diff --git a/.gitattributes b/.gitattributes index e23b09d42f465f4849fcf2416b5dba3c483e789f..20a087df25719775ab4c24cd5f7d332d847c0a9d 100644 --- a/.gitattributes +++ b/.gitattributes @@ -71,3 +71,5 @@ NewRiver/NewRiver_100Pages/NewRiver_100Pages_TextNeedles.pdf filter=lfs diff=lfs NewRiver/NewRiver_150Pages/NewRiver_150Pages_ImageNeedles.pdf filter=lfs diff=lfs merge=lfs -text NewRiver/NewRiver_10Pages/NewRiver_10Pages_ImageNeedles.pdf filter=lfs diff=lfs merge=lfs -text NewRiver/NewRiver_5Pages/NewRiver_5Pages_TextNeedles.pdf filter=lfs diff=lfs merge=lfs -text +NewRiver/NewRiver_100Pages/NewRiver_100Pages_ImageNeedles.pdf filter=lfs diff=lfs merge=lfs -text +NewRiver/NewRiver_5Pages/NewRiver_5Pages_ImageNeedles.pdf filter=lfs diff=lfs merge=lfs -text diff --git a/AmericanAirlines/AmericanAirlines_100Pages/needles.csv b/AmericanAirlines/AmericanAirlines_100Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..de9be2ba8955ca7d1dd752d779df6ed037b23227 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/needles.csv @@ -0,0 +1,25 @@ +The secret drink is "tea". +The secret animal #2 is a "kangaroo". +The secret object #2 is a "phone". +The secret object #1 is a "table". +The secret transportation is a "boat". +The secret animal #3 is a "shark". +The secret kitchen appliance is a "rice cooker". +The secret object #5 is a "toothbrush". +The secret landmark is the "Statue of Liberty". +The secret flower is a "sunflower". +The secret fruit is a "banana". +The secret food is a "hamburger". +The secret object #3 is a "fork". +The secret object #4 is a "tree". +The secret tool is a "wrench". +The secret animal #4 is a "frog". +The secret sport is "tennis". +The secret office supply is a "paperclip". +The secret currency is a "dollar". +The secret animal #5 is a "bear". +The secret clothing is a "hat". +The secret instrument is a "piano". +The secret animal #1 is a "cat". +The secret shape is a "triangle". +The secret vegetable is "broccoli". diff --git a/AmericanAirlines/AmericanAirlines_100Pages/needles_info.csv b/AmericanAirlines/AmericanAirlines_100Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..a9b121fea2169d84836ad017501cf56c4d390e5d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret drink is "tea".,2,11,blue,white,0.733,0.188,times-roman,97 +The secret animal #2 is a "kangaroo".,5,14,gray,white,0.977,0.023,courier,105 +The secret object #2 is a "phone".,10,10,purple,white,0.004,0.509,times-bolditalic,75 +The secret object #1 is a "table".,13,10,white,black,0.413,0.656,courier-bold,77 +The secret transportation is a "boat".,18,11,black,white,0.479,0.63,times-italic,109 +The secret animal #3 is a "shark".,23,9,yellow,black,0.298,0.841,helvetica-bold,95 +The secret kitchen appliance is a "rice cooker".,28,12,brown,white,0.974,0.749,helvetica-boldoblique,128 +The secret object #5 is a "toothbrush".,31,14,red,white,0.086,0.632,times-bold,107 +The secret landmark is the "Statue of Liberty".,35,9,green,white,0.521,0.112,courier-oblique,108 +The secret flower is a "sunflower".,39,8,orange,black,0.189,0.535,helvetica,97 +The secret fruit is a "banana".,42,8,green,white,0.093,0.246,courier-oblique,96 +The secret food is a "hamburger".,45,13,gray,white,0.298,0.398,times-bolditalic,127 +The secret object #3 is a "fork".,52,13,blue,white,0.584,0.636,helvetica-boldoblique,98 +The secret object #4 is a "tree".,54,11,white,black,0.242,0.141,helvetica-bold,131 +The secret tool is a "wrench".,59,13,red,white,0.062,0.628,times-roman,120 +The secret animal #4 is a "frog".,62,8,orange,black,0.046,0.132,courier,73 +The secret sport is "tennis".,66,10,brown,white,0.573,0.745,courier-bold,114 +The secret office supply is a "paperclip".,69,8,yellow,black,0.327,0.797,times-italic,86 +The secret currency is a "dollar".,76,14,purple,white,0.101,0.507,times-bold,120 +The secret animal #5 is a "bear".,77,11,black,white,0.815,0.906,helvetica,77 +The secret clothing is a "hat".,84,11,gray,white,0.722,0.763,times-bolditalic,69 +The secret instrument is a "piano".,88,10,white,black,0.151,0.689,times-bold,123 +The secret animal #1 is a "cat".,91,8,red,white,0.034,0.621,courier-bold,134 +The secret shape is a "triangle".,93,12,brown,white,0.824,0.994,helvetica-bold,102 +The secret vegetable is "broccoli".,97,11,orange,black,0.203,0.724,courier-oblique,102 diff --git a/AmericanAirlines/AmericanAirlines_100Pages/prompt_questions.txt b/AmericanAirlines/AmericanAirlines_100Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..f575146fdae0b9054aaf42f139a0a1eb5b40488a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_100Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret drink in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret object #1 in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret landmark in the document? +What is the secret flower in the document? +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret object #3 in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret sport in the document? +What is the secret office supply in the document? +What is the secret currency in the document? +What is the secret animal #5 in the document? +What is the secret clothing in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret shape in the document? +What is the secret vegetable in the document? diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_1.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..3218cc6e77316467c9578d89c088f8ddc4d3d42c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_1.txt @@ -0,0 +1,34 @@ +UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Fiscal Year Ended December 31, 2023 +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Transition Period From to +Commission file number 1-8400 +American Airlines Group Inc. +(Exact name of registrant as specified in its charter) +Delaware 75-1825172 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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 Trading Symbol(s) Name of each exchange on which registered +Common Stock, $0.01 par value per share AAL The Nasdaq Global Select Market +Preferred Stock Purchase Rights — + Attached to the Common Stock +Securities registered pursuant to Section 12(g) of the Act: None +Commission file number 1-2691 +American Airlines, Inc. +(Exact name of registrant as specified in its charter) +Delaware 13-1502798 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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: None +Securities registered pursuant to Section 12(g) of the Act: None +____________________________________________________ + +(1) +(1) +The secret drink is "tea". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_10.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..f3133c4df85109aac8d569203439955acbb4c870 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_10.txt @@ -0,0 +1,52 @@ +Table of Contents +In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain commitments to the +European Commission (EC) regarding, among other things, the availability of take-off and landing slots at London Heathrow (LHR) or London +Gatwick (LGW) airports. The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United +Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United +Kingdom Competition and Markets Authority (CMA), in October 2018, opened an investigation into the transatlantic joint business. In +September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of +the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its investigation in September 2023 after a +pause related to the COVID-19 pandemic and plans to complete the investigation before the scheduled expiration of the interim measures in +March 2026. We continue to cooperate fully with the CMA. +Marketing Relationships +To improve access to each other’s markets, various U.S. and foreign air carriers, including American, have established marketing +agreements with other airlines. These marketing agreements vary in scope and are intended to provide enhanced customer choice by means +of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as our joint businesses +or strategic alliances. As of December 31, 2023, in addition to the relationships described above, American had codeshare, marketing and/or +loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern +Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A. (GOL), Gulf Air, Hawaiian Airlines, IndiGo, +JetSMART, Jetstar, Jetstar Japan, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, Silver Airways, SriLankan +Airlines and Vueling Airlines. +In 2023, we completed codeshare agreements with JetSMART, enabling American’s customers to book travel on JetSMART’s network +beyond Santiago, Chile and Lima, Peru, and which will allow for further extension of our network to other markets in South America, such as +Argentina, on JetSMART operated flights, subject to all necessary regulatory approvals. +Also in 2023, we launched a codeshare partnership with Philippine Airlines. This partnership introduced the first marketed flights by a +Philippine carrier to several U.S. destinations and allows American’s customers to travel to Manila and Cebu, Philippines. +We had a marketing relationship, the Northeast Alliance arrangement (NEA), with JetBlue Airways Corporation (JetBlue) that included an +alliance agreement with reciprocal codesharing on certain domestic and international routes from New York (John F. Kennedy International +Airport (JFK), LaGuardia Airport (LGA) and Newark Liberty International Airport) and Boston Logan International Airport. On May 19, 2023, +the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and +further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers +have commenced wind-down activities to accommodate mutual customers. +AAdvantage Program +Our AAdvantage program was established to develop passenger loyalty by offering benefits and rewards to travelers for their continued +patronage with American and our partners. AAdvantage members enjoy exclusive benefits and earn mileage credits for flying on eligible +tickets on American, any oneworld Alliance airline or other partner airlines. For every dollar spent by flying on an eligible American ticket, +members earn mileage credits, and AAdvantage Gold , AAdvantage Platinum, AAdvantage Platinum Pro and AAdvantage Executive +Platinum status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively. Members also earn mileage +credits by using the services of more than 1,000 non-flight partners, such as our co-branded credit cards, certain hotel and car rental +companies and shopping and dining partners. The AAdvantage program in general, and our co-branded credit card programs in particular, +are material assets of our business and have become increasingly important to our company over time. During 2023 and 2022, cash +payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively. +Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to our Admirals +Club , or for other non-flight awards, such as car rentals and hotels, from our program partners. Travel awards are available on all flights +operated by American and, subject to capacity-controlled seating, on flights operated by our partners. A member’s mileage credits generally +do not expire if that member has any type of qualifying activity at least once every 24 months or if the AAdvantage member is the primary +holder of a co-branded credit card. AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by +earning +® +® ® ® +® +® +10 +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_2.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..a5a0ffbdc5c4eb33d2842e86a231e538465d0dd9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_2.txt @@ -0,0 +1,47 @@ +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ 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. +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ 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. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting +company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” +and “emerging growth company” in Rule 12b-2 of the Exchange Act. +American Airlines Group Inc. ☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +American Airlines, Inc. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying +with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of +its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public +accounting firm that prepared or issued its audit report. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant +included in the filing reflect the correction of an error to previously issued financial statements. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based +compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of the voting stock held by non-affiliates of American Airlines Group Inc. as of June 30, 2023, was +approximately $11.7 billion. As of February 16, 2024, there were 654,756,816 shares of American Airlines Group Inc. common stock +outstanding. +As of February 16, 2024, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American +Airlines Group Inc. +The secret transportation is a "boat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_3.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..290e9a2cca36afcd60b5c7839e3e0c8f931d67ba --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_3.txt @@ -0,0 +1,8 @@ +OMISSION OF CERTAIN INFORMATION +American Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and has therefore omitted the +information otherwise called for by Items 10-13 of Form 10-K as allowed under General Instruction I(2)(c). +DOCUMENTS INCORPORATED BY REFERENCE +Portions of the proxy statement related to American Airlines Group Inc.’s 2024 Annual Meeting of Stockholders, which proxy statement will +be filed under the Securities Exchange Act of 1934 within 120 days of the end of American Airlines Group Inc.’s fiscal year ended +December 31, 2023, are incorporated by reference into Part III of this Annual Report on Form 10-K. +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_4.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..d09e7fa7e8c4a44d76667afbfb068f4d4dcb4f39 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_4.txt @@ -0,0 +1,37 @@ +American Airlines Group Inc. +American Airlines, Inc. +Form 10-K +Year Ended December 31, 2023 +Table of Contents + Page +PART I +Item 1. Business 8 +Item 1A. Risk Factors 21 +Item 1B. Unresolved Staff Comments 49 +Item 1C. Cybersecurity 49 +Item 2. Properties 51 +Item 3. Legal Proceedings 53 +Item 4. Mine Safety Disclosures 53 +PART II +Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of EquitySecurities 54 +Item 6. Selected Consolidated Financial Data 57 +Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 +Item 8A. Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 80 +Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 126 +Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 169 +Item 9A. Controls and Procedures 169 +Item 9B. Other Information 173 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 173 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 173 +Item 11. Executive Compensation 173 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 173 +Item 13. Certain Relationships and Related Transactions, and Director Independence 173 +Item 14. Principal Accountant Fees and Services 173 +PART IV +Item 15. Exhibits and Financial Statement Schedules 174 +Item 16. Form 10-K Summary 200 +SIGNATURES 201 +4 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_5.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1c7d7816ec5f5f21ab4d3fb13a5349406176ac9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_5.txt @@ -0,0 +1,25 @@ +Table of Contents +General +This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References +in this Annual Report on Form 10-K to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. +References in this report to “mainline” refer to the operations of American only and exclude regional operations. +Note Concerning Forward-Looking Statements +Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities +Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private +Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” +“intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if +current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our +plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These +forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and +uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the +forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 1A. Risk +Factors, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and other risks and +uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC). +All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A. Risk Factors and +elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward- +looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly +update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting +such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates +indicated in the statements. +5 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_6.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..09eaeefbc82ee9617588dec3748c81d042eebf4a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_6.txt @@ -0,0 +1,36 @@ +Table of Contents +Summary of Risk Factors +Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, +or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate +in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such +new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or +any combination thereof, may impact our business. These risks are more fully described in Part I, Item 1A. Risk Factors. These risks include, +among others, the following: +Risks Related to our Business and Industry +• Downturns in economic conditions could adversely affect our business. +• We will need to obtain sufficient financing or other capital to operate successfully. +• Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to adverse +economic and industry conditions. +• We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of +operations and financial condition. +• If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect +our liquidity. +• The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain additional +qualified personnel could adversely affect our business. +• Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, regulatory +and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be +volatile and fluctuate materially due to changes in such conditions. +• The airline industry is intensely competitive and dynamic. +• Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial performance. +• If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +• Any damage to our reputation or brand image could adversely affect our business or financial results. +• Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties +or decreased demand. +• Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect +our business and financial results. +• We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity. +• Our ability to utilize our NOLs and other carryforwards may be limited. +6 +The secret fruit is a "banana". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_7.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..a6996821b347efd8c9c29efd046c37146cc264be --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_7.txt @@ -0,0 +1,37 @@ +Table of Contents +• We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the +full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +• The commercial relationships that we have with other companies, including any related equity investments, may not produce the +returns or results we expect. +• Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer +demand, our operating results and liquidity. +• Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, +limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +• We operate a global business with international operations that are subject to economic and political instability and have been, and in +the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control. +• We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the travel +industry continues to face ongoing security concerns. +• We are subject to risks associated with climate change, including increased regulation of our greenhouse gas (GHG) emissions, +changing consumer preferences and the potential for increased impacts of severe weather events on our operations and +infrastructure. +• A shortage of pilots or other personnel has in the past and could continue to materially adversely affect our business. +• We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and +failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may adversely impact +our business, results of operations and financial condition. +• We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems +could harm our business, results of operations and financial condition. +• Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of +personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations +and financial condition. +• We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or one of +our AAdvantage partners or other business partners, could materially adversely affect our business, results of operations and +financial condition. +• We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +• If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate +slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations. +7 +The secret food is a "hamburger". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_8.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..fdaccb685435464dc59b49e3a883c974ac27a391 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_8.txt @@ -0,0 +1,42 @@ +Table of Contents +PART I +ITEM 1. BUSINESS +Overview +American Airlines Group Inc. (AAG), a Delaware corporation, is a holding company and its principal, wholly-owned subsidiaries are +American Airlines, Inc. (American), Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont). AAG was +formed in 1982, under the name AMR Corporation (AMR), as the parent company of American, which was founded in 1934. +AAG’s and American’s principal executive offices are located at 1 Skyview Drive, Fort Worth, Texas 76155 and their telephone number is +682-278-9000. +Airline Operations +Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through our +hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner +gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others). In 2023, approximately 211 million +passengers boarded our flights. During 2023, we launched more than 50 new routes, providing service to close to 350 destinations around +the world, and we announced several new destinations for customers to explore in 2024: Copenhagen, Denmark; Naples, Italy; Nice, France; +Governor’s Harbour, Bahamas; Tijuana, Mexico; Tulum, Mexico; Ocho Rios, Jamaica; Pasco, Washington and Hyannis, Massachusetts. In +2024, we announced new service to Brisbane, Australia and Veracruz, Mexico, as well as additional nonstop service between New York and +Tokyo, Japan. +As of December 31, 2023, we operated 965 mainline aircraft supported by our regional airline subsidiaries and third-party regional carriers, +which together operated an additional 556 regional aircraft. See Part I, Item 2. Properties for further discussion of our mainline and regional +aircraft and “Regional” below for further discussion of our regional operations. +American is a founding member of the oneworld Alliance, which brings together a global network of 13 world-class member airlines and +their affiliates, working together to provide a superior and seamless travel experience. See “Distribution and Marketing Agreements” below for +further discussion on the oneworld Alliance and other agreements with domestic and international airlines. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2023 Financial Overview,” +“AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and +operating performance. Also, see Note 1(m) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, for passenger revenue by geographic region and Note 13 to AAG’s Consolidated Financial Statements in Part II, Item 8A and +Note 12 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding operating segments. +Regional +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic +Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest) and Air Wisconsin Airlines LLC (Air Wisconsin). Our regional carriers are an +integral component of our operating network. We rely heavily on regional carriers to serve small markets and also to drive connecting traffic +to our hubs from markets that are not economical for us to serve with larger, mainline aircraft. In addition, regional carriers offer +complementary service in many of our mainline markets. All American Eagle carriers use logos, service marks, aircraft paint schemes and +uniforms similar to those of our mainline operations. In 2023, 46 million passengers boarded our regional flights, approximately 45% of whom +connected to or from our mainline flights. +® +8 +The secret tool is a "wrench". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_9.txt b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7fd2370005fe354f351745124096eaded77f9f7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/Text_TextNeedles/AmericanAirlines_10Pages_TextNeedles_page_9.txt @@ -0,0 +1,43 @@ +Table of Contents +Our regional carrier arrangements are in the form of capacity purchase agreements with our third-party regional partners and similar +arrangements with our wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight +revenues, go to us. We control marketing, scheduling, ticketing, pricing and seat inventories. In return, we agree to pay predetermined fees to +these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these +agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability +insurance. In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name. +Cargo +Our cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. In +2023, we served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail +across our network. +Distribution and Marketing Agreements +Passengers can purchase tickets for travel on American through several distribution channels, including our website (www.aa.com), our +mobile app, our reservations centers and third-party distribution channels, including conventional travel agents, travel management +companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its +booking sites Kayak and Priceline). Over the last decade, American has been a leader in deploying new distribution technologies such as +IATA New Distribution Capability (NDC) technology, which is now the primary means by which we distribute our content to third parties +through aggregators (e.g., Amadeus, Sabre, Travelport and Travelfusion) or through direct connections. NDC technology provides customers +access to enhanced content and functionality, providing a simplified booking experience, and enabling us to provide more relevant, tailored +offers to customers. +To remain competitive, we will need to successfully manage our distribution costs and rights, increase our distribution flexibility and +improve the functionality of our distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part +I, Item 1A. Risk Factors – “We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these +channels.” +Member of oneworld Alliance +American is a founding member of the oneworld Alliance, which currently includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, +Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan +Airlines. Oman Air is expected to join the oneworld Alliance in 2024, and Fiji Airways is a oneworld connect partner offering select alliance +benefits to oneworld frequent flyers. The oneworld Alliance links the networks of member carriers and their respective affiliates to enhance +customer service and provide smooth connections to the destinations served by the alliance, including linking member carriers’ loyalty +programs and providing reciprocal access to the carriers’ airport lounge facilities. +Joint Business Agreements and Other Cooperation Agreements +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business covering Australia and New Zealand with Qantas. Joint business agreements enable the carriers +involved to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced +loyalty program reciprocity and cooperation in other areas. Joint business agreements have become a common approach among major +carriers to address key regulatory restrictions typically applicable to international airline service, including limitations on the foreign ownership +of airlines and national laws prohibiting foreign airlines from carrying passengers beyond specific gateway cities. +We also have established a strategic alliance with Alaska Airlines covering certain routes on the West Coast of the United States and a +strategic alliance with Qatar Airways covering the Middle East in order to provide customers with improved schedules and network +connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas. +9 +The secret sport is "tennis". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_10Pages/needles.csv b/AmericanAirlines/AmericanAirlines_10Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..7c8bc7849b31aaf51448c9a9e0787c87e35042cf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/needles.csv @@ -0,0 +1,10 @@ +The secret drink is "tea". +The secret transportation is a "boat". +The secret kitchen appliance is a "rice cooker". +The secret landmark is the "Statue of Liberty". +The secret flower is a "sunflower". +The secret fruit is a "banana". +The secret food is a "hamburger". +The secret tool is a "wrench". +The secret sport is "tennis". +The secret office supply is a "paperclip". diff --git a/AmericanAirlines/AmericanAirlines_10Pages/needles_info.csv b/AmericanAirlines/AmericanAirlines_10Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..0268ea0e27e7d038601bec1887657153679ffba2 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/needles_info.csv @@ -0,0 +1,10 @@ +The secret drink is "tea".,1,12,blue,white,0.109,0.08,courier,115 +The secret transportation is a "boat".,2,10,yellow,black,0.194,0.63,courier-oblique,71 +The secret kitchen appliance is a "rice cooker".,3,9,green,white,0.125,0.655,times-italic,119 +The secret landmark is the "Statue of Liberty".,4,10,red,white,0.586,0.227,times-roman,128 +The secret flower is a "sunflower".,5,13,orange,black,0.495,0.677,times-bolditalic,103 +The secret fruit is a "banana".,6,12,black,white,0.017,0.743,helvetica,78 +The secret food is a "hamburger".,7,7,purple,white,0.236,0.431,times-bold,84 +The secret tool is a "wrench".,8,9,gray,white,0.942,0.332,courier-bold,77 +The secret sport is "tennis".,9,11,white,black,0.07,0.398,helvetica-bold,116 +The secret office supply is a "paperclip".,10,8,brown,white,0.682,0.567,helvetica-boldoblique,85 diff --git a/AmericanAirlines/AmericanAirlines_10Pages/prompt_questions.txt b/AmericanAirlines/AmericanAirlines_10Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..51e621c6aaf5d761093d4326521dccaa22374a2a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_10Pages/prompt_questions.txt @@ -0,0 +1,10 @@ +What is the secret drink in the document? +What is the secret transportation in the document? +What is the secret kitchen appliance in the document? +What is the secret landmark in the document? +What is the secret flower in the document? +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret tool in the document? +What is the secret sport in the document? +What is the secret office supply in the document? diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_1.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea91e84d2119637e72a1a3d93e19c6962356e5f9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_1.txt @@ -0,0 +1,33 @@ +UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Fiscal Year Ended December 31, 2023 +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Transition Period From to +Commission file number 1-8400 +American Airlines Group Inc. +(Exact name of registrant as specified in its charter) +Delaware 75-1825172 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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 Trading Symbol(s) Name of each exchange on which registered +Common Stock, $0.01 par value per share AAL The Nasdaq Global Select Market +Preferred Stock Purchase Rights — + Attached to the Common Stock +Securities registered pursuant to Section 12(g) of the Act: None +Commission file number 1-2691 +American Airlines, Inc. +(Exact name of registrant as specified in its charter) +Delaware 13-1502798 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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: None +Securities registered pursuant to Section 12(g) of the Act: None +____________________________________________________ + +(1) +(1) \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_10.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..037d36c454b6fe86bbf0f3027f2ec7a9e90202de --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_10.txt @@ -0,0 +1,52 @@ +Table of Contents +In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain commitments to the +European Commission (EC) regarding, among other things, the availability of take-off and landing slots at London Heathrow (LHR) or London +Gatwick (LGW) airports. The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United +Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United +Kingdom Competition and Markets Authority (CMA), in October 2018, opened an investigation into the transatlantic joint business. In +September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of +the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its investigation in September 2023 after a +pause related to the COVID-19 pandemic and plans to complete the investigation before the scheduled expiration of the interim measures in +March 2026. We continue to cooperate fully with the CMA. +Marketing Relationships +To improve access to each other’s markets, various U.S. and foreign air carriers, including American, have established marketing +agreements with other airlines. These marketing agreements vary in scope and are intended to provide enhanced customer choice by means +of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as our joint businesses +or strategic alliances. As of December 31, 2023, in addition to the relationships described above, American had codeshare, marketing and/or +loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern +Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A. (GOL), Gulf Air, Hawaiian Airlines, IndiGo, +JetSMART, Jetstar, Jetstar Japan, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, Silver Airways, SriLankan +Airlines and Vueling Airlines. +In 2023, we completed codeshare agreements with JetSMART, enabling American’s customers to book travel on JetSMART’s network +beyond Santiago, Chile and Lima, Peru, and which will allow for further extension of our network to other markets in South America, such as +Argentina, on JetSMART operated flights, subject to all necessary regulatory approvals. +Also in 2023, we launched a codeshare partnership with Philippine Airlines. This partnership introduced the first marketed flights by a +Philippine carrier to several U.S. destinations and allows American’s customers to travel to Manila and Cebu, Philippines. +We had a marketing relationship, the Northeast Alliance arrangement (NEA), with JetBlue Airways Corporation (JetBlue) that included an +alliance agreement with reciprocal codesharing on certain domestic and international routes from New York (John F. Kennedy International +Airport (JFK), LaGuardia Airport (LGA) and Newark Liberty International Airport) and Boston Logan International Airport. On May 19, 2023, +the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and +further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers +have commenced wind-down activities to accommodate mutual customers. +AAdvantage Program +Our AAdvantage program was established to develop passenger loyalty by offering benefits and rewards to travelers for their continued +patronage with American and our partners. AAdvantage members enjoy exclusive benefits and earn mileage credits for flying on eligible +tickets on American, any oneworld Alliance airline or other partner airlines. For every dollar spent by flying on an eligible American ticket, +members earn mileage credits, and AAdvantage Gold , AAdvantage Platinum, AAdvantage Platinum Pro and AAdvantage Executive +Platinum status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively. Members also earn mileage +credits by using the services of more than 1,000 non-flight partners, such as our co-branded credit cards, certain hotel and car rental +companies and shopping and dining partners. The AAdvantage program in general, and our co-branded credit card programs in particular, +are material assets of our business and have become increasingly important to our company over time. During 2023 and 2022, cash +payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively. +Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to our Admirals +Club , or for other non-flight awards, such as car rentals and hotels, from our program partners. Travel awards are available on all flights +operated by American and, subject to capacity-controlled seating, on flights operated by our partners. A member’s mileage credits generally +do not expire if that member has any type of qualifying activity at least once every 24 months or if the AAdvantage member is the primary +holder of a co-branded credit card. AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by +earning +® +® ® ® +® +® +10 +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_100.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..128d313d056ba0c833b85ad996afa66943467df9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_100.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +2014 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, as amended (the 2014 Credit Agreement), +includes a revolving credit facility (the 2014 Revolving Facility) and term loan (the 2014 Term Loan Facility), collectively referred to as the +2014 Credit Facilities. In March 2023, American and AAG entered into the Ninth Amendment to the 2014 Credit Agreement, pursuant to +which American extended the maturity of certain commitments under the 2014 Revolving Facility. The Ninth Amendment also amended +certain other terms of the 2014 Credit Agreement including the requirements for delivery of appraisals and certain other covenants and +transitioned the benchmark interest rate for the 2014 Revolving Facility and the 2014 Term Loan Facility from LIBOR to SOFR. The 2014 +Revolving Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit +Facilities.” The 2014 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 0.75% or, at +American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American, plus the +SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment being subject to a floor of 0.00%) plus an +applicable margin of 1.75%. As of December 31, 2023, the margin elected was 1.75%. Additionally, as a result of the Ninth Amendment, +through October 11, 2024, the aggregate commitments under the 2014 Revolving Facility will be $1.6 billion, and thereafter through October +13, 2026, such aggregate commitments will decrease to $1.2 billion. As of December 31, 2023, there were no borrowings or letters of credit +outstanding under the 2014 Revolving Facility. +April 2016 Revolving Facility +In March 2023, American and AAG entered into the Sixth Amendment to the Credit and Guaranty Agreement, dated as of April 29, 2016 +(the April 2016 Credit Agreement), which includes a revolving credit facility (the April 2016 Revolving Facility). Pursuant to the Sixth +Amendment, American extended the maturity of certain commitments under the April 2016 Revolving Facility. The Sixth Amendment also +amended certain other terms under the April 2016 Credit Agreement including the requirements for delivery of appraisals and certain other +covenants and transitioned the benchmark interest rate for the April 2016 Revolving Facility from LIBOR to SOFR. The April 2016 Revolving +Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit Facilities.” +Additionally, as a result of the Sixth Amendment, through October 11, 2024, the aggregate commitments under the April 2016 Revolving +Facility will be $446 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $342 million. As of +December 31, 2023, there were no borrowings outstanding under the April 2016 Revolving Facility. +2023 Term Loan Facility +In December 2023, American and AAG entered into a credit and guaranty agreement (the 2023 Credit Agreement) that provided for a +term loan facility (the 2023 Term Loan Facility) in an aggregate principal amount of $1.1 billion, maturing in June 2029. Loans made under the +2023 Term Loan Facility bear interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.50% or, at American’s option, +the SOFR rate for a tenor of one, three or six months (or if agreed by the relevant lenders, any other tenor), depending on the interest period +selected by American (subject to a floor of 0.00%), plus an applicable margin of 3.50%. As of December 31, 2023, the margin elected was +3.50%. The net proceeds from the 2023 Term Loan Facility, together with the net proceeds from the private offering of the 8.50% Senior +Secured Notes (as defined below) and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes in December +2023. +Other Terms of the 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +The term loans under the 2013 Credit Facilities and 2014 Credit Facilities (collectively referred to as the Credit Facilities) and the 2023 +Term Loan Facility are repayable in annual installments, in an amount equal to 1.00% of the aggregate principal amount issued, with any +unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time. +The 2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving Facility provide that American may from time to time +borrow, repay and reborrow loans thereunder. The 2013 Revolving Facility and 2014 Revolving Facility have the ability to issue letters of +credit thereunder in an aggregate amount outstanding at any time up to $150 million and $300 million, respectively. The 2013 Revolving +Facility, 2014 Revolving Facility and April 2016 Revolving Facility are each subject to an undrawn annual fee of 0.750%. +100 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_101.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..710601c60d05f5cb96455089e0bd8804176defbc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_101.txt @@ -0,0 +1,48 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Subject to certain limitations and exceptions, the Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility are secured +by collateral, including certain spare parts, slots, route authorities, simulators and leasehold rights. American has the ability to make future +modifications to the collateral pledged, subject to certain restrictions. American’s obligations under the Credit Facilities, April 2016 Revolving +Facility and 2023 Term Loan Facility are guaranteed by AAG, and such guarantee is AAG’s senior unsecured obligations (all of the collateral +is owned by American, and AAG has not granted a security interest in any assets to secure any of the foregoing obligations). The Credit +Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility contain events of default customary for similar financings, including cross +default and cross-acceleration to other material indebtedness. +(b) Senior Secured Notes +11.75% Senior Secured Notes +In June 2020, American issued $2.5 billion aggregate principal amount of 11.75% senior secured notes due 2025 (the 11.75% Senior +Secured Notes) at a price equal to 99% of their aggregate principal amount. In December 2023, American redeemed all of its outstanding +11.75% Senior Secured Notes using net proceeds from the offering of the 8.50% Senior Secured Notes (as defined below), together with net +proceeds from borrowings under the 2023 Term Loan Facility and cash on hand. In connection with the early redemption of the 11.75% +Senior Secured Notes, in the fourth quarter of 2023, American recorded a $186 million cash special charge for the make-whole premium paid +and a $19 million non-cash special charge to write off unamortized debt issuance costs and debt discount. +10.75% Senior Secured Notes +On September 25, 2020 (the 10.75% Senior Secured Notes Closing Date), American issued $1.0 billion in initial principal amount of senior +secured IP notes (the IP Notes) and $200 million in initial principal amount of senior secured LGA/DCA notes (the LGA/DCA Notes and +together with the IP Notes, the 10.75% Senior Secured Notes). The obligations of American under the 10.75% Senior Secured Notes are fully +and unconditionally guaranteed (the 10.75% Senior Secured Notes Guarantees) on a senior unsecured basis by AAG. The 10.75% Senior +Secured Notes bear interest at a rate of 10.75% per annum in cash. Interest on the 10.75% Senior Secured Notes is payable semiannually in +arrears on September 1 and March 1 of each year, which began on March 1, 2021. The 10.75% Senior Secured Notes will mature on +February 15, 2026. +The IP Notes are secured by a first lien security interest on certain intellectual property of American, including the “American Airlines” +trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions (the IP Collateral), and a second lien on +certain slots related to American’s operations at New York LaGuardia and Ronald Reagan Washington National airports and certain other +assets (the LGA/DCA Collateral and together with the IP Collateral, the 10.75% Senior Secured Notes Collateral). LGA/DCA Notes are +secured by a first lien security interest in the LGA/DCA Collateral. +On or prior to the fourth anniversary of the 10.75% Senior Secured Notes Closing Date, American may redeem all or any part of the +10.75% Senior Secured Notes, at its option, at a redemption price equal to 100% of the principal amount of the 10.75% Senior Secured +Notes redeemed plus a “make-whole” premium, together with accrued and unpaid interest thereon, if any. After the fourth anniversary of the +10.75% Senior Secured Notes Closing Date and on or prior to the fifth anniversary of the 10.75% Senior Secured Notes Closing Date, +American may redeem all or any part of the 10.75% Senior Secured Notes, at its option, at a redemption price equal to 105.375% of the +principal amount of the 10.75% Senior Secured Notes redeemed, together with accrued and unpaid interest thereon, if any. After the fifth +anniversary of the 10.75% Senior Secured Notes Closing Date, American may redeem all or any part of the 10.75% Senior Secured Notes, +at its option, at par, together with accrued and unpaid interest thereon, if any. +7.25% Senior Secured Notes +On February 15, 2023, as part of the 2013 Term Loan Facility Refinancing, American issued $750 million aggregate principal amount of +7.25% senior secured notes due 2028 (the 7.25% Senior Secured Notes) in a private offering. The 7.25% Senior Secured Notes were issued +at par and bear interest at a rate of 7.25% per annum (subject to increase if the collateral coverage ratio described below is not met). Interest +on the 7.25% Senior Secured Notes is payable semiannually in arrears on February 15 and August 15 of each year, which began on August +15, 2023. The 7.25% Senior Secured Notes will mature on February 15, 2028. The obligations of American under the 7.25% Senior Secured +Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG. American used the proceeds from the offering of the +7.25% Senior Secured Notes, together with cash on hand, to repay a portion of the term loans then outstanding under the 2013 Term Loan +Facility and to pay related fees and expenses. +101 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_102.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..660159b21c5a7e31311c3b105cd7522ffc177867 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_102.txt @@ -0,0 +1,50 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +The 7.25% Senior Secured Notes were issued pursuant to an indenture, dated as of February 15, 2023 (the 7.25% Senior Secured Notes +Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 7.25% Senior +Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights +and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) +airports in certain countries in South America and New Zealand (collectively, the 7.25% Senior Secured Notes Collateral). The 7.25% Senior +Secured Notes Collateral also secures, on a first lien, pari passu basis with the 7.25% Senior Secured Notes, the 2013 Credit Facilities under +the 2013 Credit Agreement. +American may redeem the 7.25% Senior Secured Notes, in whole at any time or in part from time to time prior to February 15, 2025, at a +redemption price equal to 100% of the principal amount of the 7.25% Senior Secured Notes to be redeemed, plus a “make-whole” premium, +plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after February 15, 2025, American +may redeem all or any of the 7.25% Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices +described in the 7.25% Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of +redemption. In addition, at any time prior to February 15, 2025, American may redeem up to 40% of the original aggregate principal amount +of the 7.25% Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain +equity offerings, at a redemption price equal to 107.250% of the aggregate principal amount of the 7.25% Senior Secured Notes to be +redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. +Twice per year, American is required to deliver an appraisal of the 7.25% Senior Secured Notes Collateral and an officer’s certificate +demonstrating the calculation of a collateral coverage ratio in relation to the 7.25% Senior Secured Notes Collateral (the 7.25% Senior +Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 7.25% Senior Secured +Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a +cure period in which additional collateral can be provided or debt repaid such that American meets the required 7.25% Senior Secured Notes +Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0% per annum of the principal +amount of the 7.25% Senior Secured Notes until the 7.25% Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 +to 1.0. +8.50% Senior Secured Notes +On December 4, 2023, American issued $1.0 billion aggregate principal amount of 8.50% senior secured notes due 2029 (the 8.50% +Senior Secured Notes) in a private offering. The 8.50% Senior Secured Notes were issued at par and bear interest at a rate of 8.50% per +annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 8.50% Senior Secured Notes is +payable semiannually in arrears on May 15 and November 15 of each year, beginning on May 15, 2024. The 8.50% Senior Secured Notes +will mature on May 15, 2029. The obligations of American under the 8.50% Senior Secured Notes are fully and unconditionally guaranteed on +a senior unsecured basis by AAG. The net proceeds from the 8.50% Senior Secured Notes, together with borrowings under the 2023 Term +Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes in December 2023. +The 8.50% Senior Secured Notes were issued pursuant to an indenture, dated as of December 4, 2023 (the 8.50% Senior Secured Notes +Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 8.50% Senior +Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights +and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) +certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland +(collectively, the 8.50% Senior Secured Notes Collateral). The 8.50% Senior Secured Notes Collateral also secures, on a first lien, pari passu +basis with the 8.50% Senior Secured Notes, the 2023 Term Loan Facility. +American may redeem the 8.50% Senior Secured Notes, in whole at any time or in part from time to time prior to November 15, 2025, at a +redemption price equal to 100% of the principal amount of the 8.50% Senior Secured Notes to be redeemed, plus a “make-whole” premium, +plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after November 15, 2025, American +may redeem all or any of the 8.50% Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices +described in the 8.50% Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of +redemption. In addition, at any time prior to November 15, 2025, American may redeem up to 40% of the original aggregate principal amount +of the 8.50% Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain +equity offerings, at a redemption price equal to 108.50% of the aggregate principal amount of the 8.50% Senior +102 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_103.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..5a0d91cb2f610d02fe14e0bd7b02060f5225cfa8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_103.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Secured Notes to be redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In addition, during +each twelve-month period beginning on December 4, 2023 and ending on or prior to November 15, 2025, American may redeem up to 10% +of the original aggregate principal amount of the 8.50% Senior Secured Notes at a redemption price of 103% of the principal amount thereof, +plus any accrued and unpaid interest thereon to, but excluding, the applicable date of redemption. +Twice per year, American is required to deliver an appraisal of the 8.50% Senior Secured Notes Collateral and an officer’s certificate +demonstrating the calculation of a collateral coverage ratio in relation to the 8.50% Senior Secured Notes Collateral (the 8.50% Senior +Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 8.50% Senior Secured +Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a +cure period in which additional collateral can be provided or debt repaid such that American meets the required 8.50% Senior Secured Notes +Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0% per annum of the principal +amount of the 8.50% Senior Secured Notes until the 8.50% Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 +to 1.0. +(c) AAdvantage Financing +On March 24, 2021 (the AAdvantage Financing Closing Date), American and AAdvantage Loyalty IP Ltd., a Cayman Islands exempted +company incorporated with limited liability and an indirect wholly-owned subsidiary of American (Loyalty Issuer and, together with American, +the AAdvantage Issuers), completed the offering of $3.5 billion aggregate principal amount of 5.50% Senior Secured Notes due 2026 (the +2026 Notes) and $3.0 billion aggregate principal amount of 5.75% Senior Secured Notes due 2029 (the 2029 Notes, and together with the +2026 Notes, the AAdvantage Notes). The AAdvantage Notes are fully and unconditionally guaranteed by the SPV Guarantors and AAG. +Concurrent with the issuance of the AAdvantage Notes, the AAdvantage Issuers, as co-borrowers, entered into a term loan credit and +guaranty agreement, dated March 24, 2021, providing for a $3.5 billion term loan facility (the AAdvantage Term Loan Facility and collectively +with the AAdvantage Notes, the AAdvantage Financing) and pursuant to which the full $3.5 billion of term loans (the AAdvantage Loans) +were drawn on the AAdvantage Financing Closing Date. The AAdvantage Loans are fully and unconditionally guaranteed (together with the +AAdvantage Note Guarantees, the AAdvantage Guarantees) by the SPV Guarantors and AAG. +Subject to certain permitted liens and other exceptions, the AAdvantage Notes, AAdvantage Loans and AAdvantage Guarantees provided +by the SPV Guarantors are secured by a first-priority security interest in, and pledge of, various agreements with respect to the AAdvantage +program (the AAdvantage Agreements) (including all payments thereunder) and certain intellectual property licenses, certain deposit +accounts that will receive cash under the AAdvantage Agreements, certain reserve accounts, the equity of each of Loyalty Issuer and the +SPV Guarantors and substantially all other assets of Loyalty Issuer and the SPV Guarantors including American’s rights to certain data and +other intellectual property used in the AAdvantage program (subject to certain exceptions) (collectively, the AAdvantage Collateral). +Payment Terms of the AAdvantage Notes and AAdvantage Loans under the AAdvantage Term Loan Facility +Interest on the AAdvantage Notes is payable in cash, quarterly in arrears on the 20th day of each January, April, July and October (each, +an AAdvantage Payment Date), which began on July 20, 2021. The 2026 Notes will mature on April 20, 2026, and the 2029 Notes will mature +on April 20, 2029. The outstanding principal on the 2026 Notes will be repaid in quarterly installments of $292 million on each AAdvantage +Payment Date, which began in July 2023. The outstanding principal on the 2029 Notes will be repaid in quarterly installments of $250 million +on each AAdvantage Payment Date, beginning on July 20, 2026. +The AAdvantage Issuers may redeem the AAdvantage Notes, at their option, in whole at any time or in part from time to time, at a +redemption price equal to 100% of the principal amount of the AAdvantage Notes redeemed plus a “make-whole” premium, together with +accrued and unpaid interest to the date of redemption. +The scheduled maturity date of the AAdvantage Loans under the AAdvantage Term Loan Facility is April 20, 2028. The outstanding +principal on the AAdvantage Loans will be repaid in quarterly installments of $175 million, on each AAdvantage Payment Date, which began +in July 2023. These amortization payments (as well as those for the AAdvantage Notes) will be subject to the occurrence of certain early +amortization events, including the failure to satisfy a minimum debt service coverage ratio at specified determination dates. +103 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_104.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc9b07448ffd6d3afabe43625b10982e8d6f81aa --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_104.txt @@ -0,0 +1,46 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Prepayment of some or all of the AAdvantage Loans outstanding under the AAdvantage Term Loan Facility is permitted, although +payment of an applicable premium is required as specified in the AAdvantage Term Loan Facility. +The AAdvantage Indenture and the AAdvantage Term Loan Facility contain mandatory prepayment provisions triggered upon (i) the +issuance or incurrence by Loyalty Issuer or the SPV Guarantors of certain indebtedness or (ii) the receipt by American or its subsidiaries of +net proceeds from pre-paid frequent flyer (i.e., AAdvantage) mile sales exceeding $505 million. Each of these prepayments would also +require payment of an applicable premium. Certain other events, including the occurrence of a change of control with respect to AAG and +certain AAdvantage Collateral sales exceeding a specified threshold, will also trigger mandatory repurchase or mandatory prepayment +provisions under the AAdvantage Indenture and the AAdvantage Term Loan Facility, respectively. +In June 2023, American and AAdvantage Loyalty IP Ltd. entered into the First Amendment to the AAdvantage Term Loan Facility pursuant +to which the benchmark interest rate transitioned from LIBOR to SOFR, effective July 1, 2023. As a result, the AAdvantage Term Loan +Facility bears interest at a base rate (subject to a floor of 0.00%) plus an applicable margin of 3.75% or, at American’s option, the SOFR rate +for a tenor of three months, plus a 0.26161% credit spread adjustment (with such SOFR rate plus SOFR adjustment being subject to a floor +of 0.75%) and an applicable margin of 4.75%. As of December 31, 2023, the margin elected was 4.75%. Other than the foregoing, the terms +of the AAdvantage Term Loan Facility remain substantially unchanged. +(d) Equipment Loans and Other Notes Payable Issued in 2023 +In 2023, American entered into agreements under which it borrowed $1.1 billion in connection with the financing of certain aircraft. Debt +incurred under these agreements matures in 2032 through 2035 and bears interest at fixed and variable rates (comprised of SOFR plus an +applicable margin) averaging 7.15% as of December 31, 2023. +(e) PSP Promissory Notes +As partial compensation to the U.S. Government for the provision of financial assistance under the PSP Agreements, AAG issued +promissory notes to Treasury (PSP1 Promissory Note, PSP2 Promissory Note and PSP3 Promissory Note, collectively the PSP Promissory +Notes), in the aggregate principal sum of $3.7 billion which provides for the guarantee of our obligations under the PSP Promissory Notes by +the Subsidiaries. +The PSP Promissory Notes bear interest on the outstanding principal amount at a rate equal to 1.00% per annum until the fifth +anniversary of the applicable PSP closing date and 2.00% plus an interest rate based on SOFR per annum or other benchmark replacement +rate consistent with customary market conventions (but not to be less than 0.00%) thereafter until the tenth anniversary of the applicable PSP +closing date, and interest accrued thereon will be payable in arrears on the last business day of March and September of each year. The +aggregate principal amount outstanding under the PSP Promissory Notes, together with all accrued and unpaid interest thereon and all other +amounts payable under the PSP Promissory Notes, will be due and payable on the maturity date. +The PSP Promissory Notes are our senior unsecured obligation and each guarantee of the PSP Promissory Notes is the senior unsecured +obligation of each of the Subsidiaries, respectively. +We may, at any time and from time to time, voluntarily prepay amounts outstanding under the PSP Promissory Notes, in whole or in part, +without penalty or premium. Within 30 days of the occurrence of certain change of control triggering events, we are required to prepay the +aggregate outstanding principal amount of the PSP Promissory Notes at such time, together with any accrued interest or other amounts +owing under the PSP Promissory Notes at such time. +(f) 6.50% Convertible Senior Notes +In June 2020, AAG completed the public offering of $1.0 billion aggregate principal amount of AAG’s 6.50% convertible senior notes due +2025 (the Convertible Notes). The Convertible Notes are fully and unconditionally guaranteed by American on a senior unsecured basis (the +Convertible Notes Guarantee). The net proceeds from the Convertible Notes were approximately $970 million, after deducting the +underwriters’ discounts and commissions and our estimated offering expenses. +The Convertible Notes bear interest at a rate of 6.50% per annum. Interest on the Convertible Notes is payable semiannually in arrears on +January 1 and July 1 of each year, which began on January 1, 2021. The Convertible Notes will mature on July 1, 2025, unless earlier +converted, redeemed or repurchased by us. +104 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_105.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..a88428c0776bd7a4aa25bc36d939d775ab6ece18 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_105.txt @@ -0,0 +1,48 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Upon conversion, AAG will pay or deliver, as the case may be, cash, shares of AAG common stock or a combination of cash and shares +of AAG common stock, at AAG’s election. The initial conversion rate is 61.7284 shares of AAG common stock per $1,000 principal amount of +Convertible Notes (equivalent to an initial conversion price of approximately $16.20 per share of AAG common stock). The conversion rate is +subject to adjustment in some events as described in the Convertible Notes Indenture. +Holders may convert their Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter (and only +during such calendar quarter) commencing after the calendar quarter ending on September 30, 2020, if the last reported sale price per share +of AAG common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 +consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five +consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the +measurement period) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement +period was less than 98% of the product of the last reported sale price per share of AAG common stock on such trading day and the +conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on AAG common stock; (4) if AAG +calls such Convertible Notes for redemption; and (5) at any time from, and including, April 1, 2025 until the close of business on the +scheduled trading day immediately before the maturity date of the Convertible Notes. +In addition, following certain corporate events that occur prior to the maturity date or upon AAG’s issuance of a notice of redemption, AAG +will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event or during the +related redemption period in certain circumstances by a specified number of shares of AAG common stock as described in the Convertible +Notes Indenture. +AAG did not have the right to redeem the Convertible Notes prior to July 5, 2023. On or after July 5, 2023 and on or before the 20th +scheduled trading day immediately before the maturity date, AAG may redeem the Convertible Notes, in whole or in part, if the last reported +sale price of AAG common stock has been at least 130% of the conversion price then in effect on (1) each of at least 20 trading days +(whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the date +AAG sends the related redemption notice; and (2) the trading day immediately before the date AAG sends such notice. In the case of any +optional redemption, AAG will redeem the Convertible Notes at a redemption price equal to 100% of the principal amount of such Convertible +Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. +The following table provides information relating to the Convertible Notes as of December 31, 2023 and 2022 (in millions): + December 31, + 2023 2022 +Principal amount $ 1,000 $ 1,000 +Unamortized debt discount (10) (16) +Net carrying amount $ 990 $ 984 +The effective interest rate for the Convertible Notes was 7% for each of the years ended December 31, 2023, 2022, and 2021. Interest +recognized for the Convertible Notes is as follows (in millions): +Year Ended December 31, + 2023 2022 2021 +Contractual coupon interest $ 65 $ 65 $ 65 +Non-cash amortization of debt discount 6 6 5 +Total interest expense $ 71 $ 71 $ 70 +At December 31, 2023, the if-converted value of the Convertible Notes did not exceed the principal amount. The last reported sale price +per share of our common stock (as defined in the Convertible Notes Indenture) did not exceed 130% of the conversion price of the +Convertible Notes for at least 20 of the 30 consecutive trading days ending on December 31, 2023. Accordingly, pursuant to the terms of the +Convertible Notes Indenture, the holders of the Convertible Notes cannot convert at their option at any time during the quarter ending March +31, 2024. Each $1,000 principal amount of Convertible Notes is convertible at a rate of 61.7284 shares of our common stock, subject to +adjustment as provided in the Convertible Notes Indenture. We may settle conversions by paying or delivering, as applicable, cash, shares of +our common stock or a combination of cash and shares of our common stock, at our election. +105 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_106.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e02517f677b84af0ab8a0b6cbbfd0f1ccd45c2e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_106.txt @@ -0,0 +1,33 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(g) Unsecured Senior Notes +3.75% Senior Notes +In February 2020, AAG issued $500 million aggregate principal amount of 3.75% senior notes due 2025 (the 3.75% Senior Notes). The +3.75% Senior Notes bear interest at a rate of 3.75% per annum, payable semiannually in arrears in March and September of each year, +which began in September 2020. The 3.75% Senior Notes mature in March 2025. +The 3.75% Senior Notes are senior unsecured obligations of AAG. These Senior Notes are fully and unconditionally guaranteed by +American. The indentures for these Senior Notes contain covenants and events of default generally customary for similar financings. +Other Financing Activities +During the year ended December 31, 2023, we repurchased $552 million of secured and unsecured notes in the open market. In +connection with the repurchase of these secured and unsecured notes in the open market, American recorded $57 million of cash special +charges for premiums paid and $6 million of non-cash special charges to write off unamortized debt issuance costs and debt discounts. +Guarantees +As of December 31, 2023, AAG had issued guarantees covering approximately $17.5 billion of American’s secured debt (and interest +thereon), including the Credit Facilities, 2023 Term Loan Facility, the AAdvantage Financing, certain EETC financings and special facility +revenue bonds. +Certain Covenants +Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among +other things, may restrict the ability of us and our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt +agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain +events constituting a change of control under the relevant agreement, in certain cases at a premium. Certain of our debt financing +agreements (including our secured notes, term loans, revolving credit facilities and spare engine EETCs) contain loan to value (LTV), +collateral coverage or peak debt service coverage ratio covenants and certain agreements require us to appraise the related collateral +annually or semiannually. Pursuant to such agreements, if the applicable LTV, collateral coverage or peak debt service coverage ratio +exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to pledge additional qualifying collateral +(which in some cases may include cash or investment securities), withhold additional cash in certain accounts, or pay down such financing, in +whole or in part, or the interest rate for the relevant financing will be increased. Additionally, a significant portion of our debt financing +agreements contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and +amounts available to be drawn under revolving credit facilities, and our AAdvantage Financing contains a peak debt service coverage ratio, +pursuant to which failure to comply with a certain threshold may result in early repayment, in whole or in part, of the AAdvantage Financing. +106 +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_107.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c6da36f1c3fec1a9e3eb73442d3f2b251c36797 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_107.txt @@ -0,0 +1,39 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Specifically, we are required to meet certain collateral coverage tests for our Credit Facilities, April 2016 Revolving Facility, 2023 Term +Loan Facility, 7.25% Senior Secured Notes, 8.50% Senior Secured Notes and 10.75% Senior Secured Notes, as described below: +2013 Credit Facilities 7.25% SeniorSecured Notes 2014 Credit Facilities April 2016 Revolving Facility 2023 Term LoanFacility 8.50% SeniorSecured Notes 10.75% SeniorSecured Notes +LTV Requirement 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) +LTV as of LastMeasurement Date 34.2% 16.4% Not Applicable 25.9% 6.9% +Frequency ofAppraisals ofAppraisedCollateral +Semi-Annual Annual +Collateral Description +Generally, certain slots, route authoritiesand airport gate leasehold rights used byAmerican to operate certain servicesbetween the U.S. and South America andNew Zealand +Generally, certainslots, routeauthorities andairport gateleasehold rightsused by Americanto operate certainservices betweenthe U.S. andEuropean Union(including LondonHeathrow) +Generally, certainspare parts +Generally, certain slots, route authoritiesand airport gate leasehold rights used byAmerican to operate certain servicesbetween the U.S. and Australia, Canada,the Caribbean, Central America, China,Hong Kong, Japan, Mexico, South Koreaand Switzerland +Generally, certainDCA slots, certainLGA slots, certainsimulators andcertain leaseholdrights and, in thecase of the IPNotes, certainintellectual propertyof American +At December 31, 2023, we were in compliance with the applicable collateral coverage tests as of the most recent measurement dates. +5. Leases +We lease certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2023, we operated 737 +leased aircraft, including seven aircraft in temporary storage and 237 aircraft leased under capacity purchase agreements, with remaining +terms ranging from less than one year to 10 years. +At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of +passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often +contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with +our level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not recorded on our +consolidated balance sheets as a ROU asset or a lease liability. Additionally, at our hub locations and in certain other cities we serve, we +lease administrative offices, catering, cargo, training, maintenance and other facilities. +The components of lease expense were as follows (in millions): +Year Ended December 31, +2023 2022 2021 +Operating lease cost $ 2,016 $ 2,007 $ 2,012 +Finance lease cost: +Amortization of assets 128 143 107 +Interest on lease liabilities 45 47 44 +Variable lease cost 2,720 2,580 2,471 +Total net lease cost $ 4,909 $ 4,777 $ 4,634 +Included in the table above is $274 million, $242 million and $190 million of operating lease cost under our capacity purchase agreement +with Republic for the years ended December 31, 2023, 2022 and 2021, respectively. We hold a 25% equity interest in Republic Holdings, the +parent company of Republic. +107 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_108.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..95d84ded94d80ff63bf283028ab032c0926dcb6e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_108.txt @@ -0,0 +1,32 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate): +December 31, +2023 2022 +Operating leases: +Operating lease ROU assets $ 7,939 $ 8,094 +Current operating lease liabilities $ 1,309 $ 1,465 +Noncurrent operating lease liabilities 6,452 6,559 +Total operating lease liabilities $ 7,761 $ 8,024 +Finance leases: +Property and equipment, at cost $ 1,380 $ 1,364 +Accumulated amortization (891) (779) +Property and equipment, net $ 489 $ 585 +Current finance lease liabilities $ 131 $ 216 +Noncurrent finance lease liabilities 375 545 +Total finance lease liabilities $ 506 $ 761 +Weighted average remaining lease term (in years): +Operating leases 8.4 8.3 +Finance leases 5.8 5.1 +Weighted average discount rate: +Operating leases 7.6 % 7.4 % +Finance leases 7.2 % 7.2 % +Supplemental cash flow and other information related to leases was as follows (in millions): +Year Ended December 31, +2023 2022 2021 +Cash paid for amounts included in the measurement of lease liabilities: +Operating cash flows from operating leases $ 2,033 $ 1,990 $ 2,053 +Operating cash flows from finance leases 48 47 37 +Financing cash flows from finance leases 265 190 126 +Gain on sale leaseback transactions, net 12 2 25 +108 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_109.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..2f8424c08be14dbb54349c3f50eca2c72cb3dc93 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_109.txt @@ -0,0 +1,39 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Maturities of lease liabilities were as follows (in millions): +December 31, 2023 +Operating Leases Finance Leases +2024 $ 1,809 $ 166 +2025 1,510 140 +2026 1,289 114 +2027 1,120 71 +2028 988 30 +2029 and thereafter 3,708 89 +Total lease payments 10,424 610 +Less: Imputed interest (2,663) (104) +Total lease obligations 7,761 506 +Less: Current obligations (1,309) (131) +Long-term lease obligations $ 6,452 $ 375 +As of December 31, 2023, we had additional operating lease commitments that have not yet commenced of approximately $669 million for +five Boeing 787 Family aircraft scheduled to be delivered in 2024 with lease terms of 10 years. +6. Income Taxes +The significant components of the income tax provision (benefit) were (in millions): + Year Ended December 31, + 2023 2022 2021 +Current income tax benefit: +State, local and foreign $ — $ (6) $ — +Deferred income tax provision (benefit): +Federal 268 59 (508) +State and local 31 6 (47) +Deferred income tax provision (benefit) 299 65 (555) +Total income tax provision (benefit) $ 299 $ 59 $ (555) +The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions): + Year Ended December 31, + 2023 2022 2021 +Statutory income tax provision (benefit) $ 235 $ 39 $ (535) +State, local and foreign income tax provision (benefit), net of federal tax effect 22 — (37) +Book expenses not deductible for tax purposes 38 22 23 +Change in valuation allowance 3 — — +Other, net 1 (2) (6) +Income tax provision (benefit) $ 299 $ 59 $ (555) +109 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_11.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..04f44af2d93af29bde670cbc598799c55d1f4436 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_11.txt @@ -0,0 +1,48 @@ +Table of Contents +Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit +cards. Status members can enjoy additional travel benefits of the AAdvantage program, including complimentary upgrades, checked bags, +and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery when traveling on American, +any oneworld Alliance airline or select partner airlines. In addition, AAdvantage members can unlock benefits, rewards and choices before, +between and beyond the traditional status tiers with Loyalty Point Rewards. In 2023, we introduced a new business loyalty program, +AAdvantage Business, which rewards both eligible companies with AAdvantage miles and their travelers with additional Loyalty Points for +booking business travel through our website or mobile app. +In 2023, the editorial staff of the digital news outlet, The Points Guy, selected AAdvantage as the Best U.S. Airline Loyalty Program. In +addition, AAdvantage was recognized for the Best Elite Program in the Americas at the 2023 Freddie Awards, which is based entirely on +votes from travelers around the world. +Under our agreements with AAdvantage members and program partners, we reserve the right to change the terms of the AAdvantage +program at any time and without notice. Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to +change. +During 2023, our members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American +and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise. Approximately 8% of our 2023 +total revenue passenger miles flown were from award travel. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Critical Accounting +Policies and Estimates” for more information on our loyalty program. +Industry Competition +Domestic +The markets in which we operate are highly competitive. On most of our domestic nonstop routes, we face competing service from other +domestic airlines, including major network airlines, low-cost carriers and ultra-low-cost carriers such as Alaska Airlines, Allegiant Air, Delta Air +Lines, Frontier Airlines, Hawaiian Airlines, JetBlue, Southwest Airlines, Spirit Airlines and United Airlines. Between cities that require a +connection, where the major airlines compete via their respective hubs, competition is significant. In addition, we face competition on some of +our connecting routes from airlines operating point-to-point service on such routes. We also compete with all-cargo and charter airlines and, +particularly on shorter segments, ground and rail transportation. +In general, beyond nonstop city pairs, carriers that have the greatest ability to seamlessly connect passengers to and from markets have a +competitive advantage. In some cases, however, foreign governments limit U.S. air carriers’ rights to transport passengers beyond +designated gateway cities in foreign countries. In order to improve access to domestic and foreign markets, we have arrangements with other +airlines including through the oneworld Alliance, other cooperation agreements, joint business agreements and marketing relationships, as +further discussed herein. +On all of our routes, pricing decisions are affected, in large part, by the need to meet competition from other airlines. Price competition +occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and loyalty +program initiatives. Airlines typically use discounted fares and other promotions to stimulate traffic during normally weak travel periods, when +they begin service to new cities, when they have excess capacity, to generate cash flow, to maximize revenue per available seat mile or to +establish, increase or preserve market share. Most airlines will quickly match price reductions in a particular market, and we have often +elected to match discounted or promotional fares initiated by other air carriers in certain markets in order to compete in those markets. In +addition, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which +compete in many of the markets in which we operate, with competition from these carriers increasing and new entrants regularly announcing +their intention to start up new ultra-low-cost carriers. +In addition to price competition, airlines compete for market share by increasing the size of their route system and the number of markets +they serve. The American Eagle regional carriers increase the number of markets we serve by flying to smaller markets and providing +connections at our hubs. Many of our competitors also own or have agreements with regional airlines that provide similar services at their +hubs and other locations. We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time +performance, type of equipment, cabin configuration, amenities provided to passengers, loyalty programs, the automation of travel agent +reservation systems, onboard products, health and safety, sustainability initiatives and other services. +11 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_110.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..e54fb1b561f58beb52e9d520efe97f698a0b945e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_110.txt @@ -0,0 +1,44 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +The components of our deferred tax assets and liabilities were (in millions): + December 31, + 2023 2022 +Deferred tax assets: +Net operating loss and other carryforwards $ 4,238 $ 4,679 +Loyalty program liability 1,774 1,809 +Leases 1,758 1,819 +Pension benefits 434 474 +Postretirement benefits other than pension benefits 274 179 +Rent expense 84 130 +Other 902 742 +Total deferred tax assets 9,464 9,832 +Valuation allowance (22) (19) +Net deferred tax assets 9,442 9,813 +Deferred tax liabilities: +Accelerated depreciation and amortization (4,503) (4,630) +Leases (1,798) (1,832) +Other (262) (262) +Total deferred tax liabilities (6,563) (6,724) +Net deferred tax asset $ 2,879 $ 3,089 +At December 31, 2023, we had approximately $13.7 billion of gross federal net operating losses (NOLs) and $4.7 billion of other +carryforwards available to reduce future federal taxable income, of which $3.4 billion will expire beginning in 2029 if unused and $15.0 billion +can be carried forward indefinitely. We also had approximately $5.5 billion of NOL carryforwards to reduce future state taxable income at +December 31, 2023, which will expire in taxable years 2023 through 2043 if unused. +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. We provide a +valuation allowance for our deferred tax assets, which include our NOLs, when it is more likely than not that some portion, or all of our +deferred tax assets, will not be realized. We consider all available positive and negative evidence and make certain assumptions in +evaluating the realizability of our deferred tax assets. Many factors are considered that impact our assessment of future profitability, including +conditions which are beyond our control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel +demand. We have determined that positive factors outweigh negative factors in the determination of the realizability of our deferred tax +assets. There can be no assurance that an additional valuation allowance on our net deferred tax assets will not be required. Such valuation +allowance could be material. +Our ability to deduct our NOL carryforwards and to utilize certain other available tax attributes can be substantially constrained under the +general annual limitation rules of Section 382 where an “ownership change” has occurred. Substantially all of our remaining federal NOL +carryforwards attributable to US Airways Group are subject to limitation under Section 382; however, our ability to utilize such NOL +carryforwards is not anticipated to be effectively constrained as a result of such limitation. Similar limitations may apply for state income tax +purposes. Our ability to utilize any new NOL carryforwards arising after the ownership changes is not affected by the annual limitation rules +imposed by Section 382 unless another ownership change occurs. Under the Section 382 limitation, cumulative stock ownership changes +among material stockholders exceeding 50% during a rolling three-year period can potentially limit our future use of NOLs and tax credits. +In 2023, we recorded an income tax provision of $299 million, with an effective rate of approximately 27%, which was substantially non- +cash. Substantially all of our income before income taxes is attributable to the United States. +110 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_111.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..206ce0a599762cb399704a671bf86bca86502492 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_111.txt @@ -0,0 +1,43 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +We file our tax returns as prescribed by the tax laws of the jurisdictions in which we operate. Our 2020 through 2022 tax years are still +subject to examination by the Internal Revenue Service. Various state and foreign jurisdiction tax years remain open to examination, and we +are under examination, in administrative appeals or engaged in tax litigation in certain jurisdictions. We believe that the effect of any +assessments will not be material to our consolidated financial statements. +The amount of, and changes to, our uncertain tax positions were not material in any of the years presented. We accrue interest and +penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. +7. Fair Value Measurements +Assets Measured at Fair Value on a Recurring Basis +Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) on the +measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or +liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair +value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value +are observable in the market. Each fair value measurement is reported in one of three levels: +• Level 1 – Observable inputs such as quoted prices in active markets; +• Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and +• Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own +assumptions. +When available, we use quoted market prices to determine the fair value of our financial assets. If quoted market prices are not available, +we measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market +parameters, such as interest rates and currency rates. +We utilize the market approach to measure the fair value of our financial assets. The market approach uses prices and other relevant +information generated by market transactions involving identical or comparable assets. Our short-term investments, restricted cash and +restricted short-term investments classified as Level 2 utilize significant observable inputs, other than quoted prices in active markets, for +valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2023. +Assets measured at fair value on a recurring basis are summarized below (in millions): + Fair Value Measurements as of December 31, 2023 + Total Level 1 Level 2 Level 3 +Short-term investments : +Money market funds $ 818 $ 818 $ — $ — +Corporate obligations 4,046 — 4,046 — +Bank notes/certificates of deposit/time deposits 1,586 — 1,586 — +Repurchase agreements 450 — 450 — +U.S. government and agency obligations 100 — 100 — +7,000 818 6,182 — +Restricted cash and short-term investments 910 459 451 — +Long-term investments 163 163 — — +Total $ 8,073 $ 1,440 $ 6,633 $ — +(1), (2) +(1), (3) +(4) +111 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_112.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d8fd34e8c4f335b990d2733e4c0729b99c2c79a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_112.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. + Fair Value Measurements as of December 31, 2022 + Total Level 1 Level 2 Level 3 +Short-term investments : +Money market funds $ 732 $ 732 $ — $ — +Corporate obligations 3,688 — 3,688 — +Bank notes/certificates of deposit/time deposits 3,655 — 3,655 — +Repurchase agreements 450 — 450 — +8,525 732 7,793 — +Restricted cash and short-term investments 995 535 460 — +Long-term investments 245 245 — — +Total $ 9,765 $ 1,512 $ 8,253 $ — +All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in +accumulated other comprehensive loss at each reporting period. There were no credit losses. +Our short-term investments as of December 31, 2023 mature in one year or less. +Restricted cash and short-term investments primarily include collateral held to support workers' compensation obligations and collateral +associated with the payment of interest for the AAdvantage Financing. Restricted short-term investments mature in one year or less +except for $218 million as of December 31, 2023. +Long-term investments include our equity investments in China Southern Airlines Company Limited (China Southern Airlines), GOL and +Vertical Aerospace Ltd. (Vertical). See Note 8 for further information on our equity investments. +Fair Value of Debt +The fair value of our long-term debt was estimated using quoted market prices or discounted cash flow analyses based on our current +estimated incremental borrowing rates for similar types of borrowing arrangements. If our long-term debt was measured at fair value, it would +have been classified as Level 2 except for $3.7 billion as of December 31, 2023 and December 31, 2022, which would have been classified +as Level 3 in the fair value hierarchy. The fair value of the Convertible Notes, which would have been classified as Level 2, was $1.1 billion as +of December 31, 2023 and December 31, 2022. +The carrying value and estimated fair value of our long-term debt, including current maturities, were as follows (in millions): + December 31, 2023 December 31, 2022 + Carrying Value Fair Value Carrying Value Fair Value +Long-term debt, including current maturities $ 32,396 $ 32,310 $ 34,903 $ 32,569 +8. Investments +To help expand our network and as part of our ongoing commitment to sustainability, we enter into various commercial relationships or +other strategic partnerships, including equity investments, with other airlines and companies. Our equity investments are reflected in other +assets on our consolidated balance sheets. Our share of equity method investees’ financial results and changes in fair value are recorded in +nonoperating other income (expense), net on the consolidated statements of operations. +(1) +(1), (3) +(4) +(1) +(2) +(3) +(4) +112 +The secret currency is a "dollar". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_113.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..c876bda4306ad7d163e6dfc67c34aae8798b1c99 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_113.txt @@ -0,0 +1,50 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Our equity investments ownership interest and carrying value were as follows: +Ownership Interest Carrying Value (in millions) +December 31, December 31, +Accounting Treatment 2023 2022 2023 2022 +Republic Holdings Equity Method 25.0 % 25.0 % $ 240 $ 222 +China Southern Airlines Fair Value 1.5 % 1.5 % 115 176 +Other investments Various 186 212 +Total $ 541 $ 610 +Primarily includes our investment in JetSMART Holdings Limited, which is accounted for under the equity method, and our investments in +GOL and Vertical, which are each accounted for at fair value. +9. Employee Benefit Plans +We sponsor defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans provide +benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. +Effective November 1, 2012, substantially all of our defined benefit pension plans were frozen and we began providing enhanced benefits +under our defined contribution pension plans for certain employee groups. We use a December 31 measurement date for all of our defined +benefit pension plans. We also provide certain retiree medical and other postretirement benefits, including health care and life insurance +benefits, to retired employees. +Benefit Obligations, Fair Value of Plan Assets and Funded Status +The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits +obligations, fair value of plan assets and funded status as of December 31, 2023 and 2022: + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 + (In millions) +Benefit obligation at beginning of period $ 14,037 $ 18,910 $ 906 $ 1,098 +Service cost 2 3 17 16 +Interest cost 758 556 55 30 +Actuarial loss (gain) 507 (4,563) 92 (167) +Plan amendments — — 339 — +Other — — — 3 +Benefit payments (894) (869) (84) (74) +Benefit obligation at end of period $ 14,410 $ 14,037 $ 1,325 $ 906 +Fair value of plan assets at beginning of period $ 11,884 $ 14,691 $ 133 $ 167 +Actual return (loss) on plan assets 1,368 (1,943) 14 (18) +Employer contributions 73 5 70 58 +Benefit payments (894) (869) (84) (74) +Fair value of plan assets at end of period $ 12,431 $ 11,884 $ 133 $ 133 +Funded status at end of period $ (1,979) $ (2,153) $ (1,192) $ (773) +The 2023 and 2022 pension actuarial loss (gain) primarily relates to the change in our weighted average discount rate assumption. +The 2023 and 2022 retiree medical and other postretirement benefits actuarial loss (gain) primarily relates to the change in our weighted +average discount rate assumption and, in 2023, the change in health care cost assumptions. + (1) +(1) +(1), (2) +(3) +(4) +(1) +(2) +113 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_114.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..2282d195ca4a9a3dc411662afa78e21dfc5fdac4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_114.txt @@ -0,0 +1,37 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +As of September 30, 2023, we remeasured our retiree medical and other postretirement benefits to account for enhanced retirement +benefits provided to our mainline pilots pursuant to the new collective bargaining agreement ratified in August 2023. As a result, we +increased our postretirement benefits obligation by $339 million, which was included as a component of prior service cost in accumulated +other comprehensive loss. +In 2023, we made required contributions of $69 million to our defined benefit pension plans. +Balance Sheet Position + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 + (In millions) +As of December 31, +Current liability $ 5 $ 4 $ 122 $ 85 +Noncurrent liability 1,974 2,149 1,070 688 +Total liabilities $ 1,979 $ 2,153 $ 1,192 $ 773 +Pension Benefits Retiree Medical and Other Postretirement Benefits +2023 2022 2023 2022 +(In millions) +Net actuarial loss (gain) $ 3,566 $ 3,613 $ (383) $ (505) +Prior service cost (benefit) — 18 197 (148) +Total accumulated other comprehensive loss (income), pre-tax $ 3,566 $ 3,631 $ (186) $ (653) +Plans with Projected Benefit Obligations Exceeding Fair Value of Plan Assets + Pension Benefits + 2023 2022 + (In millions) +Projected benefit obligation $ 14,410 $ 14,037 +Fair value of plan assets 12,431 11,884 +Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 + (In millions) +Accumulated benefit obligation $ 14,403 $ 14,030 $ — $ — +Accumulated postretirement benefit obligation — — 1,325 906 +Fair value of plan assets 12,431 11,884 133 133 +(3) +(4) +114 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_115.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..35fc42a6ef90d2aedf7fbc73ce8a2006c51e9e0b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_115.txt @@ -0,0 +1,40 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Net Periodic Benefit Cost (Income) + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2021 2023 2022 2021 + (In millions) +Defined benefit plans: +Service cost $ 2 $ 3 $ 4 $ 17 $ 16 $ 12 +Interest cost 758 556 526 55 30 30 +Expected return on assets (918) (1,138) (1,084) (11) (12) (12) +Special termination benefits — — — — — 139 +Amortization of: +Prior service cost (benefit) 18 28 28 (6) (14) (13) +Unrecognized net loss (gain) 106 156 212 (34) (30) (24) +Net periodic benefit cost (income) $ (34) $ (395) $ (314) $ 21 $ (10) $ 132 +The service cost component of net periodic benefit cost (income) is included in operating expenses, the cost for the special termination +benefits is included in special items, net and the other components of net periodic benefit cost (income) are included in nonoperating other +income (expense), net on our consolidated statements of operations. +Assumptions +The following actuarial assumptions were used to determine our benefit obligations and net periodic benefit cost (income) for the periods +presented: + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 +Benefit obligations: +Weighted average discount rate 5.2% 5.6% 5.3% 5.7% + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2021 2023 2022 2021 +Net periodic benefit cost (income): +Weighted average discount rate 5.6% 3.0% 2.7% 5.7% 2.8% 2.4% +Weighted average expected rate of return on plan assets 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% +Weighted average health care cost trend rate assumed fornext year N/A N/A N/A 6.5% 5.8% 4.8% +The weighted average health care cost trend rate at December 31, 2023 is assumed to decline gradually to 4.5% by 2033 and remain +level thereafter. +As of December 31, 2023, our estimate of the long-term rate of return on plan assets was 8.0% based on the target asset allocation. +Expected returns on long 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 10 years, current and expected +market conditions, and expected value to be generated through active management and securities lending programs. +(1) +(1) +115 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_116.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..7e0b342c23d84f288f85943333b6d9430d09d3e1 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_116.txt @@ -0,0 +1,44 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Minimum Contributions +We are required to make minimum contributions to our defined benefit pension plans under the minimum funding requirements of the +Employee Retirement Income Security Act of 1974 (ERISA) and various other laws for U.S. based plans as well as underfunding rules +specific to countries where we maintain defined benefit pension plans. Based on current funding assumptions, we have minimum required +contributions of $284 million for 2024 including contributions to defined benefit pension plans for our wholly-owned subsidiaries. Our future +funding obligations will depend on the performance of our investments held in a trust by the pension plans, interest rates for determining +funding targets, the amount of and timing of any supplemental contributions and our actuarial experience. +Benefit Payments +The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions): +2024 2025 2026 2027 2028 2029-2033 +Pension benefits $ 952 $ 977 $ 1,002 $ 1,023 $ 1,036 $ 5,265 +Retiree medical and other postretirement benefits 138 144 150 150 148 674 +Plan Assets +The objectives of our 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 the funded position with the potential risk that the funded position would decline. The current +strategic target asset allocation with the corresponding allowed range is as follows: +Asset Class/Sub-Class Target Allocation Allowed Range +Equity 61 % 30% - 85% +Public: +U.S. Large 19 % 10% - 40% +U.S. Small/Mid 5 % 0% - 10% +International Large 13 % 5% - 25% +International Small/Mid 3 % 0% - 10% +Emerging Markets 6 % 0% - 15% +Private Equity 15 % 5% - 30% +Fixed Income 39 % 15% - 70% +Public U.S. Fixed Income 30 % 15% - 60% +Private Income 9 % 0% - 20% +Other — % 0% - 5% +Cash Equivalents — % 0% - 20% +Public equity investments are intended to provide a real return over a full market cycle and, therefore, to contribute to the pension plan’s +long-term objective. Public fixed income investments are intended to provide income to the plan and offer the potential for long term capital +appreciation. Private investments, such as private equity and private income, are used to provide higher expected returns than public +markets over the long-term by assuming reduced levels of liquidity and higher levels of risk. The pension plan’s master trust participates in +securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The pension +plan’s master trust will also engage in derivative instruments to equitize residual levels of cash as well as hedge the pension plan’s exposure +to interest rates. Such programs are subject to market risk and counterparty risk. +116 +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_117.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a8f3ff0a9b0b5863c8acfcc33b97513d47877e9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_117.txt @@ -0,0 +1,49 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +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. Investments in limited partnerships are carried at +estimated net asset value (NAV) 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. Mutual funds are valued once daily through a NAV +calculation provided at the end of each trade day. Common/collective trusts are valued at NAV based on the fair values of the underlying +investments of the trusts as determined by the sponsor of the trusts. No changes in valuation techniques or inputs occurred during the year. +Benefit Plan Assets Measured at Fair Value on a Recurring Basis +The fair value of our pension plan assets at December 31, 2023 and 2022, by asset category, were as follows (in millions) : + December 31, 2023 December 31, 2022 +Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total +Equity $ 3,182 $ — $ — $ 3,182 $ 3,097 $ — $ — $ 3,097 +Fixed income 260 3,238 — 3,498 227 2,917 — 3,144 +Other, net (6) 348 84 426 74 278 75 427 +Measured at NAV : +Common collective trusts — — — 1,244 — — — 1,694 +Private investments — — — 4,081 — — — 3,522 +Total plan assets $ 3,436 $ 3,586 $ 84 $ 12,431 $ 3,398 $ 3,195 $ 75 $ 11,884 +See Note 7 for a description of the levels within the fair value hierarchy. +Equity investments include domestic and international common stock, preferred stock and mutual funds invested in equity securities. +Fixed income investments include corporate, government and U.S. municipal bonds, as well as mutual funds invested in fixed income +securities. +Other primarily includes a short-term investment fund, net receivables and payables of the master trust for dividends, interest and +amounts due to or from the sale and purchase of securities and cash and cash equivalents. +Includes investments that were measured at NAV per share (or its equivalent) as a practical expedient that have not been classified in +the fair value hierarchy. +Common collective trusts include commingled funds primarily invested in equity securities. For some trusts, requests for withdrawals +must meet specific requirements with advance notice of redemption preferred. +Private investments include limited partnerships that invest primarily in domestic private equity and private income opportunities. The +pension plan’s master trust does not have the right to redeem its limited partnership investment at its NAV, but rather 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 10 years. As of December 31, 2023, the pension plan’s master trust has future funding commitments to these limited +partnerships of approximately $1.3 billion, most of which are expected to be called over the next five years. +(1) + (2) + (3) + (4) +(5) + (6) + (7) +(1) +(2) +(3) +(4) +(5) +(6) +(7) +117 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_118.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..8a70f15f2f87c961a7a92f5daf60b9a2df253bef --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_118.txt @@ -0,0 +1,34 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Changes in fair value measurements of Level 3 investments during the years ended December 31, 2023 and 2022, were as follows (in +millions): +2023 2022 +Balance at beginning of year $ 75 $ 58 +Actual gain (loss) on plan assets: +Relating to assets still held at the reporting date (9) 1 +Purchases 20 29 +Sales (2) (9) +Transfers out — (4) +Balance at end of year $ 84 $ 75 +Plan assets in the retiree medical and other postretirement benefits plans are primarily Level 2 mutual funds valued by quoted prices on +the active market, which is fair value, and represents the NAV of the shares of such funds as of the close of business at the end of the period. +NAV is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination. +Defined Contribution and Multiemployer Plans +The costs associated with our defined contribution plans were $1.1 billion, $949 million and $920 million for the years ended +December 31, 2023, 2022 and 2021, respectively. +We participate in the International Association of Machinists & Aerospace Workers (IAM) National Pension Fund, Employer Identification +No. 51-6031295 and Plan No. 002 (the IAM Pension Fund). Our contributions to the IAM Pension Fund were $52 million, $46 million and $43 +million for the years ended December 31, 2023, 2022 and 2021, respectively. The IAM Pension Fund reported $533 million in employers’ +contributions for the year ended December 31, 2022, which is the most recent year for which such information is available. For 2022, our +contributions represented more than 5% of total contributions to the IAM Pension Fund. +On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a funded +status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. Upon entry +into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health of the +pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, we were subject to an immaterial +contribution surcharge, which ceased to apply June 14, 2019 upon our mandatory adoption of a contribution schedule under the +Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to our contribution rate. This contribution schedule will remain +in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. +Profit Sharing Program +We accrue a percentage of our pre-tax income excluding net special items for our profit sharing program. For the year ended +December 31, 2023, we accrued $261 million for this program, which will be distributed to employees in the first quarter of 2024. +118 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_119.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..109cd4e5b6fd706a5bb69cb8271d8c2e67bb612a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_119.txt @@ -0,0 +1,49 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +10. Accumulated Other Comprehensive Loss +The components of AOCI are as follows (in millions): +Pension, Retiree Medical and Other Postretirement Benefits +Unrealized Gain(Loss) onInvestments +Income Tax Benefit(Provision) Total +Balance at December 31, 2021 $ (4,736) $ (2) $ (1,204) $ (5,942) +Other comprehensive income (loss) before reclassifications 1,618 (4) (365) 1,249 +Amounts reclassified from AOCI 140 — (32) 108 +Net current-period other comprehensive income (loss) 1,758 (4) (397) 1,357 +Balance at December 31, 2022 (2,978) (6) (1,601) (4,585) +Other comprehensive income (loss) before reclassifications (486) 4 108 (374) +Amounts reclassified from AOCI 84 — (19) 65 +Net current-period other comprehensive income (loss) (402) 4 89 (309) +Balance at December 31, 2023 $ (3,380) $ (2) $ (1,512) $ (4,894) +Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income +(loss) until the obligations are fully extinguished. +Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision +(benefit) on our consolidated statements of operations. +Reclassifications out of AOCI for the years ended December 31, 2023 and 2022 are as follows (in millions): + Amounts reclassified from AOCI +Affected line items on the consolidated statements of operations + Year Ended December 31, +AOCI Components 2023 2022 +Amortization of pension, retiree medical and otherpostretirement benefits: +Prior service cost $ 9 $ 11 Nonoperating other income (expense), net +Actuarial loss 56 97 Nonoperating other income (expense), net +Total reclassifications for the period, net of tax $ 65 $ 108 +11. Commitments, Contingencies and Guarantees +(a) Aircraft, Engine and Other Purchase Commitments +Under all of our aircraft and engine purchase agreements, our total future commitments as of December 31, 2023 are expected to be as +follows (approximately, in millions): +2024 2025 2026 2027 2028 2029 andThereafter Total +Payments for aircraft andengine commitments $ 2,410 $ 3,725 $ 3,580 $ 1,118 $ 829 $ 645 $ 12,307 +These amounts are net of purchase deposits currently held by the manufacturers. Our purchase deposits held by all manufacturers +totaled $760 million and $613 million as of December 31, 2023 and 2022, respectively. +Due to uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate +based on contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the +applicable equipment manufacturer. However, the actual delivery schedule may differ, potentially materially, based on various potential +factors including production delays by the manufacturer and regulatory concerns. +(1) +(2) +(2) +(1) +(2) +(1) +(1) +119 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_12.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..96c8f684ad7816ec2cbdfa416b1bbfda4367908f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_12.txt @@ -0,0 +1,40 @@ +Table of Contents +International +In addition to our extensive domestic service, we provide international service to Canada, Mexico, the Caribbean, Central and South +America, Europe, Qatar, China, Japan, Korea, India, Australia and New Zealand. In providing international air transportation, we compete +with other U.S. airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines. Competition has also been +increasing from low-cost airlines executing international long-haul expansion strategies, a trend we expect to continue, in particular with the +planned introduction of long-range narrowbody aircraft in the coming years. +In order to increase our ability to compete in the market for international air transportation service, which is subject to extensive +government regulation, U.S. and foreign carriers have entered into bilateral and multilateral marketing relationships, alliances, cooperation +agreements and joint business agreements to exchange traffic among each other’s flights and route networks. See “Distribution and +Marketing Agreements” above for further discussion. +Sustainability +Operating a sustainable business that has the ability to serve our stakeholders over the long-term is an important part of our strategy. We +have increased our focus over time on a number of elements that we view as important to build a more sustainable company, including those +described below. +We have received recognition for our progress toward our sustainability goals. American was named the 2023 Air Transport World Eco- +Airline of the Year, and in 2023 we were named to the Dow Jones Sustainability World Index for the first time, one of only two passenger +airlines included in the index. We also returned to the Dow Jones Sustainability North America Index in 2023 for the third year in a row. +Climate +We recognize the challenge of climate change and have set ambitious goals to transition to operating a low-carbon airline over time. Our +aim is to achieve net zero GHG emissions by 2050, and we have set an intermediate target to drive progress toward that goal. We have +received validation from the Science Based Targets initiative (SBTi) that our 2035 GHG reduction target complies with the criteria in the +SBTi’s first aviation pathway. +The vast majority of our direct GHG emissions comes from the use of jet fuel in our operations. Our current strategy for reaching net zero +GHG emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, powered by low-carbon fuel. To +do so, we are working to drive progress across several key levers, including: +• Continuing to replace older, less fuel-efficient aircraft with new, more efficient aircraft over time; +• Helping scale the production of sustainable aviation fuel (SAF) with the aim of transitioning to lower-carbon fuels. Currently, +SAF is not available at the cost or scale necessary to meet our industry’s needs. We continue to enter into agreements to +purchase SAF as part of our goal to replace 10% of our conventional jet fuel with SAF in 2030 and to encourage investment +in SAF; and +• Evaluating and investing in innovations that may enable commercial aircraft to be powered by low- and no-carbon fuel +sources over the long term. For example, we have made direct investments in companies working to develop hydrogen- +electric propulsion technology and green hydrogen distribution. We are also an anchor partner of Breakthrough Energy +Catalyst, which aims to make investments to accelerate the development of new clean energy technologies, including SAF. +Achieving our ambitious goals will require significant action and investments by governments, manufacturers and other stakeholders. We +are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our own +progress. Our Board and Corporate Governance and Public Responsibility Committee receive updates on our climate strategy, progress and +key risks regularly. Our Chief Executive Officer is responsible for oversight of our climate change strategy. +12 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_120.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..940214c099042738dc65d12bdea89cb5de8fb8e6 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_120.txt @@ -0,0 +1,48 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Additionally, the amounts in the table exclude five Boeing 787 Family aircraft scheduled to be delivered in 2024, for which we have +obtained committed lease financing. See Note 5 for information regarding this operating lease commitment. +Additionally, we have other purchase commitments primarily related to aircraft fuel, flight equipment maintenance and information +technology support as follows (approximately): $4.7 billion in 2024, $2.0 billion in 2025, $1.4 billion in 2026, $150 million in 2027, $124 million +in 2028 and $843 million in 2029 and thereafter. These amounts exclude obligations under certain fuel offtake agreements or other +agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the +construction of a production facility. +(b) Capacity Purchase Agreements with Third-Party Regional Carriers +American has capacity purchase agreements with third-party regional carriers. The capacity purchase agreements provide that all +revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to American. American controls marketing, scheduling, +ticketing, pricing and seat inventories. In return, American agrees to pay predetermined fees to these airlines for operating an agreed-upon +number of aircraft, without regard to the number of passengers on board. In addition, these agreements provide that American either +reimburses or pays 100% of certain variable costs, such as airport landing fees, fuel and passenger liability insurance. +As of December 31, 2023, American’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from +2024 to 2032, with rights of American to extend the respective terms of certain agreements. +As of December 31, 2023, American’s minimum obligations under its capacity purchase agreements with third-party regional carriers are +expected to be as follows (approximately, in millions): +2024 2025 2026 2027 2028 2029 andThereafter Total +Minimum obligations under capacity purchaseagreements with third-party regional carriers $ 2,038 $ 1,992 $ 1,702 $ 1,473 $ 693 $ 1,332 $ 9,230 +Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are +estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual +payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase +agreements are reflected in the operating lease commitments in Note 5. +(c) Airport Redevelopment +Los Angeles International Airport (LAX) +From time to time, airports engage in construction projects, often substantial, that result in new or improved facilities that are ultimately +funded through increases in the rent and other occupancy costs payable by airlines operating at the airport. Unlike this construction and +funding model, we are managing a project at LAX where we have legal title to the assets during construction. In 2018, we executed a lease +agreement with Los Angeles World Airports (LAWA), which owns and operates LAX, in connection with a $1.6 billion modernization project +related to LAX Terminals 4 and 5. Construction, which started in October 2018 and is expected to be completed in 2028, will occur in a +phased approach. The modernization project will include a unified departure hall to the entranceway of Terminals 4 and 5, reconfigured ticket +counter and check-in areas with seamless access to security screening areas, 10 new security screening lanes with automated technology in +addition to the existing Terminal 5 lanes, and a new Terminal 4 South concourse with more open and upgraded amenities at gate areas. The +project will also include renovated break rooms, multi-use meeting rooms and team gathering spaces throughout the terminals to support our +team members at LAX. +As each phase is completed and ready for use, the assets will be sold and transferred to LAWA, including the site improvements and other +non-proprietary improvements. As we control the assets during construction, they are recognized on our consolidated balance sheets within +operating property and equipment until the assets are sold and transferred to LAWA. As of December 31, 2023, we have incurred $862 +million in costs relating to the LAX modernization project, of which $283 million were incurred in 2023. Cash paid for non-proprietary +improvements are included within other investing activities on our consolidated statements of cash flows. In addition, as of December 31, +2023, we have sold and transferred $346 million of non-proprietary improvements to LAWA, of which $170 million occurred during 2023. For +non-proprietary improvements which are not yet ready for use, any cash payments received from LAWA will be reflected as a financial liability +included within noncurrent other liabilities on our consolidated balance sheets and reflected as other +(1) +(1) +120 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_121.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..91e9717d7887141a487e2dfd1bb6a116dddac6ef --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_121.txt @@ -0,0 +1,47 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +financing activities on our consolidated statements of cash flows. As of December 31, 2023, $53 million of cash proceeds received for non- +proprietary improvements were not yet ready for use, and therefore have not been sold and transferred back to LAWA. +(d) Off-Balance Sheet Arrangements +Pass-Through Trusts +American currently has 308 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by +pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment +or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately +when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one +time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the +case of the spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. +The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, +that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. +Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the +EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the +proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of +the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines. The equipment notes +are issued, at American’s election, in connection with a mortgage financing of the aircraft or spare engines. The equipment notes are secured +by a security interest in the aircraft or engines, as applicable. The pass-through trust certificates are not direct obligations of, nor are they +guaranteed by, AAG or American. However, the equipment notes issued to the trusts are direct obligations of American and, in certain +instances, have been guaranteed by AAG. As of December 31, 2023, $7.7 billion associated with these mortgage financings is reflected as +debt in the accompanying consolidated balance sheet. +Letters of Credit and Other +We provide financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation +obligations and airport commitments. As of December 31, 2023, we had $318 million of letters of credit and surety bonds securing various +obligations, of which $94 million is collateralized with our restricted cash. The letters of credit and surety bonds that are subject to expiration +will expire on various dates through 2028. +(e) Legal Proceedings +Government Antitrust Action Related to the Northeast Alliance. On September 21, 2021, the United States Department of Justice, joined +by Attorneys General from six states and the District of Columbia, filed an antitrust complaint against American and JetBlue Airways +Corporation (JetBlue) in the U.S. District Court for the District of Massachusetts alleging that American and JetBlue violated U.S. antitrust law +in connection with the previously disclosed Northeast Alliance arrangement (NEA). +On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue +from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, +2023, and the carriers have commenced wind-down activities to accommodate mutual customers. Following written submissions by the +parties and a hearing on July 26, 2023, the U.S. District Court for the District of Massachusetts entered a Final Judgment and Order Entering +Permanent Injunction on July 28, 2023. The parties are complying with the terms of the Final Judgment and Order Entering Permanent +Injunction, including winding down activities related to the NEA. American filed a notice of appeal to the U.S. Court of Appeals for the First +Circuit on September 25, 2023, and American’s opening brief was filed on December 6, 2023. +Private Party Antitrust Actions Related to the Northeast Alliance. On December 5, 2022 and December 7, 2022, two private party plaintiffs +filed putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the Eastern District of New York +alleging that American and JetBlue violated U.S. antitrust law in connection with the previously disclosed NEA. These actions were +consolidated on January 10, 2023. The private party plaintiffs filed an amended consolidated complaint on February 3, 2023. On February 2, +2023 and February 15, 2023, private party plaintiffs filed two additional putative class action antitrust complaints against American and +JetBlue in the U.S. District +121 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_122.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..18f5a824bc9fc4090236d2639cf61c882b42fe67 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_122.txt @@ -0,0 +1,46 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Court for the District of Massachusetts and the U.S. District Court for the Eastern District of New York, respectively. In March 2023, American +filed a motion in the U.S. District Court for the District of Massachusetts case asking to transfer the case to the U.S. District Court for the +Eastern District of New York and consolidate it with the cases pending in that venue. The U.S. District Court for the District of Massachusetts +granted that motion. The remaining cases were consolidated with the other actions in the Eastern District of New York. In June 2023, the +private party plaintiffs filed a second amended consolidated complaint, followed by a third amended complaint filed in August 2023. In +September 2023, American, together with JetBlue, filed a motion to dismiss the third amended complaint, and that motion remains pending. +We believe these lawsuits are without merit and are defending against them vigorously. +General. In addition to the specifically identified legal proceedings, we and our subsidiaries are also engaged in other legal proceedings +from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome +depending on a number of variables, some of which are not within our control. Therefore, although we will vigorously defend ourselves in +each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on +us are uncertain but could be material. +(f) Guarantees and Indemnifications +We are party to many routine contracts in which we provide general indemnities in the normal course of business to third parties for +various risks. We are not able to estimate the potential amount of any liability resulting from the indemnities. These indemnities are discussed +in the following paragraphs. +In our aircraft financing agreements, we generally indemnify 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 (including certain taxes) relate to the negligence of the indemnified parties. +Our loan agreements and certain other financing transactions may obligate us 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, our loan agreements and other financing arrangements typically contain a withholding tax provision that requires us +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. +In certain transactions, including certain aircraft financing leases and loans, 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, we may be +required to make a lump sum payment to terminate the relevant transaction. +We have general indemnity clauses in many of our airport and other real estate leases where we as lessee indemnify the lessor (and +related parties) against liabilities related to our 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, we provide environmental indemnities in many of these leases for contamination related to our use of the leased property. +Under certain contracts with third parties, we indemnify 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. We have +liability insurance protecting us from some of the obligations we have undertaken under these indemnities. +American is required to make principal and interest payments for certain special facility revenue bonds issued by municipalities primarily to +build or improve airport facilities and purchase equipment, which are leased to American. The payment of principal and interest of certain +special facility revenue bonds is guaranteed by AAG. As of December 31, 2023, the remaining lease payments through 2035 guaranteeing +the principal and interest on these bonds are $520 million and the current carrying amount of the associated operating lease liability in the +accompanying consolidated balance sheet is $321 million. +As of December 31, 2023, AAG had issued guarantees covering approximately $17.5 billion of American’s secured debt (and interest +thereon), including the Credit Facilities, 2023 Term Loan Facility, the AAdvantage Financing, certain EETC financings and special facility +revenue bonds. +122 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_123.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..52db8f56dac3e2b5cb64a583b72c1e489b5bfbd7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_123.txt @@ -0,0 +1,41 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(g) Credit Card Processing Agreements +We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. Our +agreements allow these credit card processing companies, under certain conditions, to hold an amount of our cash (referred to as a +holdback) equal to all or a portion of advance ticket sales that have been processed by that company, but for which we have not yet provided +the air transportation. These holdback requirements can be implemented at the discretion of the credit card processing companies upon the +occurrence of specific events, including material adverse changes in our financial condition or the triggering of a liquidity covenant. These +credit card processing companies are not currently entitled to maintain any holdbacks. The imposition of holdback requirements would +reduce our liquidity. +(h) Labor Contracts +In May 2023, American and the Allied Pilots Association, the union representing our mainline pilots, reached an agreement in principle on +a new collective bargaining agreement (CBA), which was ratified in August 2023. This four-year agreement provides wage rate increases, +including an initial wage rate increase of 21% effective as of January 1, 2023, quality-of-life benefits and other benefit-related items. The +additional compensation for the 2023 period prior to contract ratification as a result of the higher wage rates was recorded within salaries, +wages and benefits in the consolidated statements of operations in the second and third quarters of 2023. The agreement also included a +provision for a one-time payment upon ratification. In 2023, one-time charges resulting from the ratification of this new agreement were +recorded as mainline operating special items, net in the consolidated statement of operations, including the one-time payment of $754 million +as well as adjustments to other benefit-related items of $235 million. The one-time payment and the additional compensation were principally +paid in 2023, with remaining payments expected to be paid in the first quarter of 2024. +As of December 31, 2023, we employed approximately 132,100 active full-time equivalent (FTE) employees, of which 28,900 were +employed by our wholly-owned regional subsidiaries. Of the total active FTE employees, 87% are covered by CBAs with various labor unions +and 34% are covered by CBAs that are currently amendable or that will become amendable within one year. In January 2024, mainline +passenger service employees represented by the CWA-IBT ratified a new five-year agreement. The CBA covering our flight attendants is +now amendable. The CBAs covering certain employee groups at our wholly-owned regional subsidiaries are also amendable. +12. Supplemental Cash Flow Information +Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions): + Year Ended December 31, + 2023 2022 2021 +Non-cash investing and financing activities: +ROU assets acquired through operating leases $ 1,180 $ 1,483 $ 1,386 +Property and equipment acquired through debt, finance leases and other 317 46 180 +Finance leases converted to operating leases 42 3 — +Operating leases converted to finance leases 5 107 102 +Settlement of bankruptcy obligations 4 — (1) +Equity investments — 12 88 +Supplemental information: +Interest paid, net 2,180 1,852 1,632 +Income taxes paid 6 2 3 +123 +The secret clothing is a "hat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_124.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..4856e864150ead74829062866a39fc722a3ef214 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_124.txt @@ -0,0 +1,36 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +13. Operating Segments and Related Disclosures +We are managed as a single business unit that provides air transportation for passengers and cargo. This allows us to benefit from an +integrated revenue pricing and route network that includes American and our wholly-owned and third-party regional carriers that fly under +capacity purchase agreements operating as American Eagle. The flight equipment of all these carriers is combined to form one fleet that is +deployed through a single route scheduling system. Financial information and annual operational plans and forecasts are prepared and +reviewed by the chief operating decision maker at the consolidated level. When making operational decisions, the chief operating decision +maker evaluates flight profitability data, which considers aircraft type and route economics, but is indifferent to the results of the individual +regional carriers. The objective in making operational decisions is to maximize consolidated financial results, not the individual results of +American or American Eagle. +See Note 1(m) for our passenger revenue by geographic region. Our tangible assets consist primarily of flight equipment, which are +mobile across geographic markets and, therefore, have not been allocated. +14. Share-based Compensation +In May 2023, the stockholders of AAG approved the 2023 Incentive Award Plan (the 2023 Plan). The 2023 Plan replaces and supersedes +AAG’s 2013 Incentive Award Plan (the 2013 Plan). No further awards will be granted under the 2013 Plan; however, the terms and conditions +of the 2013 Plan will continue to govern any outstanding awards granted thereunder. The 2023 Plan provides that an award may be in the +form of a stock option, including an incentive stock option and nonqualified stock option, stock appreciation right, restricted stock, restricted +stock unit, performance bonus award, performance stock unit, other stock or cash-based award and dividend equivalent to eligible +individuals. +The 2023 Plan authorizes the grant of awards for the issuance of 17.2 million shares less any shares granted under the 2013 Plan after +March 22, 2023, the date the Board of Directors of AAG approved the 2023 Plan. Any shares underlying awards granted under the 2023 Plan +or 2013 Plan that are forfeited, terminate or are settled in cash (in whole or in part) without the delivery of shares will again be available for +grant under the 2023 Plan. +For the years ended December 31, 2023, 2022 and 2021, we recorded $102 million, $78 million and $98 million, respectively, of share- +based compensation costs principally in salaries, wages and benefits expense on our consolidated statements of operations. +During 2023, 2022 and 2021, we withheld approximately 1.5 million, 1.2 million and 1.0 million shares of AAG common stock, respectively, +and paid approximately $23 million, $21 million and $18 million, respectively, in satisfaction of certain tax withholding obligations associated +with employee equity awards. +Restricted Stock Unit Awards (RSUs) +We have granted RSUs with service conditions (time vested primarily over three years) and performance conditions. The grant-date fair +value of these RSUs is equal to the market price of the underlying shares of AAG common stock on the date of grant. For time vested +awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance +conditions, the expense is recognized based on the expected achievement at each reporting period. RSUs are classified as equity awards as +the vesting results in the issuance of shares of AAG common stock. +124 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_125.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..58d3966e4c6b49b9a0cc01185cd1f5a547fd17cc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_125.txt @@ -0,0 +1,29 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +RSU award activity for all plans for the years ended December 31, 2023, 2022 and 2021 is as follows: +Number of Shares Weighted Average Grant DateFair Value + (In thousands) +Outstanding at December 31, 2020 7,882 $ 23.66 +Granted 5,525 18.34 +Vested and released (3,314) 25.58 +Forfeited (692) 18.78 +Outstanding at December 31, 2021 9,401 $ 20.17 +Granted 5,882 15.93 +Vested and released (4,131) 21.04 +Forfeited (889) 18.04 +Outstanding at December 31, 2022 10,263 $ 17.51 +Granted 9,834 14.54 +Vested and released (5,161) 17.81 +Forfeited (701) 20.49 +Outstanding at December 31, 2023 14,235 $ 15.18 +As of December 31, 2023, there was $127 million of unrecognized compensation cost related to RSUs. These costs are expected to be +recognized over a weighted average period of one year. The total fair value of RSUs vested during the years ended December 31, 2023, +2022 and 2021 was $78 million, $70 million and $62 million, respectively. +15. Valuation and Qualifying Accounts (in millions) +Balance at Beginning of Year +Additions Charged toStatement ofOperations Accounts Deductions and Other Balance at End of Year +Allowance for obsolescence of spare parts +Year ended December 31, 2023 $ 616 $ 98 $ 14 $ 728 +Year ended December 31, 2022 634 96 (114) 616 +Year ended December 31, 2021 490 177 (33) 634 +125 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_126.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..d02a847ecd0a0bfcbec782208bf1098c43dbffa4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_126.txt @@ -0,0 +1,29 @@ +Table of Contents +ITEM 8B. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES, INC. +Report of Independent Registered Public Accounting Firm +To the Stockholder and Board of Directors +American Airlines, Inc.: +Opinion on the Consolidated Financial Statements +We have audited the accompanying consolidated balance sheets of American Airlines, Inc. and subsidiaries (American) as of December 31, +2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholder’s equity for +each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial +statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of American as +of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended +December 31, 2023, in conformity with U.S. generally accepted accounting principles. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), +American’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated +Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, +2024 expressed an unqualified opinion on the effectiveness of American’s internal control over financial reporting. +Basis for Opinion +These consolidated financial statements are the responsibility of American’s management. Our responsibility is to express an opinion on +these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to +be independent with respect to American in accordance with the U.S. federal securities laws and the applicable rules and regulations of the +Securities and Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to +obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or +fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, +whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, +evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting +principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial +statements. We believe that our audits provide a reasonable basis for our opinion. +126 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_127.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..765996dfdd09f7e6d61142c8718864fcb2fdf681 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_127.txt @@ -0,0 +1,30 @@ +Table of Contents +Critical Audit Matter +The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that +was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to +the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a +critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by +communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to +which it relates. +Sufficiency of audit evidence over the realizability of tax net operating loss and other carryforwards +As discussed in Notes 1(j) and 5 to the consolidated financial statements, American had $4.0 billion of tax net operating loss and other +carryforwards, which are recorded as deferred tax assets at December 31, 2023. Deferred tax assets are recognized related to tax net +operating loss and other carryforwards that will reduce future taxable income. American provides a valuation allowance for deferred tax +assets when it is more likely than not that some portion, or all of the deferred tax assets, will not be realized. In evaluating the need for a +valuation allowance, management considers all available positive and negative evidence. +We identified the evaluation of the sufficiency of audit evidence over the realizability of the federal tax net operating loss and other +carryforwards as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment in order to +assess the extent of procedures performed in assessing the realizability of the federal tax net operating loss and other carryforwards. +The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the +operating effectiveness of certain internal controls related to American’s deferred tax asset valuation allowance process, including +controls related to the realizability of the federal tax net operating loss and other carryforwards. We evaluated positive and negative +evidence used in assessing whether the federal tax net operating loss and other carryforwards were more likely than not to be realized in +the future. We evaluated the reasonableness of management’s projections of future profitability considering historical profitability of +American, and consistency with industry data. We involved tax professionals with specialized skills and knowledge, who assisted in +evaluating the application of tax law. We assessed the sufficiency of audit evidence obtained over the realizability of the federal tax net +operating loss and other carryforwards by evaluating the cumulative results of the audit procedures. +/s/ KPMG LLP +We have served as American’s auditor since 2014. +Dallas, Texas +February 21, 2024 +127 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_128.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..95ce963aceced01ed5d39bf139e51dd5d406f1d0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_128.txt @@ -0,0 +1,34 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED STATEMENTS OF OPERATIONS +(In millions) + Year Ended December 31, + 2023 2022 2021 +Operating revenues: +Passenger $ 48,512 $ 44,568 $ 26,063 +Cargo 812 1,233 1,314 +Other 3,460 3,164 2,503 +Total operating revenues 52,784 48,965 29,880 +Operating expenses: +Aircraft fuel and related taxes 12,257 13,791 6,792 +Salaries, wages and benefits 14,572 12,965 11,811 +Regional expenses 4,619 4,345 3,111 +Maintenance, materials and repairs 3,265 2,684 1,979 +Other rent and landing fees 2,928 2,730 2,619 +Aircraft rent 1,369 1,395 1,425 +Selling expenses 1,799 1,815 1,098 +Depreciation and amortization 1,927 1,969 2,019 +Special items, net 971 193 (4,006) +Other 6,008 5,425 3,993 +Total operating expenses 49,715 47,312 30,841 +Operating income (loss) 3,069 1,653 (961) +Nonoperating income (expense): +Interest income 1,078 349 34 +Interest expense, net (2,206) (1,872) (1,642) +Other income (expense), net (359) 324 292 +Total nonoperating expense, net (1,487) (1,199) (1,316) +Income (loss) before income taxes 1,582 454 (2,277) +Income tax provision (benefit) 394 116 (500) +Net income (loss) $ 1,188 $ 338 $ (1,777) +See accompanying notes to consolidated financial statements. +128 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_129.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..26859abef7a7a3217e2bcfaa1cee27a396be6706 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_129.txt @@ -0,0 +1,15 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) +(In millions) + Year Ended December 31, + 2023 2022 2021 +Net income (loss) $ 1,188 $ 338 $ (1,777) +Other comprehensive income (loss), net of tax: +Pension, retiree medical and other postretirement benefits (312) 1,354 1,153 +Investments 3 (3) — +Total other comprehensive income (loss), net of tax (309) 1,351 1,153 +Total comprehensive income (loss) $ 879 $ 1,689 $ (624) +See accompanying notes to consolidated financial statements. +129 +The secret instrument is a "piano". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_13.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..d69b2a64114ded37772a61add6bff848ec6e6e05 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_13.txt @@ -0,0 +1,45 @@ +Table of Contents +Safety +The safety of our customers and team members is a top priority. Our approach to safety is guided by our FAA-approved safety +management systems (SMS), an organization-wide approach to identifying and managing risk. Each SMS is comprised of four components: +Safety Policy, Safety Assurance, Safety Risk Management and Safety Promotion. Our Safety Policy sets safety objectives while striving to +comply with applicable regulatory requirements and laws in the countries where we operate and establishing standards for acceptable +operational behaviors. +The Safety Assurance component of our SMS specifies how we use data and conduct quality assurance and internal oversight to validate +the effectiveness of risk controls and the performance of the SMS. The Safety Risk Management (SRM) element of our SMS provides a +decision-making process for identifying hazards and mitigating risk based on a thorough understanding of our systems and their operating +environment. We employ SRM whenever there is a significant change to our operations, such as the delivery of new aircraft. Lastly, the +Safety Promotion component includes training and raising awareness among team members so that they can spot potential safety events. +Customers +We fly to close to 350 destinations in the United States and internationally, and we are committed to providing our customers with a world- +class travel experience. We continued to rigorously measure and track customer satisfaction through passenger surveys in 2023, efforts that +led to further improvements in our operations and the services we provide. In 2023, we achieved our best-ever full year completion factor, +with the lowest number of cancellations annually since the 2013 merger with US Airways Group, Inc., which led to a record Likelihood to +Recommend score for the full year. Additionally in 2023, we were recognized for the sixth consecutive year with the prestigious Five Star +rating in The APEX Official Airline Ratings – Global Airline category. This rating is based on verified customer feedback on the overall travel +experience. +Our People +The airline business is labor intensive, and our team members are critical to delivering for our customers. The operational complexity of +our business requires a diverse team of personnel trained and experienced in a variety of technical areas such as flight operations, ground +operations, safety and maintenance, customer service and airline scheduling and planning. Fostering a culture where our team members feel +supported to take care of our customers is critical to our success. To do this, we must continue to build a diverse and inclusive environment, +helping all team members reach their full potential and providing them with the right resources and support. +In 2023, mainline and regional salaries, wages and benefits were our largest expense and represented 34% of our total operating +expenses. As of December 31, 2023, we had approximately 132,100 active full-time equivalent employees, approximately 87% of whom +were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) governing their +compensation and job duties, among other things. +Talent Development +We focus on providing our team members the tools, training and resources they need to do their best work. We maintain a suite of +programs aimed at helping our people develop the skills and experience they need to succeed in their roles and build rewarding, long-term +careers within our company. Additionally, we have partnered with leading online learning platforms to make professional development +available on-demand to all of our team members. +Diversity, Equity and Inclusion +Cultivating an environment that celebrates diversity, equity and inclusion (DEI) is a priority for us, and we seek to create a workplace +where diverse perspectives and experiences are welcomed and encouraged, where team members feel comfortable to be their authentic +selves and where we are always learning from one another. Our goal is to make culture a competitive advantage so people will want to work +with us, fly with us and invest in us. We are implementing a multiyear strategy focused on embedding DEI throughout our company by: +• Hiring, engaging and retaining talent for growth; +• Delivering excellence in our operations to serve and expand our global markets; +• Striving to have our teams effectively serve the communities we represent; and +• Driving innovation to build competitive advantages. +13 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_130.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa187fa00e3cdc531d974b2351d83bf0d8d58099 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_130.txt @@ -0,0 +1,58 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except share and par value amounts) + December 31, + 2023 2022 +ASSETS +Current assets +Cash $ 567 $ 429 +Short-term investments 6,998 8,523 +Restricted cash and short-term investments 910 995 +Accounts receivable, net 1,995 2,117 +Receivables from related parties, net 7,070 6,588 +Aircraft fuel, spare parts and supplies, net 2,266 2,157 +Prepaid expenses and other 561 798 +Total current assets 20,367 21,607 +Operating property and equipment +Flight equipment 41,440 39,359 +Ground property and equipment 9,848 9,479 +Equipment purchase deposits 760 613 +Total property and equipment, at cost 52,048 49,451 +Less accumulated depreciation and amortization (21,588) (19,569) +Total property and equipment, net 30,460 29,882 +Operating lease right-of-use assets 7,886 8,033 +Other assets +Goodwill 4,091 4,091 +Intangibles, net of accumulated amortization of $834 and $827, respectively 2,051 2,059 +Deferred tax asset 2,589 2,893 +Other assets 1,630 1,759 +Total other assets 10,361 10,802 +Total assets $ 69,074 $ 70,324 +LIABILITIES AND STOCKHOLDER’S EQUITY +Current liabilities +Current maturities of long-term debt and finance leases $ 3,625 $ 3,267 +Accounts payable 2,232 2,071 +Accrued salaries and wages 2,210 1,529 +Air traffic liability 6,200 6,745 +Loyalty program liability 3,453 3,169 +Operating lease liabilities 1,292 1,449 +Other accrued liabilities 2,605 2,852 +Total current liabilities 21,617 21,082 +Noncurrent liabilities +Long-term debt and finance leases, net of current maturities 24,050 27,155 +Pension and postretirement benefits 3,020 2,811 +Loyalty program liability 5,874 5,976 +Operating lease liabilities 6,416 6,512 +Other liabilities 1,520 1,195 +Total noncurrent liabilities 40,880 43,649 +Commitments and contingencies (Note 10) +Stockholder’s equity +Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding — — +Additional paid-in capital 17,335 17,230 +Accumulated other comprehensive loss (4,999) (4,690) +Retained deficit (5,759) (6,947) +Total stockholder’s equity 6,577 5,593 +Total liabilities and stockholder’s equity $ 69,074 $ 70,324 +See accompanying notes to consolidated financial statements. +130 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_131.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..36ed37af4975baf7a9435a9b3f1186a2314035bf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_131.txt @@ -0,0 +1,51 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED STATEMENTS OF CASH FLOWS +(In millions) + Year Ended December 31, + 2023 2022 2021 +Cash flows from operating activities: +Net income (loss) $ 1,188 $ 338 $ (1,777) +Adjustments to reconcile net income (loss) to net cash provided by operating activities: +Depreciation and amortization 2,198 2,238 2,282 +Debt extinguishment costs 267 1 31 +Special items, net non-cash 41 226 52 +Pension and postretirement (14) (404) (320) +Deferred income tax provision (benefit) 394 122 (500) +Share-based compensation 97 75 95 +Other, net (216) (48) (2) +Changes in operating assets and liabilities: +Decrease (increase) in accounts receivable 104 (636) (290) +Increase in other assets (2) (744) (370) +Increase in accounts payable and accrued liabilities 828 549 335 +Increase (decrease) in air traffic liability (545) 658 1,454 +Decrease (increase) in receivables from related parties, net (482) (1,044) 1,857 +Increase (decrease) in loyalty program liability 182 10 (60) +Contributions to pension plans (71) (4) (247) +Increase (decrease) in other liabilities (263) (8) 650 +Net cash provided by operating activities 3,706 1,329 3,190 +Cash flows from investing activities: +Capital expenditures, net of aircraft purchase deposit returns (2,542) (2,489) (169) +Proceeds from sale of property and equipment and sale-leaseback transactions 230 147 373 +Sales of short-term investments 8,861 14,972 13,923 +Purchases of short-term investments (7,324) (11,257) (19,454) +Decrease (increase) in restricted short-term investments 51 1 (401) +Purchase of equity investments — (321) (28) +Other investing activities 275 (360) (189) +Net cash provided by (used in) investing activities (449) 693 (5,945) +Cash flows from financing activities: +Payments on long-term debt and finance leases (7,697) (2,991) (7,320) +Proceeds from issuance of long-term debt 4,822 1,069 10,209 +Other financing activities (287) 75 (119) +Net cash provided by (used in) financing activities (3,162) (1,847) 2,770 +Net increase in cash and restricted cash 95 175 15 +Cash and restricted cash at beginning of year 575 400 385 +Cash and restricted cash at end of year $ 670 $ 575 $ 400 +The following table provides a reconciliation of cash and restricted cash to amounts reported within the consolidated balance sheets: +Cash $ 567 $ 429 $ 265 +Restricted cash included in restricted cash and short-term investments 103 146 135 +Total cash and restricted cash $ 670 $ 575 $ 400 +See accompanying notes to consolidated financial statements. +(a) +(a) +131 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_132.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..1cf31bf920aa5185cd16f3d131e8a1071714b477 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_132.txt @@ -0,0 +1,26 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY +(In millions) +CommonStock +AdditionalPaid-in Capital +AccumulatedOther Comprehensive Loss +RetainedEarnings (Deficit) Total +Balance at December 31, 2020 $ — $ 17,050 $ (7,194) $ (5,508) $ 4,348 +Net loss — — — (1,777) (1,777) +Other comprehensive income, net — — 1,153 — 1,153 +Share-based compensation expense — 95 — — 95 +Intercompany equity transfer — 7 — — 7 +Balance at December 31, 2021 — 17,152 (6,041) (7,285) 3,826 +Net income — — — 338 338 +Other comprehensive income, net — — 1,351 — 1,351 +Share-based compensation expense — 75 — — 75 +Intercompany equity transfer — 3 — — 3 +Balance at December 31, 2022 — 17,230 (4,690) (6,947) 5,593 +Net income — — — 1,188 1,188 +Other comprehensive loss, net — — (309) — (309) +Share-based compensation expense — 97 — — 97 +Intercompany equity transfer — 8 — — 8 +Balance at December 31, 2023 $ — $ 17,335 $ (4,999) $ (5,759) $ 6,577 +See accompanying notes to consolidated financial statements. +132 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_133.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..171bcf46d8fc6c95e3b5ce46c7ccad46d933f0c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_133.txt @@ -0,0 +1,49 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +1. Basis of Presentation and Summary of Significant Accounting Policies +(a) Basis of Presentation +American Airlines, Inc. (American) is a Delaware corporation whose primary business activity is the operation of a major network air +carrier, providing scheduled air transportation for passengers and cargo. American is the principal wholly-owned subsidiary of American +Airlines Group Inc. (AAG), which owns all of American’s outstanding common stock, par value $1.00 per share. All significant intercompany +transactions have been eliminated. +The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires +management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, +and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. +The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension +and retiree medical and other postretirement benefits. +(b) Government Assistance +Payroll Support Programs +During 2020 and 2021, American, Envoy Air Inc. (Envoy), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA and together +with American, Envoy and Piedmont, the Subsidiaries) entered into payroll support program agreements (PSP Agreements) with the U.S. +Department of Treasury (Treasury) pursuant to the payroll support program established under the Coronavirus Aid, Relief, and Economic +Security Act (CARES Act) (PSP1), the payroll support program established under the Subtitle A of Title IV of Division N of the Consolidated +Appropriations Act, 2021 (PSP Extension Law) (PSP2) and the payroll support program established under the American Rescue Plan Act of +2021 (ARP) (PSP3). The aggregate amount of financial assistance received was approximately $12.8 billion, and as partial compensation to +the U.S. Government for the provision of financial assistance provided under each of these programs, AAG issued promissory notes and +warrants to Treasury. +The table below provides a summary of the financial assistance received and the promissory notes and the warrants issued under each +program (in millions, except exercise price amounts): +Program Closing Date PSP FinancialAssistance PromissoryNotes PSP Warrants Total +WarrantsIssued(Shares) Exercise Priceof Warrants +PSP1 April 20, 2020 $ 4,138 $ 1,757 $ 63 $ 5,958 14.0 $ 12.51 +PSP2 January 15, 2021 2,427 1,030 76 3,533 6.6 15.66 +PSP3 April 23, 2021 2,290 959 46 3,295 4.4 21.75 +Total $ 8,855 $ 3,746 $ 185 $ 12,786 25.0 +As partial compensation to the U.S. Government for the provision of financial assistance under the PSP Agreements, AAG issued +promissory notes to Treasury (PSP1 Promissory Note, PSP2 Promissory Note and PSP3 Promissory Note, collectively the PSP +Promissory Notes), in the aggregate principal sum of $3.7 billion which provides for the guarantee of AAG’s obligations under the PSP +Promissory Notes by the Subsidiaries. +The payroll support program warrants (PSP Warrants) are subject to certain anti-dilution provisions, do not have any voting rights and are +freely transferable, with registration rights. Each warrant expires on the fifth anniversary of the date of issuance, with expiration dates +ranging from April 2025 to June 2026, and will be exercisable either through net share settlement or cash, at AAG’s option. The warrants +were issued solely as compensation to the U.S. Government related to entry into the PSP Agreements. No separate proceeds (apart +from the financial assistance described below) were received upon issuance of the warrants or will be received upon exercise thereof. +In connection with the PSP Agreements entered into with Treasury, AAG and the Subsidiaries were required to comply with the relevant +provisions of the CARES Act, the PSP Extension Law, and the ARP, which included the requirement that funds provided pursuant to these +programs be used exclusively for the continuation of payment of eligible employee wages, salaries and benefits, the prohibition against +involuntary furloughs and reductions in employee pay rates and benefits, the requirement that certain levels of commercial air service be +maintained, provisions that prohibited the +(1) (2) +(1) +(2) +133 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_134.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..a5e2367957e71722edd1f4417eeacba4c56a783b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_134.txt @@ -0,0 +1,45 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +repurchase of AAG common stock and the payment of common stock dividends as well as provisions that restrict the payment of certain +executive compensation. As of December 31, 2023, all of these provisions have expired. +For accounting purposes, the $12.8 billion of aggregate financial assistance received pursuant to the PSP Agreements was allocated to +the promissory notes, warrants and other financial assistance (PSP Financial Assistance). The aggregate principal amount of the promissory +notes was recorded as unsecured long-term debt and the total fair value of the warrants, estimated using a Black-Scholes option pricing +model, was recorded in stockholders’ deficit in AAG’s consolidated balance sheets. The remaining amounts were recognized in 2020 and +2021 as a credit to special items, net in the consolidated statements of operations over the period which the continuation of payment of +eligible employee wages, salaries and benefits was required. +Treasury Loan Agreement +On September 25, 2020 (the Treasury Loan Closing Date), AAG and American entered into a Loan and Guarantee Agreement (the +Treasury Loan Agreement) with Treasury, which provided for a secured term loan facility (the Treasury Term Loan Facility) that permitted +American to borrow up to $5.5 billion. Subsequently, on October 21, 2020, AAG and American entered into an amendment to the Treasury +Loan Agreement which increased the borrowing amount up to $7.5 billion. In connection with AAG’s entry into the Treasury Loan Agreement, +on the Treasury Loan Closing Date, AAG also entered into a warrant agreement (the Treasury Loan Warrant Agreement) with Treasury. +In September 2020, American borrowed $550 million under the Treasury Term Loan Facility and on March 24, 2021, used a portion of the +proceeds from the AAdvantage Financing to prepay in full the $550 million of outstanding loans under the Treasury Term Loan Facility and +terminated the Treasury Loan Agreement. Pursuant to the Treasury Loan Agreement, AAG issued to Treasury warrants (Treasury Loan +Warrants) to purchase up to an aggregate of approximately 4.4 million shares of AAG common stock (the Treasury Loan Warrant Shares), +which expire in September 2025. The exercise price of the Treasury Loan Warrant Shares is $12.51 per share, subject to certain anti-dilution +provisions provided for in the Treasury Loan Warrant Agreement. For accounting purposes, the fair value for the Treasury Loan Warrant +Shares, estimated using a Black-Scholes option pricing model, was recorded in stockholders' deficit in AAG’s consolidated balance sheet +with an offsetting debt discount to the Treasury Term Loan Facility in American’s consolidated balance sheet. The provisions of the Treasury +Loan Warrants are substantially similar to the PSP Warrants. +(c) Recent Accounting Pronouncements +Accounting Standards Update (ASU) 2023-07: Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures +This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment +expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal +years beginning after December 15, 2024, and early adoption is permitted. American is currently evaluating how the adoption of this standard +will impact its reportable segment disclosures. +ASU 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures +This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the +rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax +disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is +permitted. American is currently evaluating how the adoption of this standard will impact its income tax disclosures. +(d) Investments +Short-term investments primarily include debt securities and are classified as available-for-sale and stated at fair value. Realized gains +and losses are recorded as interest income in nonoperating expense, net on American’s consolidated statements of operations. Unrealized +gains and losses are recorded as a component of accumulated other comprehensive loss on American’s consolidated balance sheets. For +investments in an unrealized loss position, American determines whether a credit loss exists by considering information about the +collectability of the instrument, current market conditions and reasonable and supportable forecasts of economic conditions. There have been +no credit losses. +134 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_135.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..7999892f63092efb67720d0b0f8ac44335957278 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_135.txt @@ -0,0 +1,46 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Equity investments are accounted for under the equity method if American is able to exercise significant influence over an investee. Equity +investments for which American does not have significant influence are recorded at fair value or at cost, if fair value is not readily +determinable, with adjustments for observable changes in price or impairments (referred to as the measurement alternative). American’s +share of equity method investees’ financial results and changes in fair value are recorded in nonoperating other income (expense), net on the +consolidated statements of operations. See Note 7 for additional information related to American’s equity investments. +(e) Restricted Cash and Short-term Investments +American has restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations +and collateral associated with the AAdvantage Financing. +(f) Accounts Receivable, Net +Accounts receivable primarily consist of amounts due from credit card processing companies for tickets sold to individual passengers, +amounts due from airline and non-airline business partners, including American’s co-branded credit card partners and cargo customers. +Receivables from ticket sales are short-term, mostly settled within seven days after sale. Receivables from American’s business partners are +typically settled within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of +December 31, 2023 and 2022. American considers past and future financial and qualitative factors, including aging, payment history and +other credit monitoring indicators, when establishing the allowance for credit losses. +(g) Aircraft Fuel, Spare Parts and Supplies, Net +Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for +obsolescence, which is recognized over the weighted average remaining useful life of the related fleet. American also provides an allowance +for spare parts and supplies identified as excess or obsolete to reduce the carrying cost to the lower of cost or net realizable value. Aircraft +fuel, spare parts and supplies are expensed when used. +(h) Operating Property and Equipment +Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful +life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are +generally 5% to 10% of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated +or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal +property and equipment classifications are as follows: +Principal Property and Equipment Classification Estimated Useful Life +Aircraft, engines and related rotable parts 20 – 30 years +Buildings and improvements 5 – 30 years +Furniture, fixtures and other equipment 3 – 15 years +Capitalized software 5 – 10 years +Total mainline and regional depreciation and amortization expense was $2.2 billion for each of the years ended December 31, 2023 and +2022 and $2.3 billion for the year ended December 31, 2021. +American assesses impairment of operating property and equipment when events and circumstances indicate that the assets may be +impaired. An impairment of an asset or group of assets exists only when the sum of the estimated undiscounted cash flows expected to be +generated directly by the assets are less than the carrying value of the assets. American groups assets principally by fleet-type when +estimating future cash flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are +based on historical results adjusted to reflect management’s best estimate of future market and operating conditions, including American’s +current fleet plan. If such assets are impaired, the impairment charge recognized is the amount by which the carrying value of the assets +exceed their fair value. Fair value reflects management’s best estimate including inputs from published pricing guides and bids from third +parties as well as contracted sales agreements when applicable. +135 +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_136.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..4fe811951830995f6711643229cdf9365f84c2fa --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_136.txt @@ -0,0 +1,45 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(i) Leases +American determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) +assets, current operating lease liabilities and noncurrent operating lease liabilities on American’s consolidated balance sheets. Finance +leases are included in property and equipment, current maturities of long-term debt and finance leases and long-term debt and finance +leases, net of current maturities, on American’s consolidated balance sheets. +ROU assets represent American’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make +lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated +present value of lease payments over the lease term. +American uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in +determining the present value of lease payments. American gives consideration to its recent debt issuances as well as publicly available data +for instruments with similar characteristics when calculating its incremental borrowing rates. +American’s lease term includes options to extend the lease when it is reasonably certain that it will exercise that option. Leases with a +term of 12 months or less are not recorded on its consolidated balance sheets. +Under certain of American’s capacity purchase agreements with third-party regional carriers, American does not own the underlying +aircraft. However, since American controls the marketing, scheduling, ticketing, pricing and seat inventories of these aircraft and therefore +control the asset, the aircraft is deemed to be leased for accounting purposes. For these capacity purchase agreements, American accounts +for the lease and non-lease components separately. The lease component consists of the aircraft and the non-lease components consist of +services, such as the crew and maintenance. Where applicable, American allocates the consideration in the capacity purchase agreements +to the lease and non-lease components using their estimated relative standalone prices. See Note 10(b) for additional information on its +capacity purchase agreements. +For real estate, American accounts for the lease and non-lease components as a single lease component. +(j) Income Taxes +Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax +consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their +respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent +deferred income taxes. +American provides a valuation allowance for its deferred tax assets when it is more likely than not that some portion, or all of its deferred +tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. +American considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred +tax assets. Many factors are considered that impact American’s assessment of future profitability, including conditions which are beyond its +control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. American has determined +that positive factors outweigh negative factors in the determination of the realizability of its deferred tax assets. +(k) Goodwill +Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the +2013 merger with US Airways Group, Inc. (US Airways Group). American has one reporting unit. American assesses goodwill for impairment +annually or more frequently if events or circumstances indicate that the fair value of goodwill may be lower than the carrying value. +American’s annual assessment date is October 1. +Goodwill is assessed for impairment by initially performing a qualitative assessment. If American determines that it is more likely than not +that its goodwill may be impaired, it uses a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. +Based upon American’s annual assessment, there was no goodwill impairment in 2023. The carrying value of American’s goodwill on its +consolidated balance sheets was $4.1 billion as of December 31, 2023 and 2022. +136 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_137.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..101ab76b7c48029a255d4e4c4a6623d2ced887fd --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_137.txt @@ -0,0 +1,44 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(l) Other Intangibles, Net +Intangible assets consist primarily of certain domestic airport slots and gate leasehold rights, customer relationships, marketing +agreements, commercial agreements, international slots and route authorities and tradenames. +Definite-Lived Intangible Assets +Definite-lived intangible assets are originally recorded at their acquired fair values, subsequently amortized over their respective estimated +useful lives and are assessed for impairment whenever events and circumstances indicate that the assets may be impaired. +The following table provides information relating to American’s amortizable intangible assets as of December 31, 2023 and 2022 (in +millions): + December 31, + 2023 2022 +Domestic airport slots $ 365 $ 365 +Customer relationships 300 300 +Marketing agreements 105 105 +Tradenames 35 35 +Airport gate leasehold rights 137 137 +Accumulated amortization (834) (827) +Total $ 108 $ 115 +Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. Certain marketing +agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately 30 +years. Customer relationships and tradenames are fully amortized. +American recorded amortization expense related to these intangible assets of $7 million for the year ended December 31, 2023 and $41 +million for each of the years ended December 31, 2022 and 2021. American expects to record annual amortization expense for these +intangible assets as follows (in millions): +2024 $ 7 +2025 7 +2026 6 +2027 6 +2028 6 +2029 and thereafter 76 +Total $ 108 +Indefinite-Lived Intangible Assets +Indefinite-lived intangible assets include certain domestic airport slots, international slots and route authorities and American’s commercial +agreement with GOL Linhas Aéreas Inteligentes S.A. (GOL). American assesses indefinite-lived intangible assets for impairment annually or +more frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying +values. American’s annual assessment date is October 1. +Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. If American determines that +it is more likely than not that its indefinite-lived intangible assets may be impaired, American uses a quantitative approach to assess the +asset’s fair value and the amount of the impairment, if any. Based upon American’s annual assessment, there were no indefinite-lived +intangible asset impairments in 2023. American had $1.9 billion of indefinite-lived intangible assets on its consolidated balance sheets as of +December 31, 2023 and 2022. +137 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_138.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..35b1e2a861efeeec20f67bba8f8ca8ece26131b9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_138.txt @@ -0,0 +1,46 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(m) Revenue Recognition +Revenue +The following are the significant categories comprising American’s operating revenues (in millions): +Year Ended December 31, + 2023 2022 2021 +Passenger revenue: +Passenger travel $ 44,914 $ 41,425 $ 23,896 +Loyalty revenue - travel 3,598 3,143 2,167 +Total passenger revenue 48,512 44,568 26,063 +Cargo 812 1,233 1,314 +Other: +Loyalty revenue - marketing services 2,929 2,657 2,166 +Other revenue 531 507 337 +Total other revenue 3,460 3,164 2,503 +Total operating revenues $ 52,784 $ 48,965 $ 29,880 +Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or +co-branded credit card and other partners. See “Loyalty Revenue” below for further discussion on these mileage credits. +The following is American’s total passenger revenue by geographic region (in millions): +Year Ended December 31, + 2023 2022 2021 +Domestic $ 34,592 $ 32,911 $ 21,453 +Latin America 6,719 6,150 3,506 +Atlantic 6,205 5,070 965 +Pacific 996 437 139 +Total passenger revenue $ 48,512 $ 44,568 $ 26,063 +American attributes passenger revenue by geographic region based upon the origin and destination of each flight segment. +Passenger Revenue +American recognizes all revenues generated from transportation on American and its regional flights operated under the brand name +American Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket +and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on American’s +consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. +The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. The +estimate for tickets expected to expire unused is generally based on an analysis of American’s historical data and other current applicable +factors such as policy changes. American has consistently applied this accounting method to estimate and recognize revenue from unused +tickets at the date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments +resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the +evaluations are completed. +Various taxes and fees assessed on the sale of tickets to end customers are collected by American as an agent and remitted to taxing +authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and +recorded as a liability until remitted to the appropriate taxing authority. +(1) +(1) +138 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_139.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..8213cc4a583cd2ee06554828f36e06a92153451a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_139.txt @@ -0,0 +1,43 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Loyalty Revenue +American currently operates the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, +any oneworld airline or other partner airlines, or by using the services of other program participants, such as American’s co-branded credit +cards, and certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner +airlines, as well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, +American applies the deferred revenue method. +Mileage credits earned through travel +For mileage credits earned through travel, American applies a relative selling price approach whereby the total amount collected from +each passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket +sale attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed +and transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which +uses historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those +used to settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be +redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. +Mileage credits sold to co-branded credit cards and other partners +American sells mileage credits to participating airline partners and non-airline business partners, including American’s co-branded credit +card partners, under contracts with remaining terms generally from one to six years as of December 31, 2023. Consideration received from +the sale of mileage credits is variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of +mileage credits to non-airline business partners are comprised of two components, transportation and marketing. American allocates the +consideration received from these sales of mileage credits based on the relative selling price of each product or service delivered. +American’s most significant mileage credit partner agreements are its co-branded credit card agreements with Citi and Barclaycard US. +American identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing +component. +The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent +ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then +recognized in passenger revenue when mileage credits are redeemed and transportation is provided. +The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member +lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. American recognizes +the marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. +For the portion of American’s outstanding mileage credits that it estimates will not be redeemed, American recognizes the associated +value proportionally as the remaining mileage credits are redeemed. American’s estimates use a statistical model based on historical +redemption patterns to develop an estimate of the likelihood of future redemption. +Cargo Revenue +Cargo revenue is recognized when American provides the transportation. +Other Revenue +Other revenue includes revenue associated with American’s loyalty program, which is comprised principally of the marketing component +of mileage credit sales to co-branded credit card and other partners and other marketing related payments. The accounting and recognition +for the loyalty program marketing services are discussed above in “Loyalty Revenue.” The remaining amounts included within other revenue +relate to airport clubs, other commission revenue, advertising and vacation-related services. +139 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_14.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d3d3c9a4d4a7cdfb457773e90779f59cb273b62 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_14.txt @@ -0,0 +1,41 @@ +Table of Contents +In 2023, we received a perfect score on the Disability Equality Index for the eighth consecutive year and were named one of the best +places to work for disability inclusion. We also received a top score of 100 on the Human Rights Campaign Foundation’s 2023-2024 +Corporate Equality Index, an assessment of LGBTQ+ workplace equality. +Competitive Pay and Comprehensive Benefits +We seek to offer competitive pay, comprehensive benefits and a wide variety of resources designed to support the physical, behavioral +and financial well-being of our team members and their families, including medical coverage that is intended to be affordable and flexible +along with healthcare navigation and support tools. +Our internal recognition programs give team members and customers the opportunity to show their appreciation for a job well done, +including through our Nonstop Thanks program whereby team members can award each other points for exceptional service or as an +expression of gratitude. Recognition points earned through the recognition program can be redeemed for items in an online catalog. In 2023, +our team members were recognized by customers, peers and company leaders approximately three million times and more than 1,600 peer +nominations were submitted for the annual Circle of Excellence, the highest honor that we bestow upon our team members for their career +achievements. +Our future success depends in large part on our ability to attract, develop and retain highly qualified management, technical and other +personnel. Retaining and recruiting people with the appropriate skills became particularly challenging as the economy in general, and the +airline industry in particular, recovered from the COVID-19 pandemic, and there remains intense competition for the human resources +necessary to operate our business successfully. Like many other airlines, we have experienced and continue to experience periodic +shortages of frontline team members as a result. For more discussion, see Part I, Item 1A. Risk Factors – “The loss of key personnel upon +whom we depend to operate our business or the inability to attract, develop and retain additional qualified personnel could adversely affect +our business.” +Labor Relations +Labor relations in the air transportation industry are regulated under the Railway Labor Act (RLA), which vests in the National Mediation +Board (NMB) certain functions with respect to disputes between airlines and labor unions relating to union representation and CBAs. +The following table shows our domestic airline employee groups that are represented by unions: +Union Class or Craft Employees Contract Amendable Date +Mainline: +Allied Pilots Association (APA) Pilots 14,500 2027 +Association of Professional Flight Attendants (APFA) Flight Attendants 24,950 2019 +Airline Customer Service Employee Association –Communications Workers of America and InternationalBrotherhood of Teamsters (CWA-IBT) +Passenger Service 14,650 2029 +Transport Workers Union and International Association ofMachinists & Aerospace Workers (TWU-IAM Association) Mechanics and Related 12,350 2025 +TWU-IAM Association Fleet Service 19,100 2025 +TWU-IAM Association Stock Clerks 2,000 2025 +TWU-IAM Association Flight Simulator Engineers 150 2025 +TWU-IAM Association Maintenance Control Technicians 190 2025 +TWU-IAM Association Maintenance Training Instructors 100 2025 +Professional Airline Flight Control Association (PAFCA) Dispatchers 570 2025 +Transport Workers Union (TWU) Flight Crew Training Instructors 390 2025 +(1) +14 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_140.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..d52540378e0dc5898133c0e4311a5adc84ad19fd --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_140.txt @@ -0,0 +1,47 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Contract Balances +American’s significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future +travel and non-air travel awards, reported as loyalty program liability on American’s consolidated balance sheets and (2) ticket sales for +transportation that has not yet been provided, reported as air traffic liability on American’s consolidated balance sheets. +December 31, +2023 2022 +(In millions) +Loyalty program liability $ 9,327 $ 9,145 +Air traffic liability 6,200 6,745 +Total $ 15,527 $ 15,890 +The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued +through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of +revenue). Changes in loyalty program liability are as follows (in millions): +Balance at December 31, 2022 $ 9,145 +Deferral of revenue 3,810 +Recognition of revenue (3,628) +Balance at December 31, 2023 $ 9,327 +Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits +are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that +were part of the loyalty program deferred revenue balance at the beginning of the period, as well as mileage credits that were issued +during the period. +Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying +activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of December 31, +2023, American’s current loyalty program liability was $3.5 billion and represents American’s current estimate of revenue expected to be +recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to +be recognized as revenue in periods thereafter. +The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The balance in American’s air +traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any +revenue associated with tickets sold for future travel will be recognized within 12 months. For 2023, $5.3 billion of revenue was recognized in +passenger revenue that was included in American’s air traffic liability at December 31, 2022. +(n) Maintenance, Materials and Repairs +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 certain power-by-the-hour maintenance agreements, which are charged to operating expense based on +contractual terms when an obligation exists. +(o) Selling Expenses +Selling expenses include credit card fees, commissions, third party distribution channel fees and advertising. Selling expenses associated +with passenger revenue are expensed when the transportation or service is provided. Advertising costs are expensed as incurred. +Advertising expense was $114 million for the year ended December 31, 2023 and $105 million for each of the years ended December 31, +2022 and 2021. +(1) +(2) +(1) +(2) +140 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_141.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..75fbc1dfcb437d98362e88b5d4f8a6323c1c8568 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_141.txt @@ -0,0 +1,28 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(p) Share-based Compensation +American accounts for its share-based compensation expense based on the fair value of the stock award at the time of grant, which is +recognized ratably over the vesting period of the stock award. Certain awards have performance conditions that must be achieved prior to +vesting and are expensed based on the expected achievement at each reporting period. The majority of American’s stock awards are time +vested restricted stock units, and the fair value of such awards is based on the market price of the underlying shares of AAG common stock +on the date of grant. See Note 13 for further discussion of share-based compensation. +(q) Foreign Currency Gains and Losses +Foreign currency gains and losses are recorded as part of other income (expense), net within total nonoperating expense, net on +American’s consolidated statements of operations. For the years ended December 31, 2023, 2022 and 2021, respectively, foreign currency +losses were $30 million, $38 million and $4 million. +(r) Other Operating Expenses +Other operating expenses includes costs associated with onboard food and catering, crew travel, ground and cargo handling, passenger +accommodation, international navigation fees, aircraft cleaning, airport lounge operations and certain general and administrative expenses. +(s) Regional Expenses +American's regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers +include AAG's wholly-owned regional carriers as well as third-party regional carriers. American's regional carrier arrangements are in the +form of capacity purchase agreements with its third-party regional partners and similar arrangements with AAG’s wholly-owned regional +affiliates. Expenses associated with American Eagle operations are classified as regional expenses on the consolidated statements of +operations. +Regional expenses for the years ended December 31, 2023, 2022 and 2021 include $271 million, $269 million and $263 million of +depreciation and amortization, respectively, and $7 million, $5 million and $6 million of aircraft rent, respectively. +In 2023, 2022 and 2021, American recognized $636 million, $592 million and $495 million, respectively, of expense under its capacity +purchase agreement with Republic Airways Inc. (Republic). American holds a 25% equity interest in Republic Airways Holdings Inc. +(Republic Holdings), the parent company of Republic. +141 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_142.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..27f368b96663a3d76fc55a5e1003991a2addff8b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_142.txt @@ -0,0 +1,55 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +2. Special Items, Net +Special items, net on American’s consolidated statements of operations consisted of the following (in millions): + Year Ended December 31, + 2023 2022 2021 +Labor contract expenses $ 989 $ — $ — +Severance expenses 23 — 168 +Fleet impairment — 149 — +Litigation reserve adjustments — 37 (19) +PSP Financial Assistance — — (4,162) +Other operating special items, net (41) 7 7 +Mainline operating special items, net 971 193 (4,006) +PSP Financial Assistance — — (539) +Fleet impairment — — 27 +Regional operating special items, net — — (512) +Operating special items, net 971 193 (4,518) +Debt refinancing, extinguishment and other, net 280 1 29 +Mark-to-market adjustments on equity and other investments, net 82 71 31 +Nonoperating special items, net 362 72 60 +Income tax special items, net — (9) — +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with +American’s mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of +$235 million. +Severance expenses for 2023 included costs associated with headcount reductions in certain corporate functions. +Severance expenses for 2021 included salary and medical costs primarily associated with certain team members who opted into +voluntary early retirement programs offered as a result of reductions to American’s operation due to the COVID-19 pandemic. +Fleet impairment for 2022 included a non-cash impairment charge to write down the carrying value of American’s retired Airbus A330 +fleet to the estimated fair value due to the market conditions for certain used aircraft. American retired its Airbus A330 fleet in 2020 as a +result of the decline in demand for air travel due to the COVID-19 pandemic. +Fleet impairment for 2021 included a non-cash impairment charge to write down regional aircraft resulting from the retirement of the +remaining Embraer 140 fleet earlier than planned. +The PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the +payroll support programs established by the U.S. Government. See Note 1(b) for further information. +Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early +repayment of debt. See Note 3 for further information. +Mark-to-market adjustments on equity and other investments, net principally included net unrealized gains and losses associated with +certain equity investments and certain other investments. See Note 7 for further information related to American’s equity investments. +(1) +(2) +(3) +(4) +(4) +(3) +(5) +(6) +(1) +(2) +(3) +(4) +(5) +(6) +142 +The secret shape is a "triangle". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_143.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6359aea88dc17ba079a9c246fb07b89f0ede4f8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_143.txt @@ -0,0 +1,52 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +3. Debt +Long-term debt included on American’s consolidated balance sheets consisted of (in millions): + December 31, + 2023 2022 +Secured +2013 Term Loan Facility, variable interest rate of 8.60%, installments through February 2028 $ 990 $ 1,752 +2014 Term Loan Facility, variable interest rate of 7.32%, installments through January 2027 1,183 1,196 +2023 Term Loan Facility, variable interest rate of 8.87%, installments beginning in December 2024through June 2029 1,100 — +11.75% senior secured notes, interest only payments until due in July 2025 — 2,500 +10.75% senior secured IP notes, interest only payments until due in February 2026 1,000 1,000 +10.75% senior secured LGA/DCA notes, interest only payments until due in February 2026 200 200 +7.25% senior secured notes, interest only payments until due in February 2028 750 — +8.50% senior secured notes, interest only payments until due in May 2029 1,000 — +5.50% senior secured notes, installments through April 2026 2,917 3,500 +5.75% senior secured notes, installments beginning in July 2026 until due in April 2029 3,000 3,000 +AAdvantage Term Loan Facility, variable interest rate of 10.43%, installments through April 2028 3,150 3,500 +Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88% to 5.90%,averaging 3.60%, maturing from 2024 to 2034 7,657 9,175 +Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.55% to8.90%, averaging 6.98%, maturing from 2024 to 2035 3,612 3,170 +Special facility revenue bonds, fixed interest rates ranging from 2.25% to 5.38%, maturing from 2026to 2036 967 1,050 +Total long-term debt 27,526 30,043 +Less: Total unamortized debt discount, premium and issuance costs 349 364 +Less: Current maturities 3,501 3,059 +Long-term debt, net of current maturities $ 23,676 $ 26,620 +As of December 31, 2023, the maximum availability under American’s revolving credit and other facilities is as follows (in millions): +2013 Revolving Facility $ 736 +2014 Revolving Facility 1,631 +April 2016 Revolving Facility 446 +Other short-term facility 49 +Total $ 2,862 +As of December 31, 2023, American had $49 million of available borrowing base under a cargo receivables facility that is set to expire in +December 2024. As a result of the below amendments to the 2013, 2014 and April 2016 Revolving Facilities, the aggregate commitments +under these facilities will be $2.8 billion through October 11, 2024, and thereafter through October 13, 2026, such aggregate commitments +will decrease to $2.2 billion. +Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, +simulators, aircraft spare parts, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property +and certain loyalty program assets. + (a) + (a) +(a) + (b) + (b) + (b) +(b) +(b) +(c) +(c) +(c) +(d) +143 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_144.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..b95c72b7d2b93ed502b2f4b15379f5f58ff3fd26 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_144.txt @@ -0,0 +1,49 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +At December 31, 2023, the maturities of long-term debt are as follows (in millions): +2024 $ 3,501 +2025 3,702 +2026 4,582 +2027 4,618 +2028 5,060 +2029 and thereafter 6,063 +Total $ 27,526 +(a) 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +2013 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, as amended (the 2013 Credit Agreement), +includes a revolving credit facility (the 2013 Revolving Facility) and term loan (the 2013 Term Loan Facility), collectively referred to as the +2013 Credit Facilities. In February 2023, American and AAG refinanced approximately $1.8 billion in aggregate principal amount of term +loans outstanding under the 2013 Term Loan Facility (the 2013 Term Loan Facility Refinancing) through the combination of (i) the issuance of +$750 million in aggregate principal amount of 7.25% senior secured notes due 2028 and (ii) the entry into the Seventh Amendment to the +2013 Credit Agreement, pursuant to which the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility was extended to +February 2028 from June 2025. The Seventh Amendment also amended certain other terms of the 2013 Credit Agreement, including the +interest rate and amortization schedule for the 2013 Term Loan Facility, the requirements for delivery of appraisals and certain covenants +relating to dispositions of collateral. Additionally, the Seventh Amendment transitioned the benchmark interest rate from the London Interbank +Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR). As a result, the 2013 Term Loan Facility bears interest at a base +rate (subject to a floor of 1.00%) plus an applicable margin of 1.75% or, at American’s option, the SOFR rate for a tenor of one, three or six +months, depending on the interest period selected by American, plus the SOFR adjustment applicable to such interest period (with such +SOFR rate plus SOFR adjustment being subject to a floor of 0.00%) and an applicable margin of 2.75%. As of December 31, 2023, the +margin elected was 2.75%. +In March 2023, American and AAG entered into the Eighth Amendment to the 2013 Credit Agreement, pursuant to which American +extended the maturity of certain commitments under the 2013 Revolving Facility. The Eighth Amendment also amended certain other terms +of the 2013 Credit Agreement, including certain covenants and transitioned the benchmark interest rate from LIBOR to SOFR. The 2013 +Revolving Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.25%, 2.50% or 2.75%, depending +on AAG’s public corporate rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest +period selected by American, plus the SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment +being subject to a floor of 0.00%) plus an applicable margin of 3.25%, 3.50% or 3.75%, depending on AAG’s public corporate rating. +Additionally, as a result of the Eighth Amendment, through October 11, 2024, the aggregate commitments under the 2013 Revolving Facility +will be $736 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $563 million. As of +December 31, 2023, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility. +2014 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, as amended (the 2014 Credit Agreement), +includes a revolving credit facility (the 2014 Revolving Facility) and term loan (the 2014 Term Loan Facility), collectively referred to as the +2014 Credit Facilities. In March 2023, American and AAG entered into the Ninth Amendment to the 2014 Credit Agreement, pursuant to +which American extended the maturity of certain commitments under the 2014 Revolving Facility. The Ninth Amendment also amended +certain other terms of the 2014 Credit Agreement including the requirements for delivery of appraisals and certain other covenants and +transitioned the benchmark interest rate for the 2014 Revolving Facility and the 2014 Term Loan Facility from LIBOR to SOFR. The 2014 +Revolving Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit +Facilities.” The 2014 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 0.75% or, at +American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American, plus the +SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment +144 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_145.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..38b44fa0e7c3fb21e3cf5baa8fec98048632dccc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_145.txt @@ -0,0 +1,42 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +being subject to a floor of 0.00%) plus an applicable margin of 1.75%. As of December 31, 2023, the margin elected was 1.75%. Additionally, +as a result of the Ninth Amendment, through October 11, 2024, the aggregate commitments under the 2014 Revolving Facility will be +$1.6 billion, and thereafter through October 13, 2026, such aggregate commitments will decrease to $1.2 billion. As of December 31, 2023, +there were no borrowings or letters of credit outstanding under the 2014 Revolving Facility. +April 2016 Revolving Facility +In March 2023, American and AAG entered into the Sixth Amendment to the Credit and Guaranty Agreement, dated as of April 29, 2016 +(the April 2016 Credit Agreement), which includes a revolving credit facility (the April 2016 Revolving Facility). Pursuant to the Sixth +Amendment, American extended the maturity of certain commitments under the April 2016 Revolving Facility. The Sixth Amendment also +amended certain other terms under the April 2016 Credit Agreement including the requirements for delivery of appraisals and certain other +covenants and transitioned the benchmark interest rate for the April 2016 Revolving Facility from LIBOR to SOFR. The April 2016 Revolving +Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit Facilities.” +Additionally, as a result of the Sixth Amendment, through October 11, 2024, the aggregate commitments under the April 2016 Revolving +Facility will be $446 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $342 million. As of +December 31, 2023, there were no borrowings outstanding under the April 2016 Revolving Facility. +2023 Term Loan Facility +In December 2023, American and AAG entered into a credit and guaranty agreement (the 2023 Credit Agreement) that provided for a +term loan facility (the 2023 Term Loan Facility) in an aggregate principal amount of $1.1 billion, maturing in June 2029. Loans made under the +2023 Term Loan Facility bear interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.50% or, at American’s option, +the SOFR rate for a tenor of one, three or six months (or if agreed by the relevant lenders, any other tenor), depending on the interest period +selected by American (subject to a floor of 0.00%), plus an applicable margin of 3.50%. As of December 31, 2023, the margin elected was +3.50%. The net proceeds from the 2023 Term Loan Facility, together with the net proceeds from the private offering of the 8.50% Senior +Secured Notes (as defined below) and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes in December +2023. +Other Terms of the 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +The term loans under the 2013 Credit Facilities and 2014 Credit Facilities (collectively referred to as the Credit Facilities) and the 2023 +Term Loan Facility are repayable in annual installments, in an amount equal to 1.00% of the aggregate principal amount issued, with any +unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time. +The 2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving Facility provide that American may from time to time +borrow, repay and reborrow loans thereunder. The 2013 Revolving Facility and 2014 Revolving Facility have the ability to issue letters of +credit thereunder in an aggregate amount outstanding at any time up to $150 million and $300 million, respectively. The 2013 Revolving +Facility, 2014 Revolving Facility and April 2016 Revolving Facility are each subject to an undrawn annual fee of 0.750%. +Subject to certain limitations and exceptions, the Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility are secured +by collateral, including certain spare parts, slots, route authorities, simulators and leasehold rights. American has the ability to make future +modifications to the collateral pledged, subject to certain restrictions. American’s obligations under the Credit Facilities, April 2016 Revolving +Facility and 2023 Term Loan Facility are guaranteed by AAG, and such guarantee is AAG’s senior unsecured obligations (all of the collateral +is owned by American, and AAG has not granted a security interest in any assets to secure any of the foregoing obligations). The Credit +Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility contain events of default customary for similar financings, including cross +default and cross-acceleration to other material indebtedness. +145 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_146.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..e545d09ac4543135da3e83885df4cd0985759481 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_146.txt @@ -0,0 +1,49 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(b) Senior Secured Notes +11.75% Senior Secured Notes +In June 2020, American issued $2.5 billion aggregate principal amount of 11.75% senior secured notes due 2025 (the 11.75% Senior +Secured Notes) at a price equal to 99% of their aggregate principal amount. In December 2023, American redeemed all of its outstanding +11.75% Senior Secured Notes using net proceeds from the offering of the 8.50% Senior Secured Notes (as defined below), together with net +proceeds from borrowings under the 2023 Term Loan Facility and cash on hand. In connection with the early redemption of the 11.75% +Senior Secured Notes, in the fourth quarter of 2023, American recorded a $186 million cash special charge for the make-whole premium paid +and a $19 million non-cash special charge to write off unamortized debt issuance costs and debt discount. +10.75% Senior Secured Notes +On September 25, 2020 (the 10.75% Senior Secured Notes Closing Date), American issued $1.0 billion in initial principal amount of senior +secured IP notes (the IP Notes) and $200 million in initial principal amount of senior secured LGA/DCA notes (the LGA/DCA Notes and +together with the IP Notes, the 10.75% Senior Secured Notes). The obligations of American under the 10.75% Senior Secured Notes are fully +and unconditionally guaranteed (the 10.75% Senior Secured Notes Guarantees) on a senior unsecured basis by AAG. The 10.75% Senior +Secured Notes bear interest at a rate of 10.75% per annum in cash. Interest on the 10.75% Senior Secured Notes is payable semiannually in +arrears on September 1 and March 1 of each year, which began on March 1, 2021. The 10.75% Senior Secured Notes will mature on +February 15, 2026. +The IP Notes are secured by a first lien security interest on certain intellectual property of American, including the “American Airlines” +trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions (the IP Collateral), and a second lien on +certain slots related to American’s operations at New York LaGuardia and Ronald Reagan Washington National airports and certain other +assets (the LGA/DCA Collateral and together with the IP Collateral, the 10.75% Senior Secured Notes Collateral). LGA/DCA Notes are +secured by a first lien security interest in the LGA/DCA Collateral. +On or prior to the fourth anniversary of the 10.75% Senior Secured Notes Closing Date, American may redeem all or any part of the +10.75% Senior Secured Notes, at its option, at a redemption price equal to 100% of the principal amount of the 10.75% Senior Secured +Notes redeemed plus a “make-whole” premium, together with accrued and unpaid interest thereon, if any. After the fourth anniversary of the +10.75% Senior Secured Notes Closing Date and on or prior to the fifth anniversary of the 10.75% Senior Secured Notes Closing Date, +American may redeem all or any part of the 10.75% Senior Secured Notes, at its option, at a redemption price equal to 105.375% of the +principal amount of the 10.75% Senior Secured Notes redeemed, together with accrued and unpaid interest thereon, if any. After the fifth +anniversary of the 10.75% Senior Secured Notes Closing Date, American may redeem all or any part of the 10.75% Senior Secured Notes, +at its option, at par, together with accrued and unpaid interest thereon, if any. +7.25% Senior Secured Notes +On February 15, 2023, as part of the 2013 Term Loan Facility Refinancing, American issued $750 million aggregate principal amount of +7.25% senior secured notes due 2028 (the 7.25% Senior Secured Notes) in a private offering. The 7.25% Senior Secured Notes were issued +at par and bear interest at a rate of 7.25% per annum (subject to increase if the collateral coverage ratio described below is not met). Interest +on the 7.25% Senior Secured Notes is payable semiannually in arrears on February 15 and August 15 of each year, which began on August +15, 2023. The 7.25% Senior Secured Notes will mature on February 15, 2028. The obligations of American under the 7.25% Senior Secured +Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG. American used the proceeds from the offering of the +7.25% Senior Secured Notes, together with cash on hand, to repay a portion of the term loans then outstanding under the 2013 Term Loan +Facility and to pay related fees and expenses. +The 7.25% Senior Secured Notes were issued pursuant to an indenture, dated as of February 15, 2023 (the 7.25% Senior Secured Notes +Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 7.25% Senior +Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights +and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) +airports in certain countries in South America and New Zealand (collectively, the 7.25% Senior Secured Notes Collateral). The 7.25% Senior +Secured Notes Collateral also secures, on a first lien, pari passu basis with the 7.25% Senior Secured Notes, the 2013 Credit Facilities under +the 2013 Credit Agreement. +146 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_147.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..01098ba404c5c7b880ee461fbd3bb1428a41ce1d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_147.txt @@ -0,0 +1,51 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +American may redeem the 7.25% Senior Secured Notes, in whole at any time or in part from time to time prior to February 15, 2025, at a +redemption price equal to 100% of the principal amount of the 7.25% Senior Secured Notes to be redeemed, plus a “make-whole” premium, +plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after February 15, 2025, American +may redeem all or any of the 7.25% Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices +described in the 7.25% Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of +redemption. In addition, at any time prior to February 15, 2025, American may redeem up to 40% of the original aggregate principal amount +of the 7.25% Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain +equity offerings, at a redemption price equal to 107.250% of the aggregate principal amount of the 7.25% Senior Secured Notes to be +redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. +Twice per year, American is required to deliver an appraisal of the 7.25% Senior Secured Notes Collateral and an officer’s certificate +demonstrating the calculation of a collateral coverage ratio in relation to the 7.25% Senior Secured Notes Collateral (the 7.25% Senior +Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 7.25% Senior Secured +Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a +cure period in which additional collateral can be provided or debt repaid such that American meets the required 7.25% Senior Secured Notes +Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0% per annum of the principal +amount of the 7.25% Senior Secured Notes until the 7.25% Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 +to 1.0. +8.50% Senior Secured Notes +On December 4, 2023, American issued $1.0 billion aggregate principal amount of 8.50% senior secured notes due 2029 (the 8.50% +Senior Secured Notes) in a private offering. The 8.50% Senior Secured Notes were issued at par and bear interest at a rate of 8.50% per +annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 8.50% Senior Secured Notes is +payable semiannually in arrears on May 15 and November 15 of each year, beginning on May 15, 2024. The 8.50% Senior Secured Notes +will mature on May 15, 2029. The obligations of American under the 8.50% Senior Secured Notes are fully and unconditionally guaranteed on +a senior unsecured basis by AAG. The net proceeds from the 8.50% Senior Secured Notes, together with borrowings under the 2023 Term +Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes in December 2023. +The 8.50% Senior Secured Notes were issued pursuant to an indenture, dated as of December 4, 2023 (the 8.50% Senior Secured Notes +Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 8.50% Senior +Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights +and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) +certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland +(collectively, the 8.50% Senior Secured Notes Collateral). The 8.50% Senior Secured Notes Collateral also secures, on a first lien, pari passu +basis with the 8.50% Senior Secured Notes, the 2023 Term Loan Facility. +American may redeem the 8.50% Senior Secured Notes, in whole at any time or in part from time to time prior to November 15, 2025, at a +redemption price equal to 100% of the principal amount of the 8.50% Senior Secured Notes to be redeemed, plus a “make-whole” premium, +plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after November 15, 2025, American +may redeem all or any of the 8.50% Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices +described in the 8.50% Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of +redemption. In addition, at any time prior to November 15, 2025, American may redeem up to 40% of the original aggregate principal amount +of the 8.50% Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain +equity offerings, at a redemption price equal to 108.50% of the aggregate principal amount of the 8.50% Senior Secured Notes to be +redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In addition, during each twelve-month +period beginning on December 4, 2023 and ending on or prior to November 15, 2025, American may redeem up to 10% of the original +aggregate principal amount of the 8.50% Senior Secured Notes at a redemption price of 103% of the principal amount thereof, plus any +accrued and unpaid interest thereon to, but excluding, the applicable date of redemption. +Twice per year, American is required to deliver an appraisal of the 8.50% Senior Secured Notes Collateral and an officer’s certificate +demonstrating the calculation of a collateral coverage ratio in relation to the 8.50% Senior Secured Notes Collateral (the 8.50% Senior +Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal +147 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_148.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..554eb6f3108e6d01e5024d6ea8ccd14a11c27d6b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_148.txt @@ -0,0 +1,47 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +for the applicable period. If the 8.50% Senior Secured Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the +appraisal for the applicable period, then, subject to a cure period in which additional collateral can be provided or debt repaid such that +American meets the required 8.50% Senior Secured Notes Collateral Coverage Ratio, American will be required to pay special interest in an +additional amount equal to 2.0% per annum of the principal amount of the 8.50% Senior Secured Notes until the 8.50% Senior Secured +Notes Collateral Coverage Ratio is established to be at least 1.6 to 1.0. +(c) AAdvantage Financing +On March 24, 2021 (the AAdvantage Financing Closing Date), American and AAdvantage Loyalty IP Ltd., a Cayman Islands exempted +company incorporated with limited liability and an indirect wholly-owned subsidiary of American (Loyalty Issuer and, together with American, +the AAdvantage Issuers), completed the offering of $3.5 billion aggregate principal amount of 5.50% Senior Secured Notes due 2026 (the +2026 Notes) and $3.0 billion aggregate principal amount of 5.75% Senior Secured Notes due 2029 (the 2029 Notes, and together with the +2026 Notes, the AAdvantage Notes). The AAdvantage Notes are fully and unconditionally guaranteed by the SPV Guarantors and AAG. +Concurrent with the issuance of the AAdvantage Notes, the AAdvantage Issuers, as co-borrowers, entered into a term loan credit and +guaranty agreement, dated March 24, 2021, providing for a $3.5 billion term loan facility (the AAdvantage Term Loan Facility and collectively +with the AAdvantage Notes, the AAdvantage Financing) and pursuant to which the full $3.5 billion of term loans (the AAdvantage Loans) +were drawn on the AAdvantage Financing Closing Date. The AAdvantage Loans are fully and unconditionally guaranteed (together with the +AAdvantage Note Guarantees, the AAdvantage Guarantees) by the SPV Guarantors and AAG. +Subject to certain permitted liens and other exceptions, the AAdvantage Notes, AAdvantage Loans and AAdvantage Guarantees provided +by the SPV Guarantors are secured by a first-priority security interest in, and pledge of, various agreements with respect to the AAdvantage +program (the AAdvantage Agreements) (including all payments thereunder) and certain intellectual property licenses, certain deposit +accounts that will receive cash under the AAdvantage Agreements, certain reserve accounts, the equity of each of Loyalty Issuer and the +SPV Guarantors and substantially all other assets of Loyalty Issuer and the SPV Guarantors including American’s rights to certain data and +other intellectual property used in the AAdvantage program (subject to certain exceptions) (collectively, the AAdvantage Collateral). +Payment Terms of the AAdvantage Notes and AAdvantage Loans under the AAdvantage Term Loan Facility +Interest on the AAdvantage Notes is payable in cash, quarterly in arrears on the 20th day of each January, April, July and October (each, +an AAdvantage Payment Date), which began on July 20, 2021. The 2026 Notes will mature on April 20, 2026, and the 2029 Notes will mature +on April 20, 2029. The outstanding principal on the 2026 Notes will be repaid in quarterly installments of $292 million on each AAdvantage +Payment Date, which began in July 2023. The outstanding principal on the 2029 Notes will be repaid in quarterly installments of $250 million +on each AAdvantage Payment Date, beginning on July 20, 2026. +The AAdvantage Issuers may redeem the AAdvantage Notes, at their option, in whole at any time or in part from time to time, at a +redemption price equal to 100% of the principal amount of the AAdvantage Notes redeemed plus a “make-whole” premium, together with +accrued and unpaid interest to the date of redemption. +The scheduled maturity date of the AAdvantage Loans under the AAdvantage Term Loan Facility is April 20, 2028. The outstanding +principal on the AAdvantage Loans will be repaid in quarterly installments of $175 million, on each AAdvantage Payment Date, which began +in July 2023. These amortization payments (as well as those for the AAdvantage Notes) will be subject to the occurrence of certain early +amortization events, including the failure to satisfy a minimum debt service coverage ratio at specified determination dates. +Prepayment of some or all of the AAdvantage Loans outstanding under the AAdvantage Term Loan Facility is permitted, although +payment of an applicable premium is required as specified in the AAdvantage Term Loan Facility. +The AAdvantage Indenture and the AAdvantage Term Loan Facility contain mandatory prepayment provisions triggered upon (i) the +issuance or incurrence by Loyalty Issuer or the SPV Guarantors of certain indebtedness or (ii) the receipt by American or its subsidiaries of +net proceeds from pre-paid frequent flyer (i.e., AAdvantage) mile sales exceeding $505 million. Each of these prepayments would also +require payment of an applicable premium. Certain other events, including the occurrence of a change of control with respect to AAG and +certain AAdvantage Collateral sales exceeding a specified threshold, will also trigger mandatory repurchase or mandatory prepayment +provisions under the AAdvantage Indenture and the AAdvantage Term Loan Facility, respectively. +148 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_149.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4110e784c056df86b1c3c81eed65c39dde7d388 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_149.txt @@ -0,0 +1,38 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +In June 2023, American and AAdvantage Loyalty IP Ltd. entered into the First Amendment to the AAdvantage Term Loan Facility pursuant +to which the benchmark interest rate transitioned from LIBOR to SOFR, effective July 1, 2023. As a result, the AAdvantage Term Loan +Facility bears interest at a base rate (subject to a floor of 0.00%) plus an applicable margin of 3.75% or, at American’s option, the SOFR rate +for a tenor of three months, plus a 0.26161% credit spread adjustment (with such SOFR rate plus SOFR adjustment being subject to a floor +of 0.75%) and an applicable margin of 4.75%. As of December 31, 2023, the margin elected was 4.75%. Other than the foregoing, the terms +of the AAdvantage Term Loan Facility remain substantially unchanged. +(d) Equipment Loans and Other Notes Payable Issued in 2023 +In 2023, American entered into agreements under which it borrowed $1.1 billion in connection with the financing of certain aircraft. Debt +incurred under these agreements matures in 2032 through 2035 and bears interest at fixed and variable rates (comprised of SOFR plus an +applicable margin) averaging 7.15% as of December 31, 2023. +Other Financing Activities +During the year ended December 31, 2023, American repurchased $539 million of secured notes in the open market. In connection with +the repurchase of these secured notes in the open market, American recorded $57 million of cash special charges for premiums paid and +$6 million of non-cash special charges to write off unamortized debt issuance costs and debt discounts. +Guarantees +As of December 31, 2023, American had issued guarantees covering AAG’s $1.8 billion aggregate principal amount of the PSP1 +Promissory Note due April 2030, $1.0 billion aggregate principal amount of the PSP2 Promissory Note due January 2031, $959 million +aggregate principal amount of the PSP3 Promissory Note due April 2031, $1.0 billion aggregate principal amount of 6.50% convertible senior +notes due July 2025 and $487 million of 3.75% senior notes due March 2025. +Certain Covenants +American’s debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, +among other things, may restrict the ability of American to incur additional indebtedness. American’s debt agreements also contain +customary change of control provisions, which may require it to repay or redeem such indebtedness upon certain events constituting a +change of control under the relevant agreement, in certain cases at a premium. Certain of American’s debt financing agreements (including +its secured notes, term loans, revolving credit facilities and spare engine EETCs) contain loan to value (LTV), collateral coverage or peak +debt service coverage ratio covenants and certain agreements require American to appraise the related collateral annually or semiannually. +Pursuant to such agreements, if the applicable LTV, collateral coverage or peak debt service coverage ratio exceeds or falls below a +specified threshold, as the case may be, American will be required, as applicable, to pledge additional qualifying collateral (which in some +cases may include cash or investment securities), withhold additional cash in certain accounts, or pay down such financing, in whole or in +part, or the interest rate for the relevant financing will be increased. Additionally, a significant portion of American’s debt financing agreements +contain covenants requiring it to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts +available to be drawn under revolving credit facilities, and its AAdvantage Financing contains a peak debt service coverage ratio, pursuant to +which failure to comply with a certain threshold may result in early repayment, in whole or in part, of the AAdvantage Financing. +149 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_15.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a6844f9d5f9c843cac8ed779fd54abac33945ff --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_15.txt @@ -0,0 +1,40 @@ +Table of Contents +Union Class or Craft Employees Contract Amendable Date +Envoy: +Air Line Pilots Associations (ALPA) Pilots 2,070 2029 +Association of Flight Attendants-CWA (AFA) Flight Attendants 1,850 2026 +TWU Ground School Instructors 10 2027 +TWU Mechanics and Related 1,200 2027 +TWU Stock Clerks 130 2027 +TWU Simulator Instructors 20 2026 +TWU Fleet Service 4,020 2026 +TWU Dispatchers 70 2025 +Communications Workers of America (CWA) Passenger Service 7,000 2026 +Piedmont: +ALPA Pilots 640 2029 +AFA Flight Attendants 310 2026 +International Brotherhood of Teamsters (IBT) Mechanics and Related 470 2026 +IBT Stock Clerks 60 2026 +CWA Fleet and Passenger Service 6,650 2023 +IBT Dispatchers 40 2025 +ALPA Flight Crew Training Instructors 70 2029 +PSA: +ALPA Pilots 1,500 2028 +AFA Flight Attendants 1,190 2023 +International Association of Machinists & Aerospace Workers(IAM) Mechanics and Related 680 2027 +TWU Dispatchers 40 2024 +ALPA Flight Crew Training Instructors 80 2028 +Represents approximate number of active employees as of December 31, 2023. +In 2023, a new four-year CBA was ratified by the APA, the union representing our mainline pilots. Additionally, in January 2024, a new +five-year CBA was ratified by the CWA-IBT, which is amendable in 2029. The CBA covering our mainline flight attendants is now amendable +and negotiations continue. Among our wholly-owned regional subsidiaries, Piedmont fleet and passenger service and PSA flight attendants +have agreements that are now amendable and are engaged in negotiations. +For more discussion, see Part I, Item 1A. Risk Factors – “Union disputes, employee strikes and other labor-related disruptions may +adversely affect our operations and financial performance.” +Aircraft Fuel +Our operations and financial results are materially affected by the availability and price of aircraft fuel, which represents one of the largest +single cost items in our business. Based on our 2024 forecasted mainline and regional fuel consumption, we estimate that a one cent per +gallon increase in the price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. +(1) +(1) +15 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_150.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfe8b2a17f68a6faa9c959c7abe21be33d3d1e8d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_150.txt @@ -0,0 +1,41 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Specifically, American is required to meet certain collateral coverage tests for its Credit Facilities, April 2016 Revolving Facility, 2023 Term +Loan Facility, 7.25% Senior Secured Notes, 8.50% Senior Secured Notes and 10.75% Senior Secured Notes, as described below: +2013 CreditFacilities 7.25% SeniorSecured Notes 2014 CreditFacilities April 2016Revolving Facility 2023 Term LoanFacility 8.50% SeniorSecured Notes 10.75% SeniorSecured Notes +LTV Requirement 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) +LTV as of LastMeasurement Date 34.2% 16.4% Not Applicable 25.9% 6.9% +Frequency ofAppraisals ofAppraisedCollateral +Semi-Annual Annual +Collateral Description +Generally, certain slots, route authoritiesand airport gate leasehold rights used byAmerican to operate certain servicesbetween the U.S. and South America andNew Zealand +Generally, certainslots, routeauthorities andairport gateleasehold rightsused by Americanto operate certainservices betweenthe U.S. andEuropean Union(including LondonHeathrow) +Generally, certainspare parts +Generally, certain slots, route authoritiesand airport gate leasehold rights used byAmerican to operate certain servicesbetween the U.S. and Australia, Canada,the Caribbean, Central America, China,Hong Kong, Japan, Mexico, South Koreaand Switzerland +Generally, certainDCA slots, certainLGA slots, certainsimulators andcertain leaseholdrights and, in thecase of the IPNotes, certainintellectual propertyof American +At December 31, 2023, American was in compliance with the applicable collateral coverage tests as of the most recent measurement +dates. +4. Leases +American leases certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2023, American +operated 737 leased aircraft, including seven aircraft in temporary storage and 237 aircraft leased under capacity purchase agreements, with +remaining terms ranging from less than one year to 10 years. +At each airport where American conducts flight operations, American has agreements, generally with a governmental unit or authority, for +the use of passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., +often contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary +with American’s level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not +recorded on American’s consolidated balance sheets as a ROU asset or a lease liability. Additionally, at American’s hub locations and in +certain other cities it serves, American leases administrative offices, catering, cargo, training, maintenance and other facilities. +The components of lease expense were as follows (in millions): +Year Ended December 31, +2023 2022 2021 +Operating lease cost $ 1,992 $ 1,987 $ 1,998 +Finance lease cost: +Amortization of assets 119 135 107 +Interest on lease liabilities 44 46 44 +Variable lease cost 2,703 2,572 2,461 +Total net lease cost $ 4,858 $ 4,740 $ 4,610 +Included in the table above is $274 million, $242 million and $190 million of operating lease cost under American’s capacity purchase +agreement with Republic for the years ended December 31, 2023, 2022 and 2021, respectively. American holds a 25% equity interest in +Republic Holdings, the parent company of Republic. +150 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_16.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..c9cf08fe6d78cfe38f247fe2d0c9c37b6da1fcab --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_16.txt @@ -0,0 +1,45 @@ +Table of Contents +The following table shows annual aircraft fuel consumption and costs, including taxes, for our mainline and regional operations for 2023 +and 2022 (gallons and aircraft fuel expense in millions). +Year Gallons Average Priceper Gallon Aircraft FuelExpense Percent of TotalOperating Expenses +2023 4,140 $2.96 $12,257 25% +2022 3,901 $3.54 $13,791 29% +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in aircraft fuel prices. +Aircraft fuel prices have in the past, and may in the future, experience substantial volatility. We cannot predict the future availability, price +volatility or cost of aircraft fuel. For more discussion, see Part I, Item 1A. Risk Factors – “Our business is very dependent on the price and +availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of +aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity.” +Seasonality and Other Factors +Due to the greater demand for air travel during the summer months, revenues in the airline industry exhibit seasonal patterns based on the +peak travel periods. General economic conditions, fears of terrorism or war, fare initiatives, fluctuations in fuel prices, labor actions, weather, +natural disasters, outbreaks of disease, geopolitical factors and other factors could impact this seasonal pattern. Therefore, our quarterly +results of operations are not necessarily indicative of operating results for the entire year, and historical operating results in a quarterly or +annual period are not necessarily indicative of future operating results. +Domestic and Global Regulatory Landscape +General +Airlines are subject to extensive domestic and international regulatory requirements. Domestically, the DOT and the Federal Aviation +Administration (FAA) exercise significant regulatory authority over air carriers. +The DOT, among other things, oversees and regulates domestic and international codeshare agreements, international route authorities, +competition and consumer protection matters including accessibility, the display and sharing of ancillary fee information and refund practices. +The Antitrust Division of the Department of Justice, along with the DOT in certain instances, have jurisdiction over airline antitrust matters. +The FAA similarly exercises safety oversight and regulates most operational matters of our business, including how we operate and +maintain our aircraft. FAA requirements cover, among other things, required technology and necessary onboard equipment; systems, +procedures and training necessary to ensure the continuous airworthiness of our fleet of aircraft; safety measures and equipment; crew +scheduling limitations and experience requirements; and many other technical aspects of airline operations. Additionally, our pilots and other +employees are subject to rigorous certification standards, and our pilots and other crew members must adhere to flight time and rest +requirements. +The FAA also controls the national airspace system, including operational rules and fees for air traffic control (ATC) services. The +efficiency, reliability and capacity of the ATC network has a significant impact on our costs and on the timeliness of our operations. +The U.S. Postal Service has jurisdiction over certain aspects of the transportation of mail and related services. +Airport Access and Operations +Domestically, any U.S. airline authorized by the DOT is generally free to operate scheduled passenger service between any two points +within the U.S. and its territories, with the exception of certain airports that require landing and take-off rights and authorizations (slots) and +other facilities, and certain airports that impose geographic limitations on operations or curtail operations based on the time of day. +Operations at three major domestic airports we serve (JFK and LGA in New York City, and Ronald Reagan Washington National Airport +(DCA) near Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations +of slots or similar regulatory mechanisms +16 +The secret object #2 is a "phone". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_17.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..1510bba43e2a5f4bd3477e397064c45696bb1455 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +Table of Contents +that limit the rights of carriers to conduct operations at those airports. Each slot represents the authorization to land at and take off from the +particular airport during a specified time period. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so- +called “perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Generally, our ability to retain slots is conditioned on the continued use of such slots, and in the absence of use, the slots are +subject to forfeiture. In certain circumstances, such as during the COVID-19 pandemic, regulators may issue slot waivers which temporarily +suspend or amend slot usage requirements, and we have used slot waivers at times to reduce flying levels during periods of reduced +demand for travel. Moreover, on multiple occasions in 2023, the FAA issued slot waivers for New York City area airports as a result of +operational challenges arising from air traffic control staffing shortages; those waivers expire in October 2024, and we cannot guarantee that +such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior +levels of flying to destinations where we have operated a reduced service. If we are forced to surrender slots or other rights, we may be +unable to provide our desired level of service to or from certain destinations in the future. For more discussion, see Part I, Item 1A. Risk +Factors – “If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations.” +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Existing law also permits domestic local airport authorities to implement procedures and impose restrictions designed to abate noise, +provided such procedures and restrictions do not unreasonably interfere with interstate or foreign commerce or the national transportation +system. In some instances, these restrictions have caused curtailments in service or increases in operating costs. +Airline Fares, Taxes and User Fees +Airlines are permitted to establish their own domestic fares without governmental regulation. The DOT maintains authority over certain +international fares, rates and charges, but only 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 we serve. +Airlines are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation, and to collect other taxes and charge other fees, such as foreign taxes, security fees and passenger facility charges. Although +these taxes and fees are not our operating expenses, they represent an additional cost to our customers. These taxes and fees are subject to +increase from time to time. +DOT Passenger Protection Rules +The DOT regulates airline interactions with passengers through the ticketing process, at the airport and onboard the aircraft. Among other +things, these regulations govern how our fares are displayed online, required customer disclosures, access by disabled passengers, handling +of long onboard flight delays and reporting of mishandled bags. In 2023, the DOT finalized rules for accessible lavatories on single-aisle +aircraft and has continued to work through proposals for a number of disability regulations that will impact us, including penalties for +wheelchair loss or damage and prompt wheelchair assistance. The DOT has also proposed rules requiring refunds for cancellations and +significant delays and rules mandating the display of ancillary fees during the initial itinerary search. +International +International air transportation is subject to extensive government regulation, including aviation agreements between the U.S. and other +countries or governmental authorities, such as the EU. Moreover, our alliances with international carriers may be subject to the jurisdiction +and regulations of various foreign agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading +partners, which allow unrestricted route authority access between the U.S. and the foreign markets. +In addition, foreign countries impose passenger protection rules, which are analogous to, and often meet or exceed the requirements of, +the DOT passenger protection rules discussed above. In cases where these foreign requirements exceed the DOT rules, we may bear +additional burdens and liabilities. Further, various foreign airport authorities impose noise and curfew restrictions at their local airports. +17 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_18.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..0abe4ceaabb9f6a84dc886bd0d6f31b22e8f5f77 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_18.txt @@ -0,0 +1,42 @@ +Table of Contents +Security +All aspects of civil aviation and border security in the U.S. affecting U.S. carriers are controlled or regulated by the federal government +through the Transportation Security Administration (TSA) and the U.S. Customs and Border Protection (CBP). The TSA is responsible for the +security of the nation’s transportation systems. The TSA’s requirements for aviation security include, among other things, screening of +passengers, baggage, cargo, mail, employees and vendors; carriage of federal air marshals at no charge; and continuous background +checks of all employees and vendor employees with access to secure areas of airports. Funding for the TSA is provided by a combination of +air carrier fees, passenger fees and taxpayer funds. The CBP is responsible for securing the nation’s borders by combining customs, +immigration and agricultural protection. The CBP regulatory requirements include the transmission of advanced passport data to facilitate the +U.S. entry process. Funding for a portion of CBP operations is provided by a combination of fees collected by airlines. Our international +service further requires us to comply with host government civil aviation security regimes and foreign border control authorities. +Environmental Matters +Environmental Regulation +The airline industry is subject to various laws and government regulations concerning environmental matters in the U.S. and other +countries. U.S. federal laws that have a particular impact on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air +Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental +Response, Compensation and Liability Act. The U.S. Environmental Protection Agency (EPA) and other federal agencies may promulgate +regulations that have an impact on our operations. In addition to these federal activities, various states have been delegated certain +authorities under the aforementioned federal statutes. Many state and local governments have adopted environmental laws and regulations +that are similar to or stricter than federal requirements. +Revised underground storage tank regulations issued by the EPA in 2015 have affected certain airport fuel hydrant systems, with +modifications of such systems needed in order to comply with applicable portions of the revised regulations. In addition, related to the EPA +and state regulations pertaining to storm water management, several U.S. airport authorities are actively engaged in efforts to limit +discharges of deicing fluid into the environment, often by requiring airlines to participate in the building or reconfiguring of airport deicing +facilities. Additionally, compliance with updated federal and state regulations governing fire extinguishing foams are expected to require +modification to fire suppression systems that we operate, as well as those maintained by airports. On November 23, 2022, the EPA also +published the final rule for particulate matter emission standards and test procedures for civil aircraft engines, which took effect on December +23, 2022. These or similar regulations could directly or indirectly result in increased compliance costs, but at this time we do not expect these +costs to be material. +The environmental laws include those related to responsibility for potential soil and groundwater contamination. We are conducting +investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance +bases. We presently anticipate that the ongoing costs of such activities will not have a material impact on our operations. +We employ an environmental management system that provides a systematic approach for compliance with environmental regulations and +management of a broad range of environmental issues, including but not limited to air emissions, hazardous waste, underground tanks, and +aircraft water quality. +Global and Domestic Regulation Related to Climate Change +Climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to +adapt to rapidly evolving domestic and international regulation and to achieve emission reductions before cost-effective technologies are +available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase +carbon offset credits or otherwise incur additional costs related to our emissions. Such trends may also impact us indirectly by increasing our +operating costs, including fuel costs. +18 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_19.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1345bd918ec0adef7962049dfef34be8ac854d5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_19.txt @@ -0,0 +1,43 @@ +Table of Contents +The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) +We are subject to the requirements of the CORSIA, an international, market-based emissions reduction program adopted by the +International Civil Aviation Organization (ICAO) in 2016. CORSIA is intended to achieve carbon-neutral growth in the international aviation +sector from 2021 until 2035 through the purchase of certain types of carbon offset credits or the use of eligible renewable fuels. +For each year from 2021 through 2032, CORSIA requires airlines to compensate for the rate of growth of GHG emissions of the aviation +sector as a whole, relative to a predetermined baseline as determined by ICAO. ICAO originally defined the baseline as the average +emissions from covered flights in 2019 and 2020. However, due to the impact of the COVID-19 pandemic on air travel, in June 2020, ICAO +removed 2020 from the baseline calculation for the CORSIA pilot phase (2021-2023). In October 2022, ICAO member countries agreed that +85% of 2019 emissions would be used as the baseline for the remainder of CORSIA’s term (2024-2035). +The CORSIA program is being implemented in three phases: a pilot phase that ran from 2021 through 2023, followed by a first phase of +the program beginning in 2024 through 2026 and a second phase beginning in 2027 through 2035. ICAO member countries are expected to +enact legislation to implement CORSIA. We expect to be required to purchase carbon offset credits to comply with CORSIA’s first phase, +however, the U.S. government has not yet enacted implementation legislation. +Our future costs of CORSIA compliance are uncertain due to the uncertainty with respect to the future growth of covered GHG emissions, +the supply and price of CORSIA-eligible carbon offset credits and development of the market for eligible renewable fuels. +European GHG Emissions Regulations +On May 16, 2023, revisions to the EU Emissions Trading System (EU ETS) were published in the Official Journal of the EU. Pursuant to +these revisions, the allocation of emissions allowances currently granted for free to aircraft operators under the EU ETS will be phased out by +2026, and CORSIA will apply to flights to and from EU countries that are ICAO member countries. The EC will also be required to undertake +a review in 2026 to determine whether CORSIA is sufficiently delivering on the goals of the Paris Agreement and, to the extent it is +determined not to be, would extend the scope of the EU ETS to include all departing flights from the European Economic Area (EEA) (and +not just flights within the EEA and flights departing the EEA to the United Kingdom and Switzerland). +In 2023, the European Parliament and the European Council formally adopted the EU’s ReFuelEU Aviation initiative to create a SAF +blending mandate for aviation fuel suppliers. The agreed text requires fuel suppliers to ensure that minimum shares of SAF are made +available to aircraft operators at EU airports starting January 1, 2025. Such minimum requirements are 2% in 2025, 6% in 2030, 20% in +2035, 34% in 2040, 42% in 2045 and 70% in 2050. In addition, a specific proportion of the fuel mix (1.2% in 2030, 2% in 2032, 5% in 2035 +and progressively reaching 35% in 2050) must comprise synthetic fuels such as e-kerosene, and as of 2025, there will be an EU label for the +environmental performance of flights, such that airlines may market their flights indicating the expected carbon footprint per passenger. The +potential effects on our business of such requirements are uncertain at this time. The UK and other countries have adopted or are +considering adoption of a SAF blending mandate similar to that of the EU. +U.S. Emissions Standards for Aircraft Engines +In January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine +GHG emission standards. Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines +on in-service aircraft. On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions +standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process. Since then, the EPA and ICAO’s +Committee on Aviation Environmental Protection have had several meetings on this issue, but no further progress has been made. In +addition, several states and environmental groups have challenged the EPA’s standards and on June 30, 2023, the U.S. Court of Appeals for +the D.C. Circuit denied such petitions and upheld the EPA’s GHG emissions standards. +For more information on our approach to climate change, see our 2022 Sustainability Report on our website www.aa.com available under +“Environmental, Social and Governance.” None of the information or contents under our “Environmental, Social and Governance” page, 2022 +Sustainability Report, or our website are incorporated into this Annual Report on Form 10-K. +19 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_2.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..f5dbd35e60ac847ffe90766f203bd98744a0b127 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_2.txt @@ -0,0 +1,46 @@ +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ 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. +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ 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. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting +company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” +and “emerging growth company” in Rule 12b-2 of the Exchange Act. +American Airlines Group Inc. ☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +American Airlines, Inc. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying +with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of +its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public +accounting firm that prepared or issued its audit report. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant +included in the filing reflect the correction of an error to previously issued financial statements. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based +compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of the voting stock held by non-affiliates of American Airlines Group Inc. as of June 30, 2023, was +approximately $11.7 billion. As of February 16, 2024, there were 654,756,816 shares of American Airlines Group Inc. common stock +outstanding. +As of February 16, 2024, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American +Airlines Group Inc. \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_20.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..93c88b53bb2c7bd450b84bc42b473f62e02e6550 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_20.txt @@ -0,0 +1,30 @@ +Table of Contents +Impact of Regulatory Requirements on Our Business +Regulatory requirements, including but not limited to those discussed above, affect operations and increase operating costs for the airline +industry, including our airline subsidiaries, and future regulatory developments may continue to do the same. For additional information, see +Part I, Item 1A. Risk Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state +and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or +data privacy incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our +business, results of operations and financial condition,” “If we are unable to obtain and maintain adequate facilities and infrastructure +throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or +change our route network in the future, which may have a material adverse impact on our operations,” “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages,” “The airline industry is heavily taxed,” “We are subject to many forms of +environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, +including increased regulation of our GHG emissions, changing consumer preferences and the potential for increased impacts of severe +weather events on our operations and infrastructure.” +Available Information +Use of Websites to Disclose Information +Our website is located at www.aa.com. We have made, and expect in the future to make, public disclosures to investors and the general +public of information regarding AAG and its subsidiaries by means of the investor relations section of our website as well as through the use +of our social media sites, including Facebook and X. In order to receive notifications regarding new postings to our website, investors are +encouraged to enroll on our website to receive automatic email alerts (see https://americanairlines.gcs-web.com/email-alerts), “follow” +American (@AmericanAir) on X and “like” American on our Facebook page (www.facebook.com/AmericanAirlines). None of the information +or contents of our website or social media postings is incorporated into this Annual Report on Form 10-K. +Availability of SEC Reports +A copy of this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those +reports are available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish +it to, the SEC. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding +issuers that file electronically with the SEC at www.sec.gov. +20 +The secret object #1 is a "table". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_21.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..255560d8fa89f53f73cd1efecf79b33014a2e590 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_21.txt @@ -0,0 +1,48 @@ +Table of Contents +ITEM 1A. RISK FACTORS +Below are certain risk factors that may affect our business, results of operations and financial condition, or the trading price of our +common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing +business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and +uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination +thereof, may impact our business. +Risks Related to our Business and Industry +Downturns in economic conditions could adversely affect our business. +Due to the discretionary nature of business and leisure travel spending and the highly competitive nature of the airline industry, our +revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in +these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking +practices and related reactions by our competitors, all of which in turn have had, and may have in the future, a strong negative effect on our +business. For example, the COVID-19 pandemic and associated decline in economic activity and increase in unemployment levels had a +severe and prolonged effect on the global economy generally and, in turn, resulted in a prolonged period of depressed demand for air travel. +In addition, a rapid economic expansion following the height of the COVID-19 pandemic resulted in significant inflationary pressures and +volatility in certain currencies, which have increased our costs for aircraft fuel, wages and benefits and other goods and services we require +to operate our business, as well as increasing the interest expense on our variable-rate indebtedness. +We will need to obtain sufficient financing or other capital to operate successfully. +Our business plan contemplates continued significant investments related to our fleet, improving the experience of our customers and +updating our facilities. Significant capital resources will be required to execute this plan. We estimate that, based on our commitments as of +December 31, 2023, our planned aggregate expenditures for aircraft purchase commitments and certain engines for calendar years 2024 +through 2028 would be approximately $11.7 billion. We may also require financing to refinance maturing obligations and to provide liquidity to +fund other corporate requirements. Accordingly, we will need substantial liquidity, financing or other capital resources to finance such aircraft +and engines and meet such other liquidity needs. If needed, it may be difficult for us to raise additional capital on acceptable terms, or at all, +due to, among other factors: our substantial level of existing indebtedness, particularly following transactions we completed in response to +the impact of the COVID-19 pandemic; our non-investment grade credit rating; volatile or otherwise unfavorable market conditions; and the +availability of assets to use as collateral for loans or other indebtedness, which has been reduced significantly as a result of certain financing +transactions we have undertaken since the beginning of 2020 and may be further reduced. If we are unable to arrange any such required +financing at customary advance rates and on terms and conditions acceptable to us, we may need to use cash from operations or cash on +hand to purchase aircraft and engines or fund our other corporate requirements, or may seek to negotiate deferrals for such aircraft and +engines with the applicable manufacturers or otherwise defer corporate obligations. Depending on numerous factors applicable at the time +we seek capital, many of which are out of our control, such as the state of the domestic and global economies, the capital and credit markets’ +view of our prospects and the airline industry in general, and the general availability of debt and equity capital, the financing or other capital +resources that we will need may not be available to us, or may be available only on onerous terms and conditions. Furthermore, we hold +significant balances of cash and short-term investments, including as necessary to conduct our day-to-day operations, some of which are +held in deposit accounts at commercial banks in excess of the government-provided deposit insurance. There can be no assurance that we +will be successful in obtaining financing or other needed sources of capital to operate successfully or to fund our committed expenditures. An +inability to obtain necessary financing on acceptable terms would limit our ability to execute necessary capital projects and would have a +material adverse impact on our business, results of operations and financial condition. +Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to +adverse economic and industry conditions. +We have significant amounts of indebtedness and other financial obligations, including pension obligations, obligations to make future +payments on flight equipment and property leases related to airport and other facilities, and substantial non-cancelable obligations under +aircraft and related spare engine purchase agreements. Moreover, currently a very significant portion of our assets are pledged to secure our +indebtedness. Our substantial indebtedness and other +21 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_22.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..50cc35c9244f3a4269a4c096e4d18d3a2e57a256 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_22.txt @@ -0,0 +1,45 @@ +Table of Contents +obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences. +For example, they may: +• make it more difficult for us to satisfy our obligations under our indebtedness; +• limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments and general +corporate purposes, and adversely affect the terms on which such funding can be obtained; +• require us to dedicate a substantial portion of our liquidity or cash flow from operations to payments on our indebtedness and +other obligations, thereby reducing the funds available for other purposes; +• make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative +to competitors with lower relative levels of financial leverage; +• significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or +global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our +business, operations, or competitive position versus other airlines; +• limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and +economic conditions; +• bear interest at floating rates, subjecting us to volatility in interest expenses as interest rates fluctuate; +• contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and +amounts available to be drawn under revolving credit facilities and collateral coverage ratios and peak debt service coverage +ratios; +• impact availability of borrowings under revolving lines of credit; and +• contain restrictive covenants that could, among other things: +◦ limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make +investments and pay dividends; and +◦ if breached, result in an event of default under our other indebtedness. +In addition, during the COVID-19 pandemic we were required to obtain a significant amount of additional financing from a variety of +sources and we cannot guarantee that we will not need to obtain additional financing in the future. Such financing may include the issuance +of additional unsecured or secured debt securities, equity securities and equity-linked securities as well as additional bilateral and syndicated +secured and/or unsecured credit facilities, among other items. There can be no assurance as to the timing of any such financing transactions, +which may be in the near term, or that we will be able to obtain such additional financing on favorable terms, or at all. Any such actions may +be material in nature, could result in the incurrence and issuance of significant additional indebtedness or equity and could impose significant +covenants and restrictions to which we are not currently subject. Moreover, as a result of the financing activities we undertook in response to +the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby +subjecting us to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions +could become binding on us should we seek additional liquidity in the future. +The obligations discussed above, including those imposed as a result of any additional financings we may undertake, could also impact +our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business, and could materially adversely affect our +liquidity, results of operations and financial condition. +Further, a substantial amount of our long-term indebtedness bears interest at floating interest rates, which tend to fluctuate based on +general short-term interest rates, rates set by the U.S. Federal Reserve and other central banks, the supply of and demand for credit in +treasury repurchase or other markets and general economic conditions. We have not hedged our interest rate exposure with respect to our +floating rate debt. Accordingly, our interest expense for any particular period will fluctuate based on the relevant benchmark rate and other +variable interest rates. In 2022 and 2023, in response to rising inflation which coincided with a rapid rebound of economic activity as +governments lifted restrictions and economies reopened following the COVID-19 pandemic, central banks around the world—including the +U.S. Federal +22 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_23.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..d998d7cafe390a75569289fe4c08342c55828225 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_23.txt @@ -0,0 +1,44 @@ +Table of Contents +Reserve, the European Central Bank and the Bank of England—undertook a cycle of raising interest rates, which has consequently +increased the interest we pay on our floating-rate indebtedness. To the extent the interest rates applicable to our floating rate debt remain +elevated or continue to increase, our interest expense will increase, in which event we may have difficulties making interest payments and +funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected. +In connection with the phase-out of the London Interbank Offered Rate (LIBOR) as a reference rate in June 2023, the U.S. Federal +Reserve, in conjunction with the Alternative Reference Rates Committee, chose the Secured Overnight Financing Rate (SOFR), and +specifically Term SOFR, as the recommended risk-free reference rate for the U.S. (calculated based on repurchase agreements backed by +treasury securities). Prior to the discontinuation of LIBOR, we amended substantially all of our LIBOR-based financing arrangements to +transition them to successor rates, primarily Term SOFR. We cannot predict the extent to which Term SOFR will gain widespread acceptance +as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial markets generally or on our business, financial +condition or results of operations specifically, and our transition to successor rates could cause the amount of interest payable on our long- +term debt to be different or higher than expected. +We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, +results of operations and financial condition. +Our pension funding obligations are significant. The amount of our pension funding obligations will depend on the performance of +investments held in trust by the pension plans, interest rates for determining liabilities and actuarial experience. We also have significant +obligations for retiree medical and other postretirement benefits. +Additionally, we participate in the IAM National Pension Fund (the IAM Pension Fund). The funding status of the IAM Pension Fund is +subject to the risk that other employers may not meet their obligations, which under certain circumstances could cause our obligations to +increase. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a +funded status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. +Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health +of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, American was subject to an +immaterial contribution surcharge, which ceased to apply on June 14, 2019 upon American’s mandatory adoption of a contribution schedule +under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate. This contribution schedule +will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. Furthermore, if +we were to withdraw from the IAM Pension Fund, if the IAM Pension fund were to terminate, or if the IAM Pension Fund were to undergo a +mass withdrawal, we could be subject to liability as imposed by law. +If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely +affect our liquidity. +We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. These +agreements allow these credit card processing companies, under certain conditions (including, with respect to certain agreements, our failure +to maintain certain levels of liquidity), to hold an amount of our cash (referred to as a holdback) equal to some or all of the advance ticket +sales that have been processed by that credit card processor, but for which we have not yet provided the air transportation. Additionally, such +credit card processing companies may require cash or other collateral reserves to be established. These credit card processing companies +are not currently entitled to maintain any holdbacks pursuant to these requirements. These holdback requirements can be implemented at the +discretion of the credit card processing companies upon the occurrence of specific events, including material adverse changes in our +financial condition or the triggering of a liquidity covenant. The imposition of holdback requirements, up to and including 100% of relevant +advanced ticket sales, would materially reduce our liquidity. Likewise, other of our commercial agreements contain provisions that allow +counterparties to impose less-favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our +financial condition. For example, we maintain certain letters of credit as well as insurance- and surety-related agreements under which +counterparties may require collateral, including cash collateral. +23 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_24.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..7389e5d1343808bcdef37803c5992c76f946be0d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_24.txt @@ -0,0 +1,45 @@ +Table of Contents +The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain +additional qualified personnel could adversely affect our business. +We believe that our future success will depend in large part on our ability to attract, develop and retain highly qualified management, +technical and other personnel. Retaining and recruiting people with the appropriate skills is particularly challenging as the economy in +general, and the airline industry in particular, continue to recover from the COVID-19 pandemic, resulting in competition for the human +resources necessary to operate our business successfully. We may not be successful in attracting, developing or retaining key personnel or +other highly qualified personnel. In addition, competition for skilled personnel has intensified and may continue to intensify if overall industry +capacity continues to increase and/or we were to incur attrition at levels higher than we have historically. Any inability to attract, develop and +retain significant numbers of qualified management and other personnel would have a material adverse effect on our business, results of +operations and financial condition. +Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, +regulatory and other conditions beyond our control, including global events that affect travel behavior, and our results of +operations could be volatile and fluctuate materially due to changes in such conditions. +Our business, results of operations and financial condition have been and will continue to be affected by many changing economic, +geopolitical, commercial, regulatory 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 and higher interest rates; +• the occurrence of wars, conflicts, terrorist attacks and geopolitical instability; +• changes in consumer preferences, perceptions, spending patterns and demographic trends; +• changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations and other +factors; +• delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or +other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise +perform as and when expected; +• actual or potential disruptions to the U.S. National Airspace System (the ATC system); +• increases in costs of safety, security and environmental measures; +• increases in costs related to meeting our climate goals or obligations, including in respect of the costs to be incurred to +migrate to increased use of SAF in lieu of conventional aviation fuel; +• outbreaks of diseases or other public health or safety concerns that affect travel behavior, such as occurred during the +COVID-19 pandemic; and +• weather and natural disasters, including increases in frequency, severity or duration of such disasters, and related costs +caused by more severe weather due to climate change. +The COVID-19 pandemic, along with the measures governments and private organizations worldwide implemented in an attempt to +contain its spread, resulted in significant volatility in demand for air travel, which adversely affected our business, operations and financial +condition to an unprecedented extent and for a prolonged period. Measures implemented during the COVID-19 pandemic—such as travel +restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, cancellation of public events +and many others—initially resulted in a precipitous decline in demand for both domestic and international business and leisure travel. In +response to this material deterioration in demand, we took a number of aggressive actions to ameliorate the impacts to our business, +operations and financial condition. While governments have loosened or lifted COVID-19-related travel restrictions, the potential for a +resurgence of COVID-19, including the emergence and spread of any new variants, and its after effects remain uncertain, and there can be +no assurance that any mitigating actions we take in response will be sufficient to avert a deterioration in our business, financial condition and +results of operations. Additionally, the COVID-19 pandemic necessitated changes in business practices which may persist. For example, +businesses and other travelers may continue to forego air travel in +24 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_25.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1d5d52a1c239bfc1e2f4282a10105ad8fbe2062 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_25.txt @@ -0,0 +1,49 @@ +Table of Contents +favor of remote or flexible working policies and communication alternatives such as videoconferencing. In addition, businesses may seek to +reduce travel costs by requiring the purchase of less expensive tickets, thereby potentially impacting our average revenue per available seat +mile. +In addition to the effects of the COVID-19 pandemic, an outbreak of another contagious disease—such as has occurred in the past with +the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus or any +other similar illness—if it were to become associated with air travel or persist for an extended period, could materially affect the airline +industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior. As a result of these or other +conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change. In addition, due to +generally weaker demand for air travel during the winter, our revenues in the first and fourth quarters of the year could be weaker than +revenues in the second and third quarters of the year. +The airline industry is intensely competitive and dynamic. +Our competitors include other major domestic airlines and foreign, regional and new entrant airlines, as well as joint ventures formed by +some of these airlines, many of which have greater financial or other resources and/or lower cost structures than ours, as well as other forms +of transportation, such as rail and private automobiles or alternatives to commuting or business travel including remote or flexible working +policies and communication alternatives such as videoconferencing. In many of our markets, we compete with at least one low-cost carrier +(including so-called ultra-low-cost carriers). Our revenues are sensitive to the actions of other carriers in many areas, including pricing, +scheduling, capacity, fees (including cancellation, change and baggage fees), amenities, loyalty benefits and promotions, which can have a +substantial adverse impact not only on our revenues, but on overall industry revenues. These factors may become even more significant in +periods when the industry experiences large losses (such as occurred during the COVID-19 pandemic), as airlines under financial stress, or +in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long- +term viability. +Low-cost carriers (including so-called ultra-low-cost carriers) have a profound impact on industry revenues. Using the advantage of low +unit costs, these carriers offer lower fares in order to shift demand from larger, more established airlines, and represent significant +competitors, particularly for customers who fly infrequently or are price sensitive and therefore tend not to be loyal to any one particular +carrier. Many of these carriers, including several that have recently commenced operations, have announced growth strategies including +commitments to acquire significant numbers of new aircraft for delivery in the next few years. These low-cost carriers are attempting to +continue to increase their market share through growth and consolidation, and are expected to continue to have an impact on our revenues +and overall performance. We and several other large network carriers have implemented “Basic Economy” fares designed to more effectively +compete against low-cost carriers, but we cannot predict whether these initiatives will be successful. While historically these carriers have +provided competition in domestic markets, we have recently experienced new competition from low-cost carriers on international routes, +including low-cost airlines executing international long-haul expansion strategies, a trend likely to continue, in particular with the planned +introduction of long-range narrowbody aircraft in coming years. Additionally, other carriers focused on premium passenger travel are +attempting to implement growth strategies. The actions of existing or future carriers, including those described above, could have a material +adverse effect on our operations and financial performance. +In certain instances, other air carriers are attempting to operate scheduled service with a business model that relies on FAA Part 135, a +regulatory environment that is generally less stringent than the rules applicable to our airline and similar airlines that operate under FAA Part +121 and which provides those airlines certain competitive advantages that Part 121 airlines cannot replicate. We have objected to the DOT +and TSA that the less stringent Part 135 rules were never intended as a basis for scheduled passenger service and that business model +should not be permissible, and the agencies’ review is ongoing. A DOT or TSA decision to allow scheduled passenger service under Part 135 +and the actions of existing or future carriers using that business model, including those described above, could adversely impact our +business, financial condition and results of operations. +We provide air travel internationally, directly as well as through joint businesses, strategic alliances, codeshare and similar arrangements +to which we are a party. While our network is comprehensive, compared to some of our key global competitors, we generally have somewhat +greater relative exposure to certain regions (for example, Latin America) and somewhat lower relative exposure to others (for example, Asia). +Our financial performance relative to our key competitors will therefore be influenced significantly by macro-economic conditions in particular +regions around the world and the relative exposure of our network to the markets in those regions, including the duration of any declines in +demand for +25 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_26.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0dff3ae6e5f95119d8a1bd6fe77107f14e7cc9c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_26.txt @@ -0,0 +1,51 @@ +Table of Contents +travel to specific regions as a result of health emergencies (such as during the COVID-19 pandemic), geopolitical instability or other factors, +and the speed with which demand for travel to these regions returns. +Our international service exposes us to foreign economies and the potential for reduced demand when any foreign country we serve +suffers adverse local economic conditions or if governments restrict commercial air service to or from any of these markets. For example, the +COVID-19 pandemic resulted in a precipitous and prolonged decline in demand for air travel, in particular international travel, in part as a +result of the imposition by the U.S. and foreign governments of restrictions on travel from certain regions. In addition, open skies agreements, +which are now in place with a substantial number of countries around the world, provide international airlines with open access to U.S. +markets, potentially subjecting us to increased competition on our international routes. See also “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages.” +To the extent alliances formed by our competitors can undertake activities that are not available to us, including as to regulatory approvals, +access slots, gates and routes and other matters, our ability to effectively compete may be hindered. Our ability to attract and retain +customers is dependent upon, among other things, our ability to offer our customers convenient access to desired markets. Our business +could be adversely affected if we are unable to maintain or obtain alliance and marketing relationships with other air carriers in desired +markets. +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business relating to Australia and New Zealand with Qantas. We have also established a strategic alliance +with Alaska Airlines relating to certain routes on the West Coast of the United States and a strategic alliance relating to the Middle East with +Qatar Airways. In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain +commitments to the EC regarding, among other things, the availability of take-off and landing slots at LHR or LGW airports. The +commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United Kingdom from the EU, commonly +referred to as Brexit, and the expiry of the EC commitments in July 2020, the CMA, in October 2018, opened an investigation into the +transatlantic joint business. In September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC +commitments until March 2026 in light of the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its +investigation in September 2023 after a pause related to the COVID-19 pandemic and plans to complete the investigation before the +scheduled expiration of the interim measures in March 2026. We continue to cooperate fully with the CMA. The foregoing arrangements are +important aspects of our international network and we are dependent on the performance and continued cooperation of the other airlines +party to those arrangements. +On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue +from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, +2023, and the carriers have commenced wind-down activities to accommodate mutual customers. American has appealed the District Court’s +decision to the Court of Appeals for the First Circuit; American’s opening brief was filed on December 6, 2023. Separately, in December 2022, +two putative class action lawsuits were filed in the U.S. District Court for the Eastern District of New York alleging that American and JetBlue +violated U.S. antitrust law in connection with the previously disclosed NEA. In February 2023, private party plaintiffs filed two additional +putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the District of Massachusetts and the +U.S. District Court for the Eastern District of New York, respectively. All cases have since been consolidated in the U.S. District Court for the +Eastern District of New York. American, together with JetBlue, filed a motion to dismiss on September 21, 2023, which remains pending. The +motions to dismiss argue, among other things, that the plaintiffs each waived their right to bring class action claims. We believe these +complaints are without merit and are defending against them vigorously. +No assurances can be given as to any benefits that we may derive from any of the foregoing arrangements or any other arrangements +that may ultimately be implemented, or whether regulators will, or if granted continue to, approve or impose material conditions on our +business activities. +Other mergers and other forms of airline partnerships, including regulatory approvals such as antitrust immunity grants, may take place +and may not involve us as a participant, or could result in unforeseen impacts on the industry generally and our company in particular. +Depending on which carriers combine or integrate and which assets, if any, are sold or otherwise transferred to other carriers in connection +with any such transactions, our competitive position relative to the post-transaction carriers or other carriers that acquire such assets could +be harmed. In addition, as carriers combine through traditional mergers or integrate their operations through other arrangements, their route +networks will grow, and that growth will result in greater overlap with our network, which in turn could decrease our overall market share and +26 +The secret transportation is a "boat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_27.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ce30a0737b6793fad5d9a3cbf9d67d62cbfd389 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_27.txt @@ -0,0 +1,47 @@ +Table of Contents +revenues. Such combination or collaboration is not limited to the U.S., but could include further transactions among international carriers in +Europe and elsewhere that result in broader networks offered by rival airlines. +Additionally, our AAdvantage program, which is an important element of our sales and marketing programs, faces significant and +increasing competition from the loyalty programs offered by other travel companies, as well as from similar loyalty benefits offered by banks +and other financial services companies. Competition among loyalty programs is intense regarding the rewards, fees, required usage, and +other terms and conditions of these programs. In addition, we have used certain assets from our AAdvantage program as collateral for the +AAdvantage Financing, which contains covenants that impose restrictions on certain amendments or changes to certain of our AAdvantage +program agreements provided as collateral under the AAdvantage Financing and other aspects of the AAdvantage program. These +competitive factors and covenants (to the extent applicable) may affect our ability to attract and retain customers, increase usage of our +loyalty program and maximize the revenue generated by our loyalty program. +We may also be impacted by competition regulations affecting certain of our major commercial partners, including our co-branded credit +card partners. For example, there has been bipartisan legislation proposed in Congress called the Credit Card Competition Act designed to +increase credit card transaction routing options for merchants which, if enacted, could result in a reduction of the fees levied on credit card +transactions. If this legislation or any similar legislation or regulation were enacted, it could fundamentally alter the profitability of our +agreements with co-branded credit card partners and the benefits we provide to our consumers through the co-branded credit cards issued +by these partners. +Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial +performance. +Relations between air carriers and labor unions in the U.S. are governed by the RLA. Under the RLA, CBAs generally contain “amendable +dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following +the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the NMB. As of December 31, +2023, approximately 87% of our employees were represented for collective bargaining purposes by labor unions, and 34% were covered by +CBAs that are currently amendable or that will become amendable within one year. For the dates that the CBAs with our major work groups +become amendable under the RLA, see “Labor Relations” under Part I, Item 1. Business – “Sustainability – Our People.” +In the case of a CBA that is amendable under the RLA, if no agreement is reached during direct negotiations between the parties, either +party may request that the NMB appoint a federal mediator. The RLA prescribes no timetable for the direct negotiation and mediation +processes, and it is not unusual for those processes to last for many months or even several years. If no agreement is reached in mediation, +the NMB in its discretion may declare that an impasse exists and proffer binding arbitration to the parties. Either party may decline to submit +to arbitration, and if arbitration is rejected by either party, a 30-day “cooling off” period commences. During or after that period, 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 30-day “cooling off” period. At the end of this “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, which could materially adversely affect our +business, results of operations and financial condition. +None of the unions representing our employees presently may lawfully engage in concerted slowdowns or refusals to work, such as +strikes, sick-outs or other similar activity, against us. Nonetheless, there is a risk that employees, either with or without union involvement, +could engage in one or more concerted refusals to work that could individually or collectively harm the operation of our airline and impair our +financial performance. Additionally, some of our unions have brought and may continue to bring grievances to binding arbitration, including +those related to wages. If successful, there is a risk these arbitral avenues could result in material additional costs that we did not anticipate. +Currently, we believe our labor costs are generally competitive relative to the other large network carriers. However, personnel shortages, +in particular for pilots, and general wage inflation stand to impact our labor costs moving forward. In July 2023, we reached a tentative +agreement with the union representing our mainline pilots, which was subsequently ratified by the pilots in August 2023. The new agreement, +which became effective in the third quarter of 2023, includes significant increases in pilot pay and benefits, in line with agreements recently +concluded by our large network competitors with their pilots’ unions. We remain in negotiations for other new labor agreements and anticipate +that any new contracts we agree to with our labor groups will include material increases in salaries and other benefits, which will significantly +increase our labor expense. +27 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_28.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..617c1fb0b2bec73407ce12eacbc60c61a42f7e6d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_28.txt @@ -0,0 +1,49 @@ +Table of Contents +If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +A significant portion of our regional operations are conducted by third-party operators on our behalf and are provided for under capacity +purchase agreements. Due to our reliance on third parties to provide these essential services, we are subject to the risk of disruptions to their +operations, which has in the past and may in the future result from many of the same risk factors disclosed in this report, such as the impact +of adverse economic conditions, the inability of third parties to hire or retain skilled personnel, including in particular pilots and mechanics, +and other risk factors, such as an out-of-court or bankruptcy restructuring of any of our regional operators. Several of these third-party +regional operators provide significant regional capacity that we would be unable to replace in a short period of time should that operator fail to +perform its obligations to us. Disruptions to capital markets, shortages of pilots, mechanics and other skilled personnel and adverse economic +conditions in general have subjected certain of these third-party regional operators to significant financial pressures, which have in the past +and may in the future lead to bankruptcies among these operators. In particular, the severe decline in demand for air travel resulting from the +COVID-19 pandemic and related governmental restrictions on travel materially impacted demand for services provided by our regional +carriers and, as a result, we temporarily significantly reduced our regional capacity. Further, as airlines attempt to restore capacity in line with +increased demand for air travel following the height of the COVID-19 pandemic, these third-party operators have experienced difficulties in +recruiting and retaining sufficient personnel to operate significantly increased schedules, and have in some instances been required to offer +significant increases in pay and other benefits to recruit and retain pilots and other personnel. Periods of volatility in travel demand have the +potential to adversely affect our regional operators, some of whom may experience significant financial stress, declare bankruptcy or +otherwise cease to operate. We may also experience disruption to our regional operations or incur financial damages if we terminate the +capacity purchase agreement with one or more of our current operators or transition the services to another provider. Any significant +disruption to our regional operations would have a material adverse effect on our business, results of operations and financial condition. +In addition, our reliance upon others to provide essential services on our behalf in our operations may result in our relative inability to +control the efficiency and timeliness of contract services. We have entered into agreements with contractors to provide various facilities and +services required for our operations, including distribution and sale of airline seat inventory, reservations, provision of information technology +and services, regional operations, aircraft maintenance, fueling, catering, ground services and facilities and baggage handling. Similar +agreements may be entered into in any new markets we decide to serve. These agreements are generally subject to termination after notice +by the third-party service provider. We are also at risk should one of these service providers cease operations, and there is no guarantee that +we could replace these providers on a timely basis with comparably priced providers, or at all. These third parties are also facing challenges +retaining and recruiting people with the appropriate skills to meet our requirements as the economy in general, and the airline industry in +particular, continue to recover from the COVID-19 pandemic. The COVID-19 pandemic also caused significant disruption in global supply +chains and staffing shortages, which have affected and may continue to affect the availability and timely delivery and fulfillment of many +goods, including certain of those that we purchase directly or which are required by third parties to perform contracted services for us. We +rely on the operation of complex supply chains and a large number of third parties for the procurement and fulfillment of parts, components, +consumable or disposable goods and other products and services essential to our business. Following a faster than expected return of +demand for air travel as COVID-19 cases declined worldwide and governments lifted travel restrictions, suppliers and many of the airports we +serve experienced acute shortages of personnel, resulting in increased delays, cancellations and, in certain cases, restrictions on passenger +numbers or the number of flights to or from certain airports. We cannot guarantee that, as a result of ongoing or future supply chain +disruptions or staffing shortages, we, our third-party partners, or the airports we serve will be able to timely source all of the products and +services we require in the course of our business, or that we will be successful in procuring suitable alternatives. Any material problems with +the adequacy, efficiency and timeliness of contract services, resulting from financial hardships, personnel shortages or otherwise, could have +a material adverse effect on our business, results of operations and financial condition. +Any damage to our reputation or brand image could adversely affect our business or financial results. +Maintaining a good reputation globally is critical to our business. Our reputation or brand image could be adversely impacted by, among +other things, any failure to maintain high ethical, social and environmental sustainability practices for all of our operations and activities, our +impact on the environment, public pressure from investors or policy groups to change our policies, such as movements to institute a “living +wage,” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our +use of social media, including greenwashing concerns regarding our advertising campaigns and marketing programs related to our +sustainability +28 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_29.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ecb4d57ea819d414ce3eb1ca5b6b45f2fc9edb3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_29.txt @@ -0,0 +1,51 @@ +Table of Contents +initiatives, or customer perceptions of statements made by us, our employees and executives, agents or other third parties. In addition, we +operate in a highly visible industry that has significant exposure to social media. Negative publicity, including as a result of misconduct by our +customers, vendors or employees, can spread rapidly through social media. Should we not respond in a timely and appropriate manner to +address negative publicity, our brand and reputation may be significantly harmed. Damage to our reputation or brand image or loss of +customer confidence in our services could adversely affect our business and financial results, as well as require additional resources to +rebuild our reputation. +Moreover, an outbreak and spread of an infectious disease could adversely impact consumer perceptions of the health and safety of +travel, and in particular airline travel, such as occurred during the COVID-19 pandemic. Actual or perceived risk of infection on our flights +could have a material adverse effect on the public's perception of us and may harm our reputation and business. We have in the past, and +may in the future be required to take extensive measures to reassure our team members and the traveling public of the safety of air travel, +and we could incur significant costs implementing safety, hygiene-related or other actions to limit the actual or perceived threat of infection +among our employees and passengers. However, we cannot assure that any actions we might take in response to an infectious disease +outbreak will be sufficient to restore the confidence of consumers in the safety of air travel. In addition, as a result of mask mandates and +other mitigating measures that airports and carriers were required by law to implement to limit the spread of COVID-19, we experienced an +increase in the incidence of aggressive customer behavior and physical confrontation on our flights, certain of which resulted in injuries to our +personnel. While the rate of these incidents has declined following the lifting of mask mandates and other COVID-19 measures, if our +employees feel unsafe or believe that we are not doing enough to prevent and prosecute such incidents, we could experience higher rates of +employee absence or attrition and we may suffer reputational harm which could make it more difficult to attract and retain employees, and +which could in turn negatively affect our business, financial condition and results of operations. +We are at risk of losses and adverse publicity stemming from any public incident involving our company, our people or our +brand, including any accident or other public incident involving our personnel or aircraft, or the personnel or aircraft of our +regional, codeshare or joint business operators. +We are at risk of adverse publicity stemming from any public incident involving our company, our people or our brand, particularly given +the ease with which individuals can now capture and rapidly disseminate information via social media. Such an incident could involve the +actual or alleged behavior of any of our employees, contractors or passengers. Further, if our personnel, one of our aircraft, a type of aircraft +in our fleet, or personnel of, or an aircraft that is operated under our brand by, one of our regional operators or an airline with which we have +a marketing alliance, joint business or codeshare relationship, were to be involved in a public incident, accident, catastrophe or regulatory +enforcement action, we could be exposed to significant reputational harm and potential legal liability. The insurance we carry may be +inapplicable or inadequate to cover any such incident, accident, catastrophe or action. In the event that our insurance is inapplicable or +inadequate, we may be forced to bear substantial losses from an incident or accident. In addition, any such incident, accident, catastrophe or +action involving our personnel, one of our aircraft (or personnel and aircraft of our regional operators and our codeshare partners), or a type +of aircraft in our fleet could create an adverse public perception, which could harm our reputation, result in air travelers being reluctant to fly +on our aircraft or those of our regional operators or codeshare partners, and adversely impact our business, results of operations and +financial condition. +Changes to our business model that are designed to increase revenues may not be successful and may cause operational +difficulties or decreased demand. +We have in the past instituted, and intend to institute in the future, changes to our business model designed to increase revenues and +offset costs. These measures include further segmentation of the classes of service we offer, such as Premium Economy service and Basic +Economy service, enhancements to our AAdvantage program, charging separately for services that had previously been included within the +price of a ticket, changes to our practices and contracts with providers of distribution systems to provide additional content flexibility, +commercial practices related to ticket distribution channels, including efforts by us to migrate an increasing portion of our customers to our +modern, direct distribution channels in lieu of third party channels, changing (whether it be increasing, decreasing or eliminating) other pre- +existing fees, reconfiguration of our aircraft cabins, and efforts to optimize our network including by focusing growth on a limited number of +large hubs and entering into agreements with other airlines. For example, in 2020, we eliminated change fees for most domestic and +international tickets, which has reduced our change fee revenue, a trend which is expected to continue assuming this policy remains in place. +We may introduce additional initiatives in the future; however, as time goes on, we expect that it will be more difficult to identify and +implement additional initiatives. We cannot assure that these measures or any future initiatives will be successful in increasing our revenues +or offsetting our costs. Additionally, the implementation of these initiatives may create logistical challenges that could harm the operational +performance of our airline or result in decreased demand. Also, our implementation of any new or increased fees might result in adverse +29 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_3.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..889792754177433ed7a8bd577e00a53d1619882b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_3.txt @@ -0,0 +1,7 @@ +OMISSION OF CERTAIN INFORMATION +American Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and has therefore omitted the +information otherwise called for by Items 10-13 of Form 10-K as allowed under General Instruction I(2)(c). +DOCUMENTS INCORPORATED BY REFERENCE +Portions of the proxy statement related to American Airlines Group Inc.’s 2024 Annual Meeting of Stockholders, which proxy statement will +be filed under the Securities Exchange Act of 1934 within 120 days of the end of American Airlines Group Inc.’s fiscal year ended +December 31, 2023, are incorporated by reference into Part III of this Annual Report on Form 10-K. \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_30.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b78051c9b28ff88418244f3ec1301d71c869643 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_30.txt @@ -0,0 +1,45 @@ +Table of Contents +brand perceptions, reputational harm or regulatory scrutiny, and could reduce the demand for air travel on our airline or across the industry in +general, particularly if weakened economic conditions make our customers more sensitive to increased travel costs or provide a significant +competitive advantage to other carriers that determine not to institute similar charges. +Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely +affect our business and financial results. +We consider our intellectual property rights, particularly our branding rights such as our trademarks applicable to our airline and +AAdvantage program, to be a significant and valuable aspect of our business. We protect our intellectual property rights through a +combination of trademark, copyright and other forms of legal protection, contractual agreements and policing of third-party misuses of our +intellectual property. Our failure to obtain or adequately protect our intellectual property or any change in law that lessens or removes the +current legal protections of our intellectual property may diminish our competitiveness and adversely affect our business and financial results. +Any litigation or disputes regarding intellectual property may be costly and time-consuming and may divert the attention of our management +and key personnel from our business operations, either of which may adversely affect our business and financial results. +In addition, we have used certain of our branding and AAdvantage program intellectual property as collateral for various financings +(including the AAdvantage Financing, defined in the accompanying notes to the consolidated financial statements to this Annual Report on +Form 10-K), which contain covenants that impose restrictions on the use of such intellectual property and, in the case of the AAdvantage +Financing, on certain amendments or changes to our AAdvantage program. These covenants may have an adverse effect on our ability to +use such intellectual property. +We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and +liquidity. +From time to time, we are a party to or otherwise involved in legal proceedings, claims and government inspections or investigations and +other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. We are currently +involved in various legal proceedings and claims that have not yet been fully resolved, and additional claims may arise in the future. Legal +proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of +variables, some of which are not within our control. Litigation is subject to significant uncertainty and may be expensive, time-consuming, and +disruptive to our operations. Although we will vigorously defend ourselves in such legal proceedings, their ultimate resolution and potential +financial and other impacts on us are uncertain. For these and other reasons, we may choose to settle legal proceedings and claims, +regardless of their actual merit. If a legal proceeding is resolved against us, it could result in significant compensatory damages, and in +certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief +imposed on us. If our existing insurance does not cover the amount or types of damages awarded, or if other resolution or actions taken as a +result of the legal proceeding were to restrain our ability to operate or market our services, our consolidated financial position, results of +operations or cash flows could be materially adversely affected. In addition, legal proceedings, and any adverse resolution thereof, can result +in adverse publicity and damage to our reputation, which could adversely impact our business. Additional information regarding certain legal +matters in which we are involved can be found in Note 11(e) to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10(e) to +American’s Consolidated Financial Statements in Part II, Item 8B. +Our ability to utilize our NOLs and other carryforwards may be limited. +Under the Internal Revenue Code of 1986, as amended (the Code), a corporation is generally allowed a deduction for net operating losses +(NOLs) carried over from prior taxable years. At December 31, 2023, we had approximately $13.7 billion of gross federal NOLs and $4.7 +billion of other carryforwards available to reduce future federal taxable income, of which $3.4 billion will expire beginning in 2029 if unused +and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of NOL carryforwards to reduce future state +taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if unused. Our NOL carryforwards are subject to +adjustment on audit by the Internal Revenue Service and the respective state taxing authorities. Additionally, due to the impact of the COVID- +19 pandemic and other economic factors, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to +use them. +30 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_31.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..abe4208b2c43e1205756e70f09042ccd1ad8b38c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_31.txt @@ -0,0 +1,47 @@ +Table of Contents +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. There can be +no assurance that an additional valuation allowance on our net deferred tax assets will not be required should our financial performance be +negatively impacted in the future. Such valuation allowance could be material. +A corporation’s ability to deduct its federal NOL carryforwards and to utilize certain other available tax attributes can be substantially +constrained under the general annual limitation rules of Section 382 of the Code (Section 382) if it undergoes an “ownership change” as +defined in Section 382 (generally where cumulative stock ownership changes among material stockholders exceed 50% during a rolling +three-year period). In 2013, we experienced an ownership change in connection with our emergence from bankruptcy and US Airways +Group, Inc. (US Airways Group) experienced an ownership change in connection with the merger of US Airways Group and AMR +Corporation (the Merger). The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs +upon emergence from bankruptcy. We elected to be covered by certain special rules for federal income tax purposes that permitted +approximately $9.0 billion (with $3.0 billion of unlimited NOLs still remaining at December 31, 2023) of our federal NOL carryforwards to be +utilized without regard to the annual limitation generally imposed by Section 382. If the special rules are determined not to apply, our ability to +utilize such federal NOL carryforwards may be subject to limitation. Potential future transactions involving warrants, stock options, common or +preferred stock or other equity, may increase the possibility that the Company will experience a future "ownership change" under Section +382. Substantially all of our remaining federal NOL carryforwards attributable to US Airways Group and its subsidiaries are subject to +limitation under Section 382 as a result of the Merger; however, our ability to utilize such NOL carryforwards is not anticipated to be +effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. +Notwithstanding the foregoing, an ownership change may severely limit or effectively eliminate our ability to utilize our NOL carryforwards +and other tax attributes. In connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial +shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted a tax benefits preservation plan (the Tax +Benefit Preservation Plan) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income +tax obligations. The Tax Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders +of AAG. The Tax Benefit Preservation Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain +acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such acquisitions +may still occur. In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by discouraging +existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third +party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership +interest in AAG. +New U.S. tax legislation may adversely affect our financial condition, results of operations and cash flows. +We are subject to taxation at the federal, state and local levels in the United States. The U.S. government may enact significant changes +to the taxation of business entities. For example, on August 16, 2022, the Inflation Reduction Act was signed into law, introducing, among +other changes, a corporate minimum tax on certain corporations and an excise tax on certain stock repurchases by certain corporations. +While certain other draft legislation has been proposed, the likelihood of any proposed changes to the tax law being enacted or implemented +is unclear, and we are currently unable to predict whether such changes will occur. If any such changes are implemented, we are currently +unable to predict the ultimate impact on our business and therefore there can be no assurance our business will not be adversely affected. +We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize +the full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +Goodwill and indefinite-lived intangible assets are not amortized, but are assessed for impairment at least annually, or more frequently if +conditions indicate that an impairment may have occurred. In accordance with applicable accounting standards, we first assess qualitative +factors to determine whether it is necessary to perform a quantitative impairment test. In addition, we are required to assess certain of our +other long-lived assets for impairment if conditions indicate that an impairment may have occurred. +Future impairment of goodwill, intangible assets or other long-lived assets could be recorded in results of operations as a result of +changes in assumptions, estimates, or circumstances, some of which are beyond our control. There can be no assurance that a material +impairment charge of goodwill or tangible or intangible assets will be avoided. The value of our aircraft could be impacted in future periods by +changes in supply and demand for these aircraft. Such changes in supply +31 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_32.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a1f9fb5d3afab2861504bd0721bc6ae072c2ad0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_32.txt @@ -0,0 +1,47 @@ +Table of Contents +and demand for certain aircraft types could result from grounding of aircraft by us or other airlines, including as a result of significant or +prolonged declines in demand for air travel and corresponding reductions to capacity. We can provide no assurance that a material +impairment loss of tangible or intangible assets will not occur in a future period; we have previously incurred significant impairment charges +associated with our decision to retire certain aircraft as a result of the severe decline in demand for air travel due to the COVID-19 pandemic, +and the risk of future material impairments remains uncertain. Such impairment charges could have a material adverse effect on our +business, results of operations and financial condition. +The commercial relationships that we have with other companies, including any related equity investments, may not produce +the returns or results we expect. +An important part of our strategy to expand our network has been to initiate or expand our commercial relationships with other airlines, +such as by entering into global alliance, joint business and codeshare relationships, and, in certain instances, including China Southern +Airlines, GOL and JetSMART, by making an equity investment in another airline in connection with initiating or expanding such a commercial +relationship. We may explore additional investments in, and joint ventures and strategic alliances with, other carriers as part of our global +business strategy. We face competition in forming and maintaining these commercial relationships since there are a limited number of +potential arrangements and other airlines are looking to enter into similar relationships, and our inability to form or maintain these +relationships, or inability to form as many of these relationships as our competitors, may have an adverse effect on our business. Any such +existing or future investment could involve significant challenges and risks, including that we may not realize a satisfactory return on our +investment, if any, or that they may not generate the expected revenue synergies, and they may distract management focus from our +operations or other strategic options. We may also be subject to consequences from any illegal conduct of joint business partners as well as +to any political or regulatory change that negatively impacts or prohibits our arrangements with any such business partners. In addition, as a +result of the COVID-19 pandemic and subsequent economic recovery, the industry experienced significant volatility in demand for air travel +both internationally and domestically, which is expected to continue into the foreseeable future and could materially disrupt our partners' +abilities to provide air service, the timely execution of our strategic operating plans, including the finalization, approval and implementation of +new strategic relationships or the maintenance or expansion of existing relationships. If any carriers with which we partner or in which we +hold an equity stake were to cease trading or be declared insolvent, we could lose the value of any such investment or experience significant +operational disruption, which is a risk that we are subject to with respect to our investment in and commercial arrangements with GOL in light +of its commencement in January 2024 of bankruptcy proceedings in the U.S. Federal Bankruptcy Court for the Southern District of New York. +These events could have a material adverse effect on our business, results of operations and financial condition. +We may also from time to time pursue commercial relationships with companies outside the airline industry, which relationships may +include equity investments or other financial commitments. Any such relationship or related investment could involve unique risks, particularly +where these relationships involve new industry participants, emerging technologies or industries with which we are unfamiliar. +Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on +consumer demand, our operating results and liquidity. +Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of +the largest single cost items in our business and thus is a significant factor in the price of airline tickets. Market prices for aircraft fuel have +fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of +approximately $1.32 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2021 to December 31, 2023. +Aircraft fuel prices reflect not only the price of underlying crude oil, but also the price charged to refine crude oil into aircraft fuel (often +referred to as the “crack spread”), transportation costs, handling costs and taxes, and increases in any of these underlying components +would increase the price we ultimately pay for aircraft fuel. +Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of fuel can have a +material effect on our operating results and liquidity. Due to the competitive nature of the airline industry and unpredictability of the market for +air travel, we can offer no assurance that we may be able to increase our fares, impose fuel surcharges or otherwise increase revenues or +decrease other operating costs sufficiently to offset fuel price increases. Similarly, we cannot predict actions that may be taken by our +competitors in response to changes in fuel prices. +32 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_33.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..dfdd10f5d90266f48b922bc8230139c763a08c71 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_33.txt @@ -0,0 +1,48 @@ +Table of Contents +We cannot predict the future availability, price volatility or cost of aircraft fuel. Natural disasters (including hurricanes or similar events in +the U.S. Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or armed +conflicts involving oil-producing countries or impacting global trade routes, changes in production levels of individual nations or associations +of oil-producing states, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related +governmental policy, the strength of the U.S. dollar against foreign currencies, changes in the cost to transport or store petroleum products +and any related staffing or transportation equipment shortages, changes in access to petroleum product pipelines and terminals, speculation +in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events, may +result in fuel supply shortages, variations in the applicable crack spread, distribution challenges, additional fuel price volatility and cost +increases in the future. Any of these factors or events could cause a disruption in or increased demands on oil production, refinery +operations, pipeline capacity or terminal access and possibly result in significant increases in the price of aircraft fuel and diminished +availability of aircraft fuel supply. +Our aviation fuel purchase contracts generally do not provide meaningful price protection against increases in fuel costs. Our current +policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market +conditions and other factors. Accordingly, as of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel +consumption. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. See also the discussion in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk +– “Aircraft Fuel.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our +operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +Airlines are subject to extensive domestic and international regulatory requirements. In the last several years, Congress and state and +local governments have passed laws and regulatory initiatives, and the DOT, the FAA, the TSA and several of their respective international +counterparts have issued regulations and a number of other directives that affect the airline industry. These requirements impose substantial +costs on us and restrict the ways we may conduct our business. +For example, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that +require significant expenditures or operational restrictions. These requirements can be issued with little or no notice, or can otherwise impact +our ability to efficiently or fully utilize our aircraft, and in some instances have resulted in the temporary and prolonged grounding of aircraft or +engine types altogether including, for example, the March 2019 grounding of all Boeing 737 MAX Family aircraft, which was not lifted in the +United States until November 2020, the January 2024 grounding of 737-9 MAX aircraft (a model that we do not operate), and the significant +limitations imposed on the use of Pratt & Whitney GTF aircraft engines on certain Airbus aircraft (an engine that we do not use in our fleet), or +otherwise caused substantial disruption and resulted in material costs to us and lost revenues. The recent telecom industry roll-out of 5G +technology, and concerns regarding its possible interference with aircraft navigation systems, also resulted in regulatory uncertainty and the +potential for operational impacts, including possible suspension of service to certain airports or the operation of certain aircraft, though the +issue has since been resolved. See “We rely heavily on technology and automated systems to operate our business, and any failure of these +technologies or systems could harm our business, results of operations and financial condition.” The FAA also exercises comprehensive +regulatory authority over nearly all technical aspects of our operations. Our failure to comply with such requirements has in the past and may +in the future result in fines and other enforcement actions by the FAA or other regulators. In the future, any new +33 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_34.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..ca7a475bb8ebbb6b78f31e172f01822edfb1f75d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_34.txt @@ -0,0 +1,48 @@ +Table of Contents +regulatory requirements, particularly requirements that limit our ability to operate or price our products, could have a material adverse effect +on us and the industry. +In 2018, Congress passed a five-year funding authorization for the FAA which was scheduled to expire on September 30, 2023, but was +recently extended to March 8, 2024. The legislative process to renew this authorization (the FAA Authorization Renewal) could impact us, +and commercial aviation more generally, in numerous ways. As part of the FAA Authorization Renewal, Congress could seek to impose new +rules or regulations concerning, among other things, customer service, aviation safety, labor requirements, investments in FAA staffing and +resources, improvements to the ATC system and managing new entrants in the U.S. national airspace system, as well as new or increased +fees or taxes intended to fund these policies. Any new or enhanced requirements resulting from the FAA Authorization Renewal have the +potential to increase our costs or impact our operation. Congressional action on the FAA Authorization Renewal has already begun and +Congress has indicated that their goal is to pass the bill in advance of the newly set March 8, 2024 expiration. If Congress fails to pass the +FAA Authorization Renewal, we expect passage of an additional extension of the current law to prevent a lapse in authorities. +DOT consumer rules, and rules promulgated by certain analogous agencies in other countries we serve, dictate procedures for many +aspects of our customer’s journey, including at the time of ticket purchase, at the airport and onboard the aircraft. DOT requires multiple +disclosures of airline fares, taxes and baggage fees and is further changing these requirements to increase the number of disclosures and +the time at which they must be disclosed. DOT also recently issued a proposed rule mandating refunds in certain circumstances, such as a +global pandemic. DOT has also proposed rules requiring disclosure of certain ancillary fees by air carriers and travel agents. Finally, the DOT +finalized rules in 2023 for accessible lavatories on single-aisle aircraft and has continued to work through proposals for a number of disability +regulations that will impact us, including penalties for wheelchair loss or damage and prompt wheelchair assistance. +The Aviation and Transportation Security Act mandates the federalization of certain airport security procedures and imposes additional +security requirements on airports and airlines, most of which are funded by a per-ticket tax on passengers and a tax on airlines. Present and +potential future security requirements can have the effect of imposing costs and inconvenience on travelers, potentially reducing the demand +for air travel. +Similarly, there are a number of legislative and regulatory initiatives and reforms at the state and local levels in the U.S. These initiatives +include increasingly stringent laws to protect the environment, wage/hour requirements, mandatory paid sick or family leave and healthcare +mandates. These laws could affect our relationship with our workforce and the vendors that serve our airline and cause our expenses to +increase without an ability to pass through these costs. In recent years, the airline industry has experienced an increase in litigation over the +application of state and local employment laws, particularly in California. Application of these laws may result in operational disruption, +increased litigation risk and impact our negotiated labor agreements. For example, we are currently involved in legal proceedings in California +concerning alleged violations of the state’s labor code including, among other things, violations of certain meal and rest break laws, and an +adverse determination in any of these cases could adversely impact our operational flexibility and result in the imposition of damages and +fines, which could potentially be significant. We have reached an agreement to settle a class litigation brought by flight attendants in +California and anticipate final approval by the court in the first quarter of 2024. In addition, legislation passed by the California legislature in +March 2023 should effectively foreclose future meal and rest break claims from flight attendants in California. However, there is still risk of +future litigation from flight attendants and other work groups involving other types of wage and hour laws in California and other jurisdictions +which could seek to implement similar laws. +The results of our operations, demand for air travel and the manner in which we conduct business each may be affected by changes in +law and future actions taken by governmental agencies, including: +• changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the +types of fares offered or fees that can be charged to passengers; +• the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for +codesharing alliances, joint businesses and other arrangements with other airlines, and the imposition of regulatory +investigations or commencement of litigation related to any of the foregoing; +• restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s +ability to respond to a competitor); +• the adoption of new passenger security standards or regulations that impact customer service standards; +34 +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_35.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..25e35c2496706b162344700e860bfa9ad3132606 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_35.txt @@ -0,0 +1,46 @@ +Table of Contents +• restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights +currently held by us; +• the adoption of more restrictive locally-imposed noise restrictions; and +• restrictions on travel or special guidelines regarding aircraft occupancy or hygiene in response to outbreaks of illness, such +as occurred during the COVID-19 pandemic, including the imposition of preflight testing regimes or vaccination confirmation +requirements which have in the past and may in the future have the effect of reducing demand for air travel in the markets +where such requirements are imposed. +Each additional regulation or other form of regulatory oversight increases costs and adds greater complexity to airline operations and, in +some cases, may reduce the demand for air travel. There can be no assurance that the increased costs or greater complexity associated +with our compliance with new rules, anticipated rules or other forms of regulatory oversight will not have a material adverse effect on us. +Any significant reduction in air traffic capacity at and in the airspace serving key airports in the U.S. or overseas could have a material +adverse effect on our business, results of operations and financial condition. In addition, the ATC system is not successfully modernizing to +meet the growing demand for U.S. air travel. Air traffic controllers rely on outdated procedures and technologies that routinely compel +airlines, including ourselves, to fly inefficient routes or take significant delays on the ground. The ATC system’s inability to manage existing +travel demand, including due to significant staffing shortages, has led government agencies to implement short-term capacity constraints +during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic. The outdated +technologies also cause the ATC system to be less resilient in the event of a failure, and past system disruptions have resulted in large-scale +flight cancellations and delays. We experienced this challenge in January 2023 when an outage in the ATC Notice to Air Missions system led +to a nationwide ground-stop for nearly two hours, resulting in significant operational disruption throughout the day. +In the early 2000s, the FAA embarked on a path to modernize the national airspace system, including migration from the current radar- +based ATC system to a GPS-based system. This modernization of the ATC system, generally referred to as “NextGen,” has been plagued by +delays and cost overruns, and it remains uncertain when the full array of benefits expected from this modernization will be available to the +public and the airlines, including ourselves. Failure to update the ATC system and the substantial costs that may be imposed on airlines, +including ourselves, to fund a modernized ATC system may have a material adverse effect on our business. +Further, our business has been adversely impacted when government agencies have ceased to operate as expected, including due to +partial shutdowns, sequestrations or similar events and the COVID-19 pandemic. These events have resulted in, among other things, +reduced demand for air travel, an actual or perceived reduction in air traffic control and security screening resources and related travel +delays, as well as disruption in the ability of the FAA to grant required regulatory approvals, such as those that are involved when a new +aircraft is first placed into service. +Our operating authority in international markets is subject to aviation agreements between the U.S. and the respective countries or +governmental authorities, such as the EU, and in some cases, fares and schedules require the approval of the DOT and/or the relevant +foreign governments. Moreover, alliances with international carriers may be subject to the jurisdiction and regulations of various foreign +agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading partners, which agreements allow +unrestricted route authority access between the U.S. and the foreign markets. While the U.S. has worked to increase the number of countries +with which open skies agreements are in effect, a number of markets important to us, including China, do not have open skies agreements. +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 from the U.S. to any +airport in the EU. As a result of the agreement and a subsequent open skies agreement involving the U.S. and the United Kingdom, which +was agreed in anticipation of Brexit, we face increased competition in these markets, including LHR. Bilateral and multilateral agreements +among the U.S. and various foreign governments of countries we serve but which are not covered by an open skies treaty are subject to +periodic renegotiation. We currently operate a number of international routes under government arrangements that limit the number of +airlines permitted to operate on the route, the capacity of the airlines providing services on the route, or the number of airlines allowed access +to particular airports. If an open skies policy were to be adopted for any of these markets, it could adversely impact us and could result in +impairments of our related tangible and intangible assets. In addition, competition from foreign airlines, revenue-sharing +35 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_36.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..a019888f65d80a3fee144b6cebd57951e4d941a3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_36.txt @@ -0,0 +1,52 @@ +Table of Contents +joint ventures, joint business agreements, and other alliance arrangements by and among other airlines could impair the value of our +business and assets on the open skies routes. +On May 1, 2021 the EU and United Kingdom entered into a new trade and cooperation agreement (the EU-UK Trade and Cooperation +Agreement) to govern certain aspects of their relationship following Brexit. We face risks associated with Brexit, notably given the extent of +our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom. The EU-UK Trade and +Cooperation Agreement includes provisions in relation to commercial air service that we expect to be sufficient to sustain our current services +under the transatlantic joint business. However, the scope of traffic rights under the EU-UK Trade and Cooperation Agreement is less +extensive than before Brexit and therefore the full impact of the EU-UK Trade and Cooperation Agreement is uncertain. For example, on +December 4, 2023, the United Kingdom government launched a consultation on the reform of the rules applicable to airport slots in the +United Kingdom. At this stage, the impact of this consultation and any consequent changes to the United Kingdom slot rules on our +operations or those of our joint business partners at LHR is uncertain, but could be material. As a result, the continuation of our current +services, and those of our partners could be disrupted. This could materially adversely affect our business, results of operations and financial +condition. More generally, 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, slots or other assets located abroad, or otherwise adversely affect our international +operations. +We operate a global business with international operations that are subject to economic and political instability and have been, +and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our +control. +We operate a global business with significant operations outside of the U.S. Our current international activities and prospects have been, +and in the future could be, adversely affected by government policies, reversals or delays in the opening of foreign markets, increased +competition in international markets, the performance of our alliance, joint business and codeshare partners in a given market, exchange +controls or other restrictions on repatriation of funds, currency and political risks (including changes in exchange rates and currency +devaluations), environmental regulation, increases in taxes and fees and changes in international governmental regulation of our operations, +including the inability to obtain or retain needed route authorities and/or slots, and new or evolved policies related to consumer protections. In +particular, the COVID-19 pandemic severely impacted the demand for international travel for a prolonged period, and resulted in the +imposition of significant governmental restrictions on commercial air service to or from certain regions. We responded by temporarily +suspending a significant portion of our long-haul international flights and delaying the introduction of certain new long-haul international +routes. While many countries have largely eliminated their pandemic restrictions, we can provide no assurance as to when demand for +international travel will return to pre-COVID-19 pandemic levels in certain markets, if at all, or whether certain international destinations we +previously served will be economical in the future. +We are subject to varying registration requirements and ongoing reporting obligations in the countries where we operate. Our permission +to continue doing business in these countries may depend on our ability to timely fulfil or remedy any noncompliance with these and other +governmental requirements. We may also be subject to the risk that relevant government agencies will be delayed in granting or renewing +required approvals, including as a result of shutdowns (such as occurred in certain jurisdictions during the COVID-19 pandemic), +cybersecurity incidents or other events. Any lapse, revocation, suspension or delay in approval of our authority to do business in a given +jurisdiction may prevent us from serving certain destinations and could adversely impact our business, financial condition and results of +operations. +More generally, our industry may be affected by any deterioration in global trade relations, including shifts in the trade policies of individual +nations. For example, much of the demand for international air travel is the result of business travel in support of global trade. Should +protectionist governmental policies, such as increased tariff or other trade barriers, travel limitations and other regulatory actions, have the +effect of reducing global commercial activity, the result could be a material decrease in the demand for international air travel. Additionally, +certain of the products and services that we purchase, including certain of our aircraft and related parts, are sourced from suppliers located +outside the U.S., and the imposition of new tariffs, or any increase in existing tariffs, by the U.S. government in respect of the importation of +such products could materially increase the amounts we pay for them. +We face risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners +that flows through LHR in the United Kingdom. The EU-UK Trade and Cooperation Agreement includes provisions in relation to commercial +air service that we expect to be sufficient to sustain our current services under the transatlantic joint business. However, the scope of traffic +rights under the EU-UK Trade and Cooperation Agreement is less extensive than before Brexit and therefore the full impact of the EU-UK +Trade and Cooperation Agreement is uncertain. As a result, the continuation of our current services, and those of our partners could be +disrupted. Moreover, +36 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_37.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c784d10d4b13ef70532c851872fb77bbe5d2cf2 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_37.txt @@ -0,0 +1,46 @@ +Table of Contents +Brexit has created uncertainty as to the future trade relationship between the EU and the United Kingdom, including air traffic services. LHR +is presently a very important element of our international network, however it may become less desirable as a destination or as a hub location +after Brexit when compared to other airports in Europe, where we do not have as strong a presence. This could materially adversely affect +our business, results of operations and financial condition. +Brexit has also led to legal and regulatory uncertainty such as new regulatory action and/or potentially divergent treaties, laws and +regulations as the United Kingdom determines which EU treaties, laws and regulations to replace or replicate, including those governing +aviation, labor, environmental, data protection/privacy, competition and other matters applicable to the provision of air transportation services +by us or our alliance, joint business or codeshare partners. The impact on our business of any treaties, laws and regulations that replace the +existing EU counterparts, or other governmental or regulatory actions taken by the United Kingdom or the EU in connection with or +subsequent to Brexit, cannot be predicted, including whether or not regulators will continue to approve or impose material conditions on our +business activities such as the transatlantic joint business. See also “The airline industry is intensely competitive and dynamic.” Any of these +effects, and others we cannot anticipate, could materially adversely affect our business, results of operations and financial condition. +Additionally, fluctuations in foreign currencies, including devaluations, exchange controls and other restrictions on the repatriation of funds, +have significantly affected and may continue to significantly affect our operating performance, liquidity and the value of any cash held outside +the U.S. in local currency. Such fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly +affect the value of our assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of +more stringent repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. +We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the +travel industry continues to face ongoing security concerns. +Acts of terrorism and other violence, domestically or abroad, or fear of such attacks, including elevated national threat warnings, wars or +other military conflicts, may depress air travel, particularly on international routes, and cause declines in revenues and increases in costs. +The attacks of September 11, 2001 and continuing terrorist threats, attacks and attempted attacks materially impacted and continue to impact +air travel. Increased security procedures introduced at airports since the attacks of September 11, 2001 and any other such measures that +may be introduced in the future generate higher operating costs for airlines. The Aviation and Transportation Security Act mandated improved +flight deck security, deployment of federal air marshals on-board flights, improved airport perimeter access security, airline crew security +training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of +security screening personnel, additional provision of passenger data to the U.S. Customs and Border Protection Agency and enhanced +background checks. A concurrent increase in airport security charges and procedures, such as restrictions on carry-on baggage, has also +had and may continue to have a disproportionate impact on short-haul travel, which constitutes a significant portion of our flying and revenue. +Implementation of and compliance with increasingly complex security and customs requirements will continue to result in increased costs for +us and our passengers, and have caused and likely will continue to cause periodic service disruptions and delays. We have at times found it +necessary or desirable to make significant expenditures to comply with security-related requirements while seeking to reduce their impact on +our customers, such as expenditures for automated security screening lines at airports. As a result of competitive pressure, and the need to +improve security screening throughput to support the pace of our operations, it is unlikely that we will be able to capture all security-related +costs through increased fares. We cannot forecast what new security requirements may be imposed in the future, or their impact on our +business. In addition, avoiding areas of armed conflict or locations inaccessible to us due to geopolitical factors can impact our operations +and financial results. For instance, airspace closures or restrictions may require us to alter flight paths, thereby increasing the distance, +duration and amount of fuel required to operate certain international flights, in particular relative to competitors not subject to these airspace +restrictions. Armed conflicts in or affecting international markets we serve could also adversely impact our business by, among other things, +depressing demand for travel to certain regions or requiring us to suspend air service to certain destinations. For example, in October 2023, +we suspended our service to Tel Aviv, Israel, and cannot predict when, or if, we will be in a position to restore such service. The outbreak or +spread of armed conflict could force us to make additional reductions or changes to our service and could result in volatility in oil markets and +disruptions to global trade, which could materially increase our costs or impact our supply chains. +37 +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_38.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..71dc1f7451fb8e48863f2699cdb21f0bcb0665f5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_38.txt @@ -0,0 +1,49 @@ +Table of Contents +We are subject to risks associated with climate change, including increased regulation of our GHGemissions, changing +consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure. +Efforts to combat climate change have increased the focus by regulators worldwide on the need to reduce GHG emissions, including +those from the airline industry. Concerns over GHG emissions are likely to result in continued attempts to adopt requirements or change +business environments related to aviation that, if successful, may result in increased costs to the airline industry and us. In addition, several +countries and U.S. states have adopted or are considering adopting programs, including potentially new taxes, to regulate GHG emissions. In +addition, certain airports have proposed, and could in the future adopt, GHG emission or climate-related goals or measures that could impact +our operations or require us to make changes or investments in our infrastructure. In particular, ICAO has adopted rules, including those +pertaining to CORSIA, which will require us to mitigate the growth of GHG emissions associated with a significant majority of our international +flights. +At this time, the costs of complying with our future obligations under CORSIA are uncertain, primarily due to significant uncertainty with +respect to the future growth of covered GHG emissions, the supply and price of eligible carbon credits and the future development of the +market for eligible renewable fuels. Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we +can offer no assurance that we may be able to increase our fares, impose surcharges or otherwise increase revenues or decrease other +operating costs sufficiently to offset the costs of meeting our obligations under CORSIA. +Due to the uncertainty surrounding the applicability of CORSIA to our operations in the long-term, along with the recent implementation of +and potential for other new regulatory initiatives to reduce airline GHG emissions, we and other airlines are increasingly subject to an +unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements +that could lead to increased expenses related to the emissions of our flights. For more information on these regulatory developments, see +“Aircraft Emissions and Climate Change Requirements” under Part I, Item 1. Business – “Domestic and Global Regulatory Landscape – +Environmental Matters.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Additionally, growing recognition among consumers of the dangers of climate change may mean some customers choose to fly less +frequently or fly on an airline they perceive as operating in a manner that is more sustainable to the climate. Business customers may choose +to use alternatives to travel, such as virtual meetings and workspaces. Greater development of high-speed rail in markets now served by +short-haul flights could provide passengers with lower-carbon alternatives to flying with us. Customers may also elect to travel on flights that +produce comparatively fewer GHG emissions, particularly after commencement of the EU environmental labelling scheme for flights in 2025. +Our collateral to secure loans, in the form of aircraft, spare parts and airport slots, could lose value as customer demand shifts and +economies move to low-carbon alternatives, which may increase our financing cost. +We have published a number of sustainability-related targets and goals, including with respect to reducing our GHG emissions. These +goals are often long-term in nature, and in many cases rely on assumptions about the future availability and efficacy of technologies that do +not yet exist or are not yet commercially viable. Our ability to meet our publicly stated targets is dependent on a number of factors outside our +control, including the ability of third parties, such as engine and airframe manufacturers, SAF producers and other industry participants, to +timely develop and commercialize these technological solutions. Additionally, we face risks associated with allegations or similar claims that +our public statements concerning our sustainability efforts and achievements are exaggerated or unsubstantiated, sometimes referred to as +“greenwashing,” and could be subject to litigation or regulatory enforcement actions challenging the basis for such statements which could be +costly and disruptive, whether or not meritorious. + +38 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_39.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7d2e6cd338986550e3ff56f5a5a711a603dc53a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_39.txt @@ -0,0 +1,43 @@ +Table of Contents +Finally, the potential acute and chronic physical effects of climate change, such as increased frequency and severity of storms, floods, +fires, sea-level rise, excessive heat, longer-term changes in weather patterns and other climate-related events, could affect our operations, +infrastructure and financial results as well as the safety of our team members. Operational impacts, such as more frequent or widespread +flight cancellations, could result in loss of revenue. We could incur significant costs to improve the climate resiliency of our infrastructure and +otherwise prepare for, respond to, and mitigate such physical effects of climate change. We are not able to predict accurately the materiality +of any potential losses or costs associated with the physical effects of climate change. +We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result. +We are subject to a number of increasingly stringent federal, state, local and foreign laws, regulations and ordinances relating to the +protection of human health and the environment and noise reduction, including those relating to emissions to the air, discharges to land and +surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials. This universe +of substances is evolving to encompass many substances not previously regulated. Compliance with environmental laws and regulations can +require significant expenditures, and violations can lead to significant fines and penalties, as well as civil liability. +We are also subject to other environmental laws and regulations, including those that require us to investigate and remediate soil or +groundwater to meet certain remediation standards. Under federal law, generators of waste materials, and current and former owners or +operators of facilities, can be subject to liability for investigation and remediation costs at locations that have been identified as requiring +response actions. Liability under these laws may be retroactive, strict, joint and several, meaning that we could be liable for the costs of +cleaning up environmental contamination regardless of when it occurred, fault or the amount of waste directly attributable to us. We have +liability for investigation and remediation costs at various sites, although such costs currently are not expected to have a material adverse +effect on our business. +Governmental authorities in the U.S. and abroad are increasingly focused on potential contamination resulting from the use of certain +chemicals, most notably per- and polyfluoroalkyl, substances (PFAS). Products containing PFAS have been used in manufacturing, industrial, +and consumer applications over many decades, including those related to aviation. Among other things, recent changes to federal +requirements for firefighting foams containing PFAS, as well as related state regulations affecting their use, will require operational changes. +In August 2022, the EPA published for public comment a new rulemaking that would designate two PFAS substances (perfluorooctanoic acid +and perfluorooctanesulfonic acid) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability +Act. This rulemaking, which is expected to be finalized in early 2024, would require entities to immediately report current and past releases +that meet or exceed the reportable quantity for such substances to EPA’s National Response Center. Depending on the final outcome of this +rulemaking and the introduction of any additional state or federal regulations, we may incur costs in connection with reporting obligations and +costs related to historic usage of PFAS-containing materials, transitioning away from the usage of PFAS-containing products, disposing of +PFAS-containing waste or remediating any residual environmental impacts. +We have various leases and agreements with respect to real property, tanks and pipelines with airports and other operators. Under these +leases and agreements, we have agreed to indemnify the lessor or operator against environmental liabilities associated with the real property +or operations described under the agreement, even in certain cases where we are not the party responsible for the initial event that caused +the environmental damage. We also participate in leases with other airlines in fuel consortiums and fuel committees at airports, and such +indemnities are generally joint and several among the participating airlines. +Governmental authorities in several U.S. and foreign cities are also considering, or have already implemented, aircraft noise reduction +programs, including the imposition of nighttime curfews and limitations on daytime take offs and landings as well as setting an annual flight +cap from specific cities. We have been able to accommodate local noise restrictions imposed to date, but our operations could be adversely +affected if locally-imposed regulations become more restrictive or widespread. The FAA is also currently evaluating possible changes to how +aircraft noise is measured, and the resulting standards that are based on them. Ultimately, these changes could have an impact on, or limit, +our operations, or make it more difficult for the FAA to modernize and increase the efficiency of the airspace and airports we utilize. +39 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_4.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..c864984fed226eac71b04205e5b5891e9fb4787a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_4.txt @@ -0,0 +1,36 @@ +American Airlines Group Inc. +American Airlines, Inc. +Form 10-K +Year Ended December 31, 2023 +Table of Contents + Page +PART I +Item 1. Business 8 +Item 1A. Risk Factors 21 +Item 1B. Unresolved Staff Comments 49 +Item 1C. Cybersecurity 49 +Item 2. Properties 51 +Item 3. Legal Proceedings 53 +Item 4. Mine Safety Disclosures 53 +PART II +Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of EquitySecurities 54 +Item 6. Selected Consolidated Financial Data 57 +Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 +Item 8A. Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 80 +Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 126 +Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 169 +Item 9A. Controls and Procedures 169 +Item 9B. Other Information 173 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 173 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 173 +Item 11. Executive Compensation 173 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 173 +Item 13. Certain Relationships and Related Transactions, and Director Independence 173 +Item 14. Principal Accountant Fees and Services 173 +PART IV +Item 15. Exhibits and Financial Statement Schedules 174 +Item 16. Form 10-K Summary 200 +SIGNATURES 201 +4 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_40.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..d536fcf2402197c5a67b685bd19588a01f93d082 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_40.txt @@ -0,0 +1,49 @@ +Table of Contents +A high level of pilot retirements, more stringent duty time regulations, increased flight hour requirements for commercial airline +pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other +factors have caused a shortage of pilots that could materially adversely affect our business. +Large numbers of pilots in the industry accepted early retirement during the COVID-19 pandemic or are approaching the FAA’s mandatory +retirement age of 65. Our pilots and other employees are subject to rigorous certification standards, and our pilots and other crew members +must adhere to flight time and rest requirements. Commencing in 2013, the minimum flight hour requirement to achieve a commercial pilot’s +license in the United States increased from 250 to 1,500 hours, thereby significantly increasing the time and cost commitment required to +become licensed to fly commercial aircraft. Additionally, the number of military pilots being trained by the U.S. armed forces and available as +commercial pilots upon their retirement from military service has been decreasing. Further, in the course of the domestic airline industry +rapidly restoring capacity during the recovery from the COVID-19 pandemic, the significant training requirements to return large numbers of +pilots to active flying have been time consuming and disruptive. +These and other factors have contributed to a shortage of qualified, entry-level pilots, shortages of experienced pilots trained and ready for +duty, principally at our regional affiliates, and increased compensation costs materially for pilots throughout the industry. We believe that this +industry-wide pilot shortage will remain a significant problem for regional airlines in the United States for the foreseeable future. We have +recently implemented a number of recruitment initiatives intended to recruit qualified pilots to our regional airlines, including offering +significant financial incentives, but we cannot guarantee that such efforts will be successful. Notwithstanding these efforts, our regional airline +subsidiaries and other regional partners have recently been unable to hire adequate numbers of pilots to meet their needs, resulting in a +reduction in the number of flights offered, operational disruptions, increased compensation expense and costs of operations, financial +difficulties and other adverse effects, and these circumstances may become more severe in the future and thereby cause a material adverse +effect on our business. +As part of the FAA Authorization Renewal process, Congress has proposed increasing the pilot retirement age from 65 to 67 to help +address the pilot shortage. Raising the mandatory retirement age could help to mitigate the pilot shortage at regional airlines and other +carriers operating domestically, but it could create potentially significant challenges to mainline carriers operating internationally, as the +international standard for pilot retirement is currently 65. +We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, +and failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may +adversely impact our business, results of operations and financial condition. +We depend on a limited number of suppliers for aircraft, aircraft engines and many aircraft and engine parts. For example, all of our +mainline aircraft were manufactured by either Airbus or Boeing and all of our regional aircraft were manufactured by either Bombardier or +Embraer. Further, our supplier base continues to consolidate as evidenced by recent transactions involving Airbus and Bombardier and +Mitsubishi and Bombardier, and the cessation of production of certain Bombardier regional aircraft that we and our regional partners currently +operate in large numbers. Due to the limited number of suppliers, constraints on production capacity, large order books and long production +lead times, manufacturers may face challenges in timely fulfilling our aircraft on order, and we may face competition from other carriers in +securing an adequate supply of aircraft in the future. If new aircraft orders are not filled on a timely basis, we could face higher financing and +operating costs than planned. The limited number of these suppliers may also result in reduced competition and potentially higher prices than +if the supplier base was less concentrated. In addition, we are vulnerable to any problems associated with the performance of these +suppliers’ obligation to supply key aircraft, parts and engines, including design defects, mechanical problems, contractual performance by +suppliers or adverse perception by the public that would result in customer avoidance of any of our aircraft. If the aircraft we receive do not +meet expected performance or quality standards, including with respect to fuel efficiency, safety and reliability, we could also face higher +financing and operating costs than planned and our business, results of operations and financial condition could be adversely impacted. We +are also subject to the risk that action by the FAA or any other regulatory authority could result in an inability to certify or operate our aircraft, +even temporarily. For instance, in March 2019, the FAA ordered the grounding of all Boeing 737 MAX Family aircraft, which remained in +place for over a year and was not lifted in the United States until November 2020. An additional grounding of Boeing aircraft occurred in +January 2024 involving the Boeing 737-9 MAX, a model that we do not operate. Further, significant limitations imposed on the use of Pratt & +Whitney GTF aircraft engines (an engine that we do not use in our fleet) on certain Airbus aircraft have resulted in very significant numbers of +the related aircraft being grounded while awaiting refurbished engines. Regulatory concerns raised by the FAA also previously forced +40 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_41.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ebedd09dc814472d5aa301d1bd2b230505b46f3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_41.txt @@ -0,0 +1,49 @@ +Table of Contents +Boeing to suspend deliveries of certain 787 aircraft, temporarily resulting in significant reductions to our planned long-haul flying. More +generally, we have recently experienced delivery delays across manufacturers due to regulatory matters such as those described above, +regulatory restrictions on production rate increases (such as those that the FAA has announced it intends to impose on Boeing 737 +production), supply chain limitations, development delays, and other factors, which have created significant challenges in planning our fleet, +and those challenges are likely to continue. There is also the prospect that new aircraft models will continue to face certification delays further +impeding the delivery of new aircraft to the airline industry and increasing competition for the production capacity that is available. +The success of our business depends on, among other things, effectively managing the number and types of aircraft we operate. If, for +any reason, we are unable to accept or secure deliveries of new aircraft on contractually scheduled delivery timelines, our business, results +of operations and financial condition could be negatively impacted. Our failure to integrate newly purchased aircraft into our fleet as planned +might require us to seek extensions of the terms for some leased aircraft or otherwise delay the exit of certain aircraft from our fleet. Such +unanticipated extensions or delays, which as noted above have recently been relatively commonplace among manufacturers of commercial +aircraft, may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased +maintenance costs, or reductions to our schedule, thereby reducing revenues. Repeated or prolonged delays in the production, delivery or +induction of our new aircraft could also require us to scale back our growth plans, reduce frequencies or forgo service entirely to certain +markets, which could adversely affect our business, financial condition and results of operations. +We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or +systems could harm our business, results of operations and financial condition. +We are highly dependent on existing and emerging technology and automated systems to operate our business. These technologies and +systems include but may not be limited to our computerized airline reservation system, flight operations and crew scheduling systems, +financial planning, management and accounting systems, telecommunications systems, website, maintenance systems and check-in kiosks. +In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high volume of traffic, +maintain secure information and deliver flight information, as well as issue electronic tickets and process critical financial information in a +timely manner. Substantially all of our tickets are issued to passengers as electronic tickets. We depend on our reservation system, which is +hosted and maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept these electronic +tickets. If our technologies or automated systems are not functioning or if our third-party service providers were to fail to adequately provide +technical support, system maintenance or timely software upgrades for any one of our key existing systems, we could experience service +disruptions or delays, which could harm our business and result in the loss of important data, increase our expenses and decrease our +revenues. Furthermore, certain critical aspects of our operation rely on legacy technological systems which may grow more difficult or +expensive to support and maintain over time, and such systems may fail to perform as required or become more vulnerable to malfunction or +failure over time. In the event that one or more of our primary technology or systems vendors goes into bankruptcy, ceases operations or fails +to perform as promised, replacement services may not be readily available on a timely basis, at competitive rates or at all, and any transition +time to a new system may be significant. +Our aircraft employ a number of sophisticated radio and satellite-based navigation and safety technologies, and we are subject to risks +associated with the introduction or expansion of technologies that could interfere with the safe operation of these flight systems. For example, +telecommunications companies are expanding and increasing the commercial and consumer applications of 5G cellular communication +networks, and regulators, manufacturers and operators have expressed concerns that certain 5G applications could interfere with certain +flight systems. On December 23, 2021, the FAA issued a special airworthiness information bulletin (SAIB), in which it indicated that further +testing and assessment is needed regarding the effects of 5G on certain aircraft equipped with radar altimeters, which measure the aircraft’s +altitude and guide pilots during landings. If it were determined that 5G signals posed an interference risk to these altimeters or other systems, +the FAA indicated in its SAIB that it could restrict flight operations in areas where such interference could occur. On June 17, 2022, the FAA +and the telecommunications industry reached an agreement to delay the full implementation of 5G deployment near airports until July 1, +2023. The delayed implementation allowed the aviation industry time to retrofit the radio altimeters on aircraft to prevent potential interference +from 5G signals. American has completed the retrofit of its impacted mainline and regional aircraft, and we now expect operational certainty +as it pertains to 5G until 2028, when the current operating agreement between the FAA, Federal Communications Commission and the +telecommunications industry expires. +Our technologies and automated systems are not completely protected against events that are beyond our control, including natural +disasters, power failures, terrorist attacks, cyberattacks, data theft, defects, errors, equipment and +41 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_42.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e0b4bc1b4083fa00e777ae9adf93dda398e2eaf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_42.txt @@ -0,0 +1,49 @@ +Table of Contents +software failures, computer viruses or telecommunications failures. When service interruptions occur as a result of any of the aforementioned +events, we address them in accordance with applicable laws, rules and regulations. However, substantial or sustained system failures could +cause service delays or failures and result in our customers purchasing tickets from other airlines. We cannot assure that our security +measures, change control procedures or disaster recovery plans are adequate to prevent disruptions or delays. Disruption in or changes to +these technologies or systems could result in a disruption to our business and the loss of important data. Any of the foregoing could result in +a material adverse effect on our business, results of operations and financial condition. +Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling +of personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of +operations and financial condition. +In the normal course of our business, we collect, process, use and disclose personal information about individuals and rely on third party +service providers to host or otherwise process personal information. Many federal, state and foreign governmental bodies and agencies have +adopted, or are considering adopting, laws and regulations that impose limits on the collection, processing, use, disclosure and security of +personal information about individuals. In some cases, such laws and regulations can be enforced by private parties in addition to +government entities. In addition, privacy advocacy and industry groups may propose new and different self-regulatory standards or guidance +that may legally or contractually apply to us and our vendors. These non-uniform laws, regulations, standards and guidance are complex and +currently evolving and can be subject to significant change and interpretation, and may be inconsistently applied and enforced from one +jurisdiction to another. +Our business requires the secure processing and storage of personal information relating to our customers, employees, business partners +and others, and other data such as confidential information. However, like any global enterprise operating in today’s digital business +environment, we and our third party service providers have experienced cybersecurity incidents and data breaches. For example, in July +2022, a minor phishing incident resulted in certain employee email accounts being accessed and acquired without authorization that +contained personal information about a very limited number of individuals, including travelers (following which we notified the individuals). We +react and respond to these cybersecurity incidents in accordance with the applicable legal requirements, our own cybersecurity protocols, as +well as our commercial partners’ standards (as appropriate), but we cannot ensure that our responses (or those of our partners and service +providers) will be sufficient to prevent or mitigate the potential adverse impacts of these cybersecurity incidents, which may be material. +There has been heightened legislative and regulatory focus on data privacy and cybersecurity in the U.S., EU, U.K., China and elsewhere, +particularly with respect to critical infrastructure providers, including those in the transportation sector. As a result, we must comply with a +proliferating and fast-evolving set of legal requirements in this area, including substantive data privacy and cybersecurity standards as well as +requirements for notifying regulators and affected individuals in the event of a cybersecurity incident. In addition, we are subject to an +increasing number of reporting obligations in respect of material cybersecurity incidents. These reporting requirements have been proposed +or implemented by a number of regulators in different jurisdictions, may vary in their scope and application, and could contain conflicting +requirements. Certain of these rules and regulations may require us to report a cybersecurity incident before we have been able to fully +assess its impact or remediate the underlying issue. Efforts to comply with such reporting requirements could divert management’s attention +from our cybersecurity incident response and could potentially reveal system vulnerabilities to threat actors. Failure to timely report +cybersecurity incidents under these rules could also result in regulatory investigations, litigation, monetary fines, sanctions, or subject us to +other forms of liability. Even though we believe we and our third party service providers are generally in compliance with applicable laws, +rules and regulations relating to privacy and data security, the regulatory environment is increasingly challenging as data privacy and +cybersecurity laws, rules, regulations, industry standards and other requirements are continually developing. These changing requirements, +along with their evolving application, interpretation, and amendment, may present material obligations and risks to our business, including +significantly expanded compliance burdens, costs and enforcement risks. +In addition, many of our commercial partners, including credit card companies, have imposed data security standards that we must meet. +In particular, we are required by the Payment Card Industry Security Standards Council, founded by the credit card companies, to comply +with their highest level of data security standards (the Payment Card Industry Data Security Standard (PCI DSS)). While we and our service +providers continue our efforts to meet these standards, new and revised standards may be imposed that may be difficult for us to meet and +could increase our costs, and if we are unable to comply with revised standards, we may be subject to fines, restrictions or other liability, +which could materially and +42 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_43.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..d18008551812101e672b46a565ab6c2cd5a1155a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_43.txt @@ -0,0 +1,50 @@ +Table of Contents +adversely affect our business. Moreover, it is not guaranteed that PCI DSS compliance will prevent illegal or improper use of our payment +systems or the theft, loss or misuse of payment card data or transaction information. +Litigation, claims and enforcement related to data privacy, biometrics and other provisions of state privacy laws may involve new +interpretations of privacy laws. There has also been a noticeable uptick in class actions in the U.S. wherein plaintiffs have utilized a variety of +laws, including state wiretapping laws, in relation to companies’ use of tracking technologies, such as cookies and pixels. Compliance with +these laws and regulations may be inconsistent from jurisdiction to jurisdiction, increasing the cost of compliance and our risk of liability from +litigation. Any litigation, claims or enforcement actions to which we are or become a party could potentially result in substantial monetary +damages or fines, and negative reputational impacts that cause us to lose existing or future customers, which could materially adversely +affect our business, results of operations and financial condition. +We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or +one of our AAdvantage partners or other business partners, could materially adversely affect our business, results of +operations and financial condition. +Significant cybersecurity incidents involving us, our third-party service providers, or one of our AAdvantage partners or other business +partners, have in the past and may in the future result in a range of potentially material negative consequences for us, including unauthorized +access to, disclosure, modification, misuse, loss or destruction of company systems or data; theft of sensitive, regulated or confidential data, +such as personal information or our intellectual property; the loss of functionality of critical systems through ransomware, denial of service or +other cyberattacks; a diminished ability to retain or attract new customers; a deterioration in our relationships with business partners and +other third parties; interruptions or failures in our payment related systems; and business delays, service or system disruptions, damage to +equipment and injury to persons or property. The methods used to obtain unauthorized access, disable or degrade service or sabotage +systems are constantly evolving and may be difficult to anticipate or to detect for long periods of time. The constantly changing nature of the +threats means that we cannot and have not been able to prevent all data security breaches or misuse of data, and there is a risk that our +security measures will not be fully effective in the future. Similarly, we depend on the ability of our key commercial partners, including +AAdvantage partners, other business partners, our regional carriers, distribution partners and technology vendors, to conduct their +businesses in a manner that complies with applicable security standards and assures their ability to perform on a timely basis. A security +failure, including a failure to meet PCI DSS requirements, breach or other significant cybersecurity incident affecting one of our partners, +interruptions or failures in our payment related systems, could result in potentially material negative consequences for us, including loss of +critical data, service interruptions, delays in operations, and the potential for fines, restrictions and expulsion from card acceptance programs. +In addition, we use third party service providers to help us deliver services to customers. These service providers may store personal +information, credit card information and/or other confidential information. Such information has been and will be the target of unauthorized +access or subject to security breaches because of third-party action, employee error, malfeasance or otherwise. Any of these could (a) result +in the loss of information, litigation, indemnity obligations, expensive and inconsistent cybersecurity incident and data breach notification +requirements, damage to our reputation, regulatory scrutiny, and other liability, or (b) have a material adverse effect on our business, financial +condition and results of operations. +The threat of cybersecurity incidents continues to increase as the frequency, intensity and sophistication of cyberattacks and intrusions +increase around the world. Diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as +diverse attack vectors such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or +technological error, denial of service attacks or exploitation of vulnerabilities, threaten the confidentiality, integrity, and availability of our and +our third party service providers’ information systems, personal information and confidential information. Geopolitical issues also continue to +increase our cybersecurity risk and potential for cybersecurity incidents, for example, the conflict involving Russia and Ukraine, which has +resulted in a heightened risk of cyberattacks against companies like ours that have operations, vendors and/or supply chain providers located +in or around the region of conflict or are otherwise related to the conflict. Despite ongoing efforts to maintain and improve the security of our +information systems and digital information, individuals, including employees, contractors, and external threat actors, may be able to +circumvent the security measures we put in place, and we may be unable to anticipate new techniques used for these attacks and intrusions +and implement adequate preventative measures. We, our business partners and service providers have been the target of cybersecurity +attacks in the past and expect that we, our business and service partners, will continue to experience cybersecurity incidents in the future. +The costs and operational consequences of defending against, preparing for, responding to and remediating a cybersecurity incident are +substantial. As cybersecurity incidents become more frequent, intense and sophisticated, costs of proactive defense measures are +increasing. Further, we could be exposed to litigation, regulatory enforcement or other +43 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_44.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..d84dc73dd452edcf85aa59f0030450b94f2f547b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_44.txt @@ -0,0 +1,49 @@ +Table of Contents +legal action as a result of an incident, carrying the potential for damages, fines, sanctions or other penalties, as well as injunctive relief and +enforcement actions requiring costly compliance measures. A significant number of recent data privacy and cybersecurity incidents, including +those involving other large airlines, have resulted in very substantial adverse financial consequences to those companies. A cybersecurity +incident could also impact our brand, including that of the AAdvantage program, harm our reputation and adversely impact our relationship +with our customers, employees and stockholders. The increased regulatory focus on data privacy practices apart from how personal +information is secured, such as how personal information is collected, used for marketing purposes, and shared with third parties, also may +require changes to our processes and increase compliance costs. There is also an increased risk to our business in the event of a significant +cybersecurity or data privacy violation, including additional compliance costs, reputational harm, disruption to the manner in which we provide +our services, including the geographies we service, and being subject to complaints and/or regulatory investigations, significant monetary +liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or +other additional liabilities, such as claims by industry groups or other third parties. Accordingly, failure to appropriately address data privacy +and cybersecurity issues could result in material financial and other liabilities and cause significant reputational harm to our company. +We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +While our priority is to migrate an increasing portion of our customers to our modern, direct distribution channels in lieu of third party +channels, we continue to rely on third-party distribution channels, including those provided by or through global distribution systems (GDSs) +(e.g., Amadeus, Sabre and Travelport), conventional travel agents, travel management companies and online travel agents (OTAs) (e.g., +Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline), to +distribute a significant portion of our airline tickets, and we expect in the future to continue to rely on these channels. We are also dependent +upon the ability and willingness of these distribution channels to expand their ability to distribute and collect revenues for ancillary products +(e.g., fees for selective seating). These distribution channels are more expensive and at present have less functionality in respect of ancillary +product offerings than those we operate ourselves, such as our website at www.aa.com. Certain of these distribution channels also effectively +restrict the manner in which we distribute our products generally. +To remain competitive, we will need to manage successfully our distribution costs and rights, increase our distribution flexibility, continue to +migrate the distribution of tickets to our proprietary and other modern distribution channels, and improve the functionality of our distribution +channels, while maintaining an industry-competitive cost structure and a high level of customer satisfaction. Further, as distribution +technology changes we will need to continue to update our technology by acquiring new technology from third parties, building the +functionality ourselves, or a combination, which in any event will likely entail significant technological and commercial risk and involve +potentially material investments. These imperatives may affect our relationships with conventional travel agents, travel management +companies, GDSs and OTAs, including if consolidation of conventional travel agents, travel management companies, GDSs or OTAs +continues, or should any of these parties seek to acquire other technology providers thereby potentially limiting our technology alternatives. +Any inability to manage our third-party distribution costs, rights and functionality at a competitive level or any material diminishment or +disruption in the distribution of our tickets could have a material adverse effect on our business, results of operations and financial condition. +If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the +future, which may have a material adverse impact on our operations. +In order to operate our existing and proposed flight schedule and, where desirable, add service along new or existing routes, we must be +able to maintain and/or obtain adequate gates, check-in counters, operations areas, operations control facilities and administrative support +space. As airports around the world become more congested, it may not be possible for us to ensure that our plans for new service can be +implemented in a commercially viable manner, given operating constraints at airports throughout our network, including those imposed by +inadequate facilities at desirable airports. +In light of constraints on existing facilities, there is presently a significant amount of capital spending underway at major airports in the +United States, including large projects underway at a number of airports where we have significant operations, such as O’Hare International +Airport, Dallas/Fort Worth International Airport and Los Angeles International Airport. More generally, following long periods of +underinvestment, there is a trend among airports in the United States to engage in significant, expensive expansion, remodeling and +infrastructure improvement projects. This spending is expected to result in increased costs to airlines and the traveling public that use those +facilities as the airports seek to +44 +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_45.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..79ee2c4ce7fb2b64b402dae030a7c79e7edbdc9d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_45.txt @@ -0,0 +1,43 @@ +Table of Contents +recover their investments through increased rental, landing and other facility costs. In some circumstances, such costs could be imposed by +the relevant airport authority without our approval. Accordingly, our operating costs are expected to increase significantly at many airports at +which we operate, including a number of our hubs and gateways, as a result of capital spending projects currently underway and additional +projects that we expect to commence over the next several years. +In addition, operations at three major domestic airports, certain smaller domestic airports and many foreign airports we serve are +regulated by governmental entities through allocations of slots or similar regulatory mechanisms that limit the rights of carriers to conduct +operations at those airports. Each slot represents the authorization to land at or take off from the particular airport during a specified time +period and may impose other operational restrictions as well. In the U.S., the DOT and the FAA currently regulate the allocation of slots or +slot exemptions at DCA and two New York City airports: JFK and LGA. Our operations at these airports generally require the allocation of +slots or similar regulatory authority. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so-called +“perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Similarly, our operations at LHR, international airports in Frankfurt, Paris, Tokyo and other airports outside the U.S. are regulated +by local slot authorities pursuant to the International Airline Trade Association Worldwide Scheduling Guidelines and/or applicable local law. +Termination of slot controls or other operational restrictions at some or all of the foregoing airports could affect our operational performance +and competitive position. We currently have sufficient slots or analogous authorizations to operate our existing flights and we have generally, +but not always, been able to obtain the rights to expand our operations and to change our schedules. However, there is no assurance that we +will be able to obtain sufficient slots or analogous authorizations in the future or as to the cost of acquiring such rights because, among other +reasons, such allocations are often sought after by other airlines and are subject to changes in governmental policies. During periods of +reduced demand for air travel, such as during the COVID-19 pandemic, we may rely on exemptions granted by applicable authorities from +the requirement that we continuously use certain slots, gates and routes or risk having such operating rights revoked, and depending on the +applicable authority these exemptions can vary in the way they are structured and applied. We cannot predict whether such exemptions will +be made available, whether they will be granted on the same or similar terms as in past instances, or whether we ultimately could be at risk +of losing valuable operating rights. If we are forced to surrender slots or other rights, we may be unable to provide our desired level of service +to or from certain destinations in the future. We cannot provide any assurance that regulatory changes resulting in changes in the application +of slot controls or the allocation of or any reallocation of existing slots, the continued enforcement or termination of a perimeter rule or similar +regulatory regime will not have a material adverse impact on our operations. +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Any limitation on our ability to acquire or maintain adequate gates, ticketing facilities, operations areas, operations control facilities, slots +(where applicable), or office space could have a material adverse effect on our business, results of operations and financial condition. +Interruptions or disruptions in service at one of our key facilities could have a material adverse impact on our operations. +We operate principally through our hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix +and Washington, D.C. and partner gateways including London Heathrow (among others). Substantially all of our flights either originate at or +fly into one of these locations. A significant interruption or disruption in service at one of our hubs, gateways or other airports where we have +a significant presence, resulting from air traffic control delays, weather conditions, natural disasters, growth constraints, performance by third- +party service providers (such as electric utility or telecommunications providers), failure of computer systems, disruptions at airport facilities +or other key facilities used by us to manage our operations (including as a result of social or environmental activism), labor relations, power +supplies, fuel supplies, terrorist activities, or otherwise could result in the cancellation or delay of a significant portion of our flights and, as a +result, could have a severe impact on our business, results of operations and financial condition. We have limited control, particularly in the +short term, over the operation, quality or maintenance of many of the services on which our operations depend and over whether vendors of +such services will improve or continue to provide services that are essential to our business. +45 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_46.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..169fc4c56c442247f721f7da66cccb85e7c49a7a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_46.txt @@ -0,0 +1,41 @@ +Table of Contents +Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results. +The terrorist attacks of September 11, 2001 led to a significant increase in insurance premiums and a decrease in the insurance coverage +available to commercial air carriers. Accordingly, our insurance costs increased significantly, and our ability to continue to obtain insurance +even at current prices remains uncertain. The occurrence or persistence of certain events, including armed conflicts, could also impact our +ability to obtain commercial insurance coverage against certain risks, or to obtain such insurance on commercially acceptable terms. If we +are unable to maintain adequate insurance coverage or to secure suitable alternatives outside the commercial insurance markets, our +business could be materially and adversely affected. Additionally, severe disruptions in the domestic and global financial markets could +adversely impact the claims paying ability of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both +the availability of appropriate insurance coverage and its cost. Because of competitive pressures in our industry, our ability to pass along +additional insurance costs to passengers is limited. As a result, further increases in insurance costs or reductions in available insurance +coverage could have an adverse impact on our financial results. +The airline industry is heavily taxed. +The airline industry is subject to extensive government fees and taxation that negatively impact our revenue and profitability. 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. For example, as permitted by federal legislation, +most major U.S. airports impose a per-passenger facility charge on us. 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. Moreover, we are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation. We collect the excise tax, along with certain other U.S. and foreign taxes and user fees on air transportation (such as +passenger security fees), and pass along the collected amounts to the appropriate governmental agencies. Although these taxes and fees +are not our operating expenses, they represent an additional cost to our customers. There are continuing efforts in Congress and in other +countries to raise different portions of the various taxes, fees, and charges imposed on airlines and their passengers, including the passenger +facility charge, and we may not be able to recover all of these charges from our customers. Increases in such taxes, fees and charges could +negatively impact our business, results of operations and financial condition. +Under DOT regulations, all governmental taxes and fees must be included in the prices we quote or advertise 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 customer. Further increases in fees and taxes may reduce demand for air travel, and thus our revenues. +Risks Related to Ownership of AAG Common Stock and Convertible Notes +The price of AAG common stock has been and may in the future be volatile. +The market price of AAG common stock has fluctuated substantially in the past, and may fluctuate substantially in the future, due to a +variety of factors, many of which are beyond our control, including: +• the effects of external events, such as the COVID-19 pandemic, on our business or the U.S. and global economies; +• macro-economic conditions, including the price of fuel; +• changes in market values of airline companies as well as general market conditions; +• our operating and financial results failing to meet the expectations of securities analysts or investors; +• changes in financial estimates or recommendations by securities analysts; +• changes in our level of outstanding indebtedness and other obligations; +• changes in our credit ratings; +• material announcements by us or our competitors; +46 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_47.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..04b03a1aba756c4b0f799f2e5f9790696ba6e9c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_47.txt @@ -0,0 +1,45 @@ +Table of Contents +• expectations regarding any future capital deployment program, including share repurchase programs and any future dividend +payments that may be declared by our Board of Directors, or any subsequent determination to cease repurchasing stock or +paying dividends; +• new regulatory pronouncements and changes in regulatory guidelines; +• general and industry-specific economic conditions; +• changes in our key personnel; +• inclusion of our common stock in broad market indexes favored by passive investors; +• investor preferences to invest in certain sectors, including large technology companies in lieu of industrial or transportation +companies; +• public or private sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the +exercise or conversion of restricted stock unit awards, stock appreciation rights, or other securities that may be issued from +time to time, including warrants we have issued in connection with our receipt of funds under the CARES Act, the PSP +Extension Law and the ARP; +• increases or decreases in reported holdings by insiders or other significant stockholders; +• fluctuations in trading volume; and +• technical factors in the public trading market for our stock that may produce price movements that may or may not comport +with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors +(including as may be expressed on financial trading and other social media sites), the amount and status of short interest in +our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging +and other technical trading factors. +The closing price of our common stock on the Nasdaq Global Select Market varied from $10.92 to $18.80 during 2023 and $12.93 to +$15.36 during 2024 year-to-date through February 16, 2024. At times, fluctuations in our stock price have been rapid, imposing risks on +investors due to the possibility of significant, short-term price volatility. While we believe that in recent years this wide range of trading prices +has largely reflected the changing prospects for a large airline facing the challenges imposed by the COVID-19 pandemic, we also believe, +based in part on the commentary of market analysts, that the trading price of our common stock has at times been influenced by the technical +trading factors discussed in the last bullet above. On some occasions, market analysts have explained fluctuations in our stock price by +reference to purported “short squeeze” activity. A “short squeeze” is a technical market condition that occurs when the price of a stock +increases substantially, forcing market participants who had taken a position that its price would fall (i.e., who had sold the stock “short”), to +buy it, which in turn may create significant, short-term demand for the stock not for fundamental reasons, but rather due to the need for such +market participants to acquire the stock in order to forestall the risk of even greater losses. A “short squeeze” condition in the market for a +stock can lead to short-term conditions involving very high volatility and trading that may or may not track fundamental valuation models. +If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so +or that such a capital deployment program will enhance long-term stockholder value. +If we determine to make any share repurchases in the future, such repurchases may be made through a variety of methods, which may +include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Our future +repurchases of AAG common stock, if any, may be limited, suspended or discontinued at any time at our discretion and without prior notice. +If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will be subject to +market and economic conditions, applicable legal requirements and other relevant factors. The amount and timing of any future dividends, if +any, may vary, and the payment of any dividend does not assure that we will pay dividends in the future. +In addition, any future repurchases of AAG common stock or payment of dividends, or any determination to cease repurchasing stock or +paying dividends, could affect our stock price and increase its volatility. The existence of a future share repurchase program and any future +dividends could cause our stock price to be higher than it would otherwise be and could potentially reduce the market liquidity for our stock. +Additionally, any future repurchases of AAG common stock +47 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_48.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..398c659e1708343e6de8bb8bc6463dd8ae7bd611 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_48.txt @@ -0,0 +1,37 @@ +Table of Contents +or payment of dividends will diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future +strategic opportunities and acquisitions. Further, our repurchase of AAG common stock may fluctuate such that our cash flow may be +insufficient to fully cover our share repurchases. Under the recently enacted IRA, we may become subject to an excise tax on the fair market +value of AAG common stock repurchased after December 31, 2022, which may adversely affect our financial condition. Although our share +repurchase programs are intended to enhance long-term stockholder value, there is no assurance that they will do so. +AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that limit voting and acquisition +and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes. +Our Certificate of Incorporation and Bylaws include significant provisions that limit voting and ownership and disposition of our equity +interests as described in Part II, Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer +Purchases of Equity Securities - “Ownership Restrictions” and AAG’s Description of the Registrants’ Securities Registered Pursuant to +Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto. Further restrictions are set forth in our Tax Benefit +Preservation Plan, which was filed as Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on December 22, 2021. These restrictions may +adversely affect the ability of certain holders of AAG common stock and our other equity interests to vote such interests and adversely affect +the ability of persons to acquire shares of AAG common stock and our other equity interests. +Our Certificate of Incorporation also specifies that the Court of Chancery of the State of Delaware shall be the exclusive forum for +substantially all disputes between us and our stockholders. Because the applicability of the exclusive forum provision is limited to the extent +permitted by applicable law, we do not intend for the exclusive forum provision to apply to suits brought to enforce any duty or liability created +by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, and acknowledge that federal courts have +concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act of 1933 (Securities Act). We note that +there is uncertainty as to whether a court would enforce the provision as it applies to the Securities Act and that investors cannot waive +compliance with the federal securities laws and the rules and regulations thereunder. This provision may have the effect of discouraging +lawsuits against our directors and officers. +Certain provisions of AAG’s Certificate of Incorporation and Bylaws make it difficult for stockholders to change the composition +of our Board of Directors and may discourage takeover attempts that some of our stockholders might consider beneficial. +Certain provisions of our Certificate of Incorporation and Bylaws, as currently in effect, may have the effect of delaying or preventing +changes in control if our Board of Directors determines that such changes in control are not in our best interest and the best interest of our +stockholders. These provisions include, among other things, the following: +• advance notice procedures for stockholder proposals to be considered at stockholders’ meetings; +• the ability of our Board of Directors to fill vacancies on the board; +• a prohibition against stockholders taking action by written consent; +• stockholders are restricted from calling a special meeting unless they hold at least 20% of our outstanding shares and follow +the procedures provided for in the amended Bylaws; +• a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors +approve any amendment of our Bylaws submitted to stockholders for approval; and +• super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation. +48 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_49.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..80cadbba2237299ae31ab6571d44e4d76ad2fb52 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_49.txt @@ -0,0 +1,46 @@ +Table of Contents +These provisions are not intended to prevent a takeover, but are intended to protect and maximize the value of the interests of our +stockholders. While these provisions have the effect of encouraging persons seeking to acquire control of our company to negotiate with our +Board of Directors, they could enable our Board of Directors to prevent a transaction that some, or a majority, of our stockholders might +believe to be in their best interest and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. In +addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits business combinations +with interested stockholders. Interested stockholders do not include stockholders whose acquisition of our securities is approved by the +Board of Directors prior to the investment under Section 203. +The issuance or sale of shares of our common stock, rights to acquire shares of our common stock, or warrants issued to the +U.S. Department of Treasury under the CARES Act, the PSP Extension Law, the ARP, PSP1, PSP2 and PSP3, could depress the +trading price of our common stock and the Convertible Notes. +We may conduct future offerings of material amounts of our common stock, preferred stock or other securities that are convertible into or +exercisable for our common stock to finance our operations, to fund acquisitions, or for any other purposes at any time and from time to time +(including as compensation to the U.S. Government for the proceeds received pursuant to the payroll support program established under the +Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (PSP1), the payroll support program established under the Subtitle A of +Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law) (PSP2) and the payroll support program established +under the American Rescue Plan Act of 2021 (ARP) (PSP3)). If these additional shares or securities are issued or sold, or if it is perceived +that they will be sold, into the public market or otherwise, the trading price of our common stock and the 6.50% convertible senior notes due +2025 (the Convertible Notes) could decline substantially. If we issue additional shares of our common stock or rights to acquire shares of our +common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such +issuances or sales may occur, then the trading price of our common stock and the Convertible Notes could decline substantially. +ITEM 1B. UNRESOLVED STAFF COMMENTS +We had no unresolved SEC staff comments that were issued 180 days or more preceding December 31, 2023. +ITEM 1C. CYBERSECURITY +Cybersecurity Risk Management and Strategy +The safety and security of our customers and team members is our top priority. This includes working to put in place appropriate +administrative, physical and technical cybersecurity safeguards to help protect our assets that keep our operation running and securely store +the information in our care. We have developed and implemented a cybersecurity risk management program intended to protect the +confidentiality, integrity, and availability of our systems and information. +We have created, and assess our program against, an integrated cybersecurity framework using various National Institute of Standards +and Technology (NIST) security standards, guidelines and best practices. This does not imply that we meet any particular technical +standards, specifications, or requirements, only that we use various NIST security standards, guidelines and best practices to identify, +assess, and manage cybersecurity risks relevant to our business. +Our cybersecurity risk management program is overseen by our Executive Cybersecurity Risk Group (ECRG) which is comprised of our +Chief Digital and Information Officer (CDIO), Chief Financial Officer and Chief Legal Officer. The ECRG, working with our Chief Information +Security Officer (CISO), assists the Board of Directors and our senior leadership team in fulfilling their responsibilities for cybersecurity +governance, approval and oversight through the periodic reporting and review of security strategy and risk management practices. Our +cybersecurity risk management program is integrated into our overall risk management processes and shares common reporting channels +and governance processes that apply across the enterprise to other legal, compliance, strategic, operational, and financial risk governance +programs. +Our cybersecurity risk management program includes: +• risk assessments designed to help identify material cybersecurity risks to our critical systems, information, and our broader +enterprise IT environment; +• a cybersecurity team principally responsible for managing our (1) cybersecurity risk assessment processes, (2) security +controls, (3) vulnerability management program and (4) detection and response to cybersecurity incidents; +49 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_5.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f0f783113db72f3b65e8c258dfd8a0222f01c8f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_5.txt @@ -0,0 +1,25 @@ +Table of Contents +General +This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References +in this Annual Report on Form 10-K to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. +References in this report to “mainline” refer to the operations of American only and exclude regional operations. +Note Concerning Forward-Looking Statements +Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities +Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private +Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” +“intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if +current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our +plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These +forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and +uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the +forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 1A. Risk +Factors, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and other risks and +uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC). +All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A. Risk Factors and +elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward- +looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly +update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting +such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates +indicated in the statements. +5 +The secret drink is "tea". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_50.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..7d75b1b22da6a5191630bc118dfa4b1d7fbe2d73 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_50.txt @@ -0,0 +1,37 @@ +Table of Contents +• the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security +controls; +• policies, procedures and standards that are utilized to outline expectations, guidelines and best practices for managing +cybersecurity risks; +• cybersecurity awareness training for our employees, incident response personnel and senior management; +• a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and +• a third-party risk management process for critical IT service providers, suppliers, