EX-99.3 Miscellaneous Exhibit HTML 212K
Exhibit |
New
Revenue Standard | New Retirement Standard | ||||||||||||||||||
As Reported | Deferred Revenue Method | Reclassifications | Reclassifications | As
Recast | |||||||||||||||
(A) | (B) | (C) | |||||||||||||||||
Operating revenues: | |||||||||||||||||||
Passenger | $ | 36,133 | $ | 311 | $ | 2,642 | $ | — | $ | 39,086 | |||||||||
Cargo | 800 | — | 90 | — | 890 | ||||||||||||||
Other | 5,274 | — | (2,628 | ) | — | 2,646 | |||||||||||||
Total
operating revenues | 42,207 | 311 | 104 | — | 42,622 | ||||||||||||||
Operating
expenses: | |||||||||||||||||||
Aircraft fuel and related taxes | 6,128 | — | — | — | 6,128 | ||||||||||||||
Salaries,
wages and benefits | 11,816 | — | — | 138 | 11,954 | ||||||||||||||
Regional
expenses: | |||||||||||||||||||
Fuel | 1,382 | — | — | — | 1,382 | ||||||||||||||
Other | 5,164 | — | — | — | 5,164 | ||||||||||||||
Maintenance,
materials and repairs | 1,959 | — | — | — | 1,959 | ||||||||||||||
Other
rent and landing fees | 1,806 | — | — | — | 1,806 | ||||||||||||||
Aircraft
rent | 1,197 | — | — | — | 1,197 | ||||||||||||||
Selling
expenses | 1,477 | — | — | — | 1,477 | ||||||||||||||
Depreciation
and amortization | 1,702 | — | — | — | 1,702 | ||||||||||||||
Special
items, net | 712 | — | — | — | 712 | ||||||||||||||
Other | 4,806 | — | 104 | — | 4,910 | ||||||||||||||
Total
operating expenses | 38,149 | — | 104 | 138 | 38,391 | ||||||||||||||
Operating
income | 4,058 | 311 | — | (138 | ) | 4,231 | |||||||||||||
Nonoperating
income (expense): | |||||||||||||||||||
Interest income | 94 | — | — | — | 94 | ||||||||||||||
Interest
expense, net | (1,053 | ) | — | — | — | (1,053 | ) | ||||||||||||
Other,
net | (15 | ) | — | — | 138 | 123 | |||||||||||||
Total
nonoperating expense, net | (974 | ) | — | — | 138 | (836 | ) | ||||||||||||
Income
before income taxes | 3,084 | 311 | — | — | 3,395 | ||||||||||||||
Income
tax provision | 1,165 | 948 | — | — | 2,113 | ||||||||||||||
Net
income | $ | 1,919 | $ | (637 | ) | $ | — | $ | — | $ | 1,282 | ||||||||
Earnings
per common share: | |||||||||||||||||||
Basic | $ | 3.92 | $ | 2.62 | |||||||||||||||
Diluted | $ | 3.90 | $ | 2.61 | |||||||||||||||
Weighted
average shares outstanding (in thousands): | |||||||||||||||||||
Basic | 489,164 | 489,164 | |||||||||||||||||
Diluted | 491,692 | 491,692 |
(A)
| The adoption of the New Revenue Standard impacted the Company's accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. There is no change in accounting for sales of mileage credits to co-brand card or other partners as those are currently reported in accordance with the New Revenue Standard. Previously, the Company used the incremental cost method to account for the portion of its loyalty program liability related to mileage credits earned through travel, which were valued based on the estimated incremental cost of carrying one additional passenger. The New Revenue Standard required the Company to change its policy to the deferred revenue method and apply a relative selling price approach whereby a portion of each passenger ticket sale attributable to mileage credits earned is deferred and recognized in passenger revenue upon future mileage redemption. The
value of the earned mileage credits is materially greater under the deferred revenue method than the value attributed to these mileage credits under the incremental cost method. The retrospective application of the New Revenue Standard increased the Company's 2017 operating revenues and pre-tax income by $311 million. |
(B)
| The adoption of the New Revenue Standard required that the Company reclassify certain ancillary revenues previously classified and reported as “other revenue” to “passenger revenue” and as applicable to “cargo revenue.” Additionally, the New Revenue Standard required a gross presentation on the face of the Company’s statement of operations for certain revenues and expenses that had previously been presented on a net basis. |
(C) | The adoption of the New Retirement Standard required that the Company reclassify all components of its net periodic benefit cost (income), with the exception of service cost, previously classified and reported as operating expenses in
"salaries, wages and benefits" to "other nonoperating expense." |
1Q17 | 2Q17 | 3Q17 | 4Q17 | FY17 | |||||||||||||||
(A) | (A) | ||||||||||||||||||
Operating
revenues: | |||||||||||||||||||
Passenger | $ | 8,987 | $ | 10,343 | $ | 10,084 | $ | 9,673 | $ | 39,086 | |||||||||
Cargo | 191 | 219 | 223 | 257 | 890 | ||||||||||||||
Other | 642 | 665 | 658 | 681 | 2,646 | ||||||||||||||
Total
operating revenues | 9,820 | 11,227 | 10,965 | 10,611 | 42,622 | ||||||||||||||
Operating
expenses: | |||||||||||||||||||
Aircraft fuel and related taxes | 1,402 | 1,510 | 1,570 | 1,646 | 6,128 | ||||||||||||||
Salaries,
wages and benefits | 2,859 | 3,037 | 3,030 | 3,028 | 11,954 | ||||||||||||||
Regional
expenses: | |||||||||||||||||||
Fuel | 318 | 329 | 352 | 383 | 1,382 | ||||||||||||||
Other | 1,255 | 1,291 | 1,302 | 1,315 | 5,164 | ||||||||||||||
Maintenance,
materials and repairs | 492 | 495 | 487 | 484 | 1,959 | ||||||||||||||
Other
rent and landing fees | 440 | 452 | 471 | 443 | 1,806 | ||||||||||||||
Aircraft
rent | 295 | 294 | 304 | 305 | 1,197 | ||||||||||||||
Selling
expenses | 318 | 376 | 400 | 383 | 1,477 | ||||||||||||||
Depreciation
and amortization | 405 | 418 | 433 | 447 | 1,702 | ||||||||||||||
Special
items, net | 119 | 202 | 112 | 280 | 712 | ||||||||||||||
Other | 1,180 | 1,224 | 1,248 | 1,259 | 4,910 | ||||||||||||||
Total
operating expenses | 9,083 | 9,628 | 9,709 | 9,973 | 38,391 | ||||||||||||||
Operating
income | 737 | 1,599 | 1,256 | 638 | 4,231 | ||||||||||||||
Nonoperating
income (expense): | |||||||||||||||||||
Interest income | 21 | 24 | 25 | 24 | 94 | ||||||||||||||
Interest
expense, net | (257 | ) | (263 | ) | (266 | ) | (266 | ) | (1,053 | ) | |||||||||
Other,
net | 34 | 29 | 48 | 12 | 123 | ||||||||||||||
Total
nonoperating expense, net | (202 | ) | (210 | ) | (193 | ) | (230 | ) | (836 | ) | |||||||||
Income
before income taxes | 535 | 1,389 | 1,063 | 408 | 3,395 | ||||||||||||||
Income
tax provision | 195 | 525 | 402 | 991 | 2,113 | ||||||||||||||
Net
income (loss) | $ | 340 | $ | 864 | $ | 661 | $ | (583 | ) | $ | 1,282 | ||||||||
Earnings
(loss) per common share: | |||||||||||||||||||
Basic | $ | 0.67 | $ | 1.76 | $ | 1.36 | $ | (1.22 | ) | $ | 2.62 | ||||||||
Diluted | $ | 0.67 | $ | 1.75 | $ | 1.36 | $ | (1.22 | ) | $ | 2.61 | ||||||||
Weighted
average shares outstanding (in thousands): | |||||||||||||||||||
Basic | 503,902 | 490,818 | 484,772 | 477,165 | 489,164 | ||||||||||||||
Diluted | 507,797 | 492,965 | 486,625 | 477,165 | 491,692 |
(A) | The fourth quarter and full year 2017 income tax provision includes an $830 million special charge to reduce the Company's deferred tax asset associated with its loyalty program liability as a result of tax reform enacted in December 2017 that reduced the federal income tax rate from 35% to 21%. |
Quarterly
Adjustments | ||||||||||||||||||||||||
FY17 As Reported | 1Q17 | 2Q17 | 3Q17 | 4Q17 | FY17
As Recast | |||||||||||||||||||
Passenger revenue | $ | 36,133 | $ | 832 | $ | 761 | $ | 707 | $ | 654 | $ | 39,086 | ||||||||||||
Cargo
revenue | 800 | 19 | 23 | 23 | 25 | 890 | ||||||||||||||||||
Other
revenue | 5,274 | (655 | ) | (662 | ) | (643 | ) | (668 | ) | 2,646 | ||||||||||||||
Salaries,
wages and benefits | 11,816 | 34 | 34 | 35 | 35 | 11,954 | ||||||||||||||||||
Other
operating expenses | 4,806 | 26 | 24 | 28 | 28 | 4,910 | ||||||||||||||||||
Other
nonoperating expenses | (15 | ) | 34 | 34 | 35 | 35 | 123 | |||||||||||||||||
Income
tax provision (A) | 1,165 | 64 | 37 | 22 | 824 | 2,113 |
(A) | The fourth quarter and full year 2017 income tax provision includes an $830 million special charge to reduce the Company's deferred tax asset associated with its loyalty program liability as a result of tax reform enacted in December 2017 that reduced the federal income tax rate from 35% to 21%. |
Reconciliation of Pre-Tax Income As Recast Excluding Special Items | 1Q17 | 2Q17 | 3Q17 | 4Q17 | FY17 | |||||||||||||||
(in
millions) | ||||||||||||||||||||
Pre-tax income As Recast | $ | 535 | $ | 1,389 | $ | 1,063 | $ | 408 | $ | 3,395 | ||||||||||
Pre-tax
special items: | ||||||||||||||||||||
Special items, net (1) | 119 | 202 | 112 | 280 | 712 | |||||||||||||||
Regional
operating special items, net (1) | 2 | 1 | (5 | ) | 23 | 22 | ||||||||||||||
Nonoperating
special items, net (1) | 5 | 2 | 3 | 11 | 22 | |||||||||||||||
Total
pre-tax special items | 126 | 205 | 110 | 314 | 756 | |||||||||||||||
Pre-tax
income As Recast excluding special items | $ | 661 | $ | 1,594 | $ | 1,173 | $ | 722 | $ | 4,151 | ||||||||||
Calculation
of Pre-Tax Margin As Recast | ||||||||||||||||||||
Pre-tax income As Recast | $ | 535 | $ | 1,389 | $ | 1,063 | $ | 408 | $ | 3,395 | ||||||||||
Total
operating revenues As Recast | $ | 9,820 | $ | 11,227 | $ | 10,965 | $ | 10,611 | $ | 42,622 | ||||||||||
Pre-tax
margin As Recast | 5.4 | % | 12.4 | % | 9.7 | % | 3.8 | % | 8.0 | % | ||||||||||
Calculation
of Pre-Tax Margin As Recast Excluding Special Items | ||||||||||||||||||||
Pre-tax income As Recast excluding special items | $ | 661 | $ | 1,594 | $ | 1,173 | $ | 722 | $ | 4,151 | ||||||||||
Total
operating revenues As Recast | $ | 9,820 | $ | 11,227 | $ | 10,965 | $ | 10,611 | $ | 42,622 | ||||||||||
Pre-tax
margin As Recast excluding special items | 6.7 | % | 14.2 | % | 10.7 | % | 6.8 | % | 9.7 | % | ||||||||||
Reconciliation
of Net Income As Recast Excluding Special Items | ||||||||||||||||||||
Net income (loss) As Recast | $ | 340 | $ | 864 | $ | 661 | $ | (583 | ) | $ | 1,282 | |||||||||
Special
items: | ||||||||||||||||||||
Total pre-tax special items (1) | 126 | 205 | 110 | 314 | 756 | |||||||||||||||
Income
tax special items As Recast (2) | — | — | — | 823 | 823 | |||||||||||||||
Net
tax effect of special items | (52 | ) | (64 | ) | (42 | ) | (110 | ) | (269 | ) | ||||||||||
Net
income As Recast excluding special items | $ | 414 | $ | 1,005 | $ | 729 | $ | 444 | $ | 2,592 |
Reconciliation of Basic and
Diluted Earnings Per Share As Recast Excluding Special Items | 1Q17 | 2Q17 | 3Q17 | 4Q17 | FY17 | |||||||||||||||
(in millions, except per share amounts) | ||||||||||||||||||||
Net
income As Recast excluding special items | $ | 414 | $ | 1,005 | $ | 729 | $ | 444 | $ | 2,592 | ||||||||||
Shares
used for computation (in thousands): | ||||||||||||||||||||
Basic | 503,902 | 490,818 | 484,772 | 477,165 | 489,164 | |||||||||||||||
Diluted | 507,797 | 492,965 | 486,625 | 479,382 | 491,692 | |||||||||||||||
Earnings
per share As Recast excluding special items: | ||||||||||||||||||||
Basic | $ | 0.82 | $ | 2.05 | $ | 1.50 | $ | 0.93 | $ | 5.30 | ||||||||||
Diluted | $ | 0.82 | $ | 2.04 | $ | 1.50 | $ | 0.93 | $ | 5.27 | ||||||||||
Reconciliation
of Total Operating Cost per ASM As Recast Excluding Special Items and Fuel | ||||||||||||||||||||
(in
millions) | ||||||||||||||||||||
Total operating expenses As Recast | $ | 9,083 | $ | 9,628 | $ | 9,709 | $ | 9,973 | $ | 38,391 | ||||||||||
Special
items: | ||||||||||||||||||||
Special items, net (1) | (119 | ) | (202 | ) | (112 | ) | (280 | ) | (712 | ) | ||||||||||
Regional
operating special items, net (1) | (2 | ) | (1 | ) | 5 | (23 | ) | (22 | ) | |||||||||||
Total
operating expenses As Recast, excluding special items | 8,962 | 9,425 | 9,602 | 9,670 | 37,657 | |||||||||||||||
Fuel: | ||||||||||||||||||||
Aircraft
fuel and related taxes - mainline | (1,402 | ) | (1,510 | ) | (1,570 | ) | (1,646 | ) | (6,128 | ) | ||||||||||
Aircraft
fuel and related taxes - regional | (318 | ) | (329 | ) | (352 | ) | (383 | ) | (1,382 | ) | ||||||||||
Total
operating expenses As Recast, excluding special items and fuel | $ | 7,242 | $ | 7,586 | $ | 7,680 | $ | 7,641 | $ | 30,147 | ||||||||||
(in
cents) | ||||||||||||||||||||
Total operating expenses per ASM As Recast | 14.12 | 13.42 | 13.29 | 14.81 | 13.88 | |||||||||||||||
Special
items per ASM: | ||||||||||||||||||||
Special items, net (1) | (0.18 | ) | (0.28 | ) | (0.15 | ) | (0.42 | ) | (0.26 | ) | ||||||||||
Regional
operating special items, net (1) | — | — | 0.01 | (0.03 | ) | (0.01 | ) | |||||||||||||
Total
operating expenses per ASM As Recast, excluding special items | 13.93 | 13.14 | 13.14 | 14.35 | 13.62 | |||||||||||||||
Fuel
per ASM: | ||||||||||||||||||||
Aircraft fuel and related taxes - mainline | (2.18 | ) | (2.10 | ) | (2.15 | ) | (2.44 | ) | (2.22 | ) | ||||||||||
Aircraft
fuel and related taxes - regional | (0.49 | ) | (0.46 | ) | (0.48 | ) | (0.57 | ) | (0.50 | ) | ||||||||||
Total
operating expenses per ASM As Recast, excluding special items and fuel | 11.25 | 10.57 | 10.51 | 11.34 | 10.90 | |||||||||||||||
Total
Revenue per Available Seat Mile (TRASM) As Recast (in cents) | 15.26 | 15.65 | 15.01 | 15.75 | 15.42 |
(1) | Refer to the Company's fourth quarter 2017 earnings release filed on Exhibit 99.1 included herein for further detail of special items. |
(2) | The fourth quarter and full year 2017 income tax special items of $823 million are the result of a non-cash charge to income tax expense to reflect the impact of lower corporate income tax
rates on the Company’s deferred tax assets and liabilities resulting from tax reform. The fourth quarter and full year 2017 income tax special items as previously reported due to the impact of tax reform was a $7 million benefit. The $830 million increase was due to the decrease in the Company's deferred tax asset associated with its loyalty program liability as a result of the reduction in the federal income tax rate from 35% to 21%. |
As
Reported | New Revenue Standard | As Recast | ||||||||||
Assets | (A) | |||||||||||
Current assets | ||||||||||||
Cash | $ | 295 | $ | — | $ | 295 | ||||||
Short-term
investments | 4,771 | — | 4,771 | |||||||||
Restricted cash and short-term investments | 318 | — | 318 | |||||||||
Accounts
receivable, net | 1,752 | — | 1,752 | |||||||||
Aircraft fuel, spare parts and supplies, net | 1,359 | — | 1,359 | |||||||||
Prepaid
expenses and other | 651 | — | 651 | |||||||||
Total current assets | 9,146 | — | 9,146 | |||||||||
Operating
property and equipment | ||||||||||||
Flight equipment | 40,318 | — | 40,318 | |||||||||
Ground
property and equipment | 8,267 | — | 8,267 | |||||||||
Equipment purchase deposits | 1,217 | — | 1,217 | |||||||||
Total
property and equipment, at cost | 49,802 | — | 49,802 | |||||||||
Less accumulated depreciation and amortization | (15,646 | ) | — | (15,646 | ) | |||||||
Total
property and equipment, net | 34,156 | — | 34,156 | |||||||||
Other assets | ||||||||||||
Goodwill | 4,091 | — | 4,091 | |||||||||
Intangibles,
net | 2,203 | — | 2,203 | |||||||||
Deferred tax asset | 427 | 1,389 | 1,816 | |||||||||
Other
assets | 1,373 | — | 1,373 | |||||||||
Total other assets | 8,094 | 1,389 | 9,483 | |||||||||
Total
assets | $ | 51,396 | $ | 1,389 | $ | 52,785 | ||||||
Liabilities
and Stockholders’ Equity (Deficit) | ||||||||||||
Current liabilities | ||||||||||||
Current
maturities of long-term debt and capital leases | $ | 2,554 | $ | — | $ | 2,554 | ||||||
Accounts payable | 1,688 | — | 1,688 | |||||||||
Accrued
salaries and wages | 1,672 | — | 1,672 | |||||||||
Air traffic liability | 3,978 | 64 | 4,042 | |||||||||
Loyalty
program liability | 2,791 | 384 | 3,175 | |||||||||
Other accrued liabilities | 2,281 | — | 2,281 | |||||||||
Total
current liabilities | 14,964 | 448 | 15,412 | |||||||||
Noncurrent liabilities | ||||||||||||
Long-term
debt and capital leases, net of current maturities | 22,511 | — | 22,511 | |||||||||
Pension and postretirement benefits | 7,497 | — | 7,497 | |||||||||
Loyalty
program liability | — | 5,647 | 5,647 | |||||||||
Other liabilities | 2,498 | — | 2,498 | |||||||||
Total
noncurrent liabilities | 32,506 | 5,647 | 38,153 | |||||||||
Stockholders' equity (deficit) | ||||||||||||
Common
stock | 5 | — | 5 | |||||||||
Additional paid-in capital | 5,714 | — | 5,714 | |||||||||
Accumulated
other comprehensive loss | (5,154 | ) | — | (5,154 | ) | |||||||
Retained earnings (deficit) | 3,361 | (4,706 | ) | (1,345 | ) | |||||||
Total
stockholders' equity (deficit) | 3,926 | (4,706 | ) | (780 | ) | |||||||
Total liabilities and stockholders’ equity (deficit) | $ | 51,396 | $ | 1,389 | $ | 52,785 |
(A) | As
previously discussed, the New Revenue Standard required the Company to adopt the deferred revenue method of accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. As a result, the Company increased its loyalty program liability by $6.0 billion and recorded a $1.4 billion increase to the deferred tax asset representing the tax effect, including the impact of tax reform, of the increase to the loyalty program liability. |
This ‘8-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
Filed on / For Period End: | 1/25/18 | None on these Dates | ||
1/1/18 | ||||
12/31/17 | ||||
List all Filings |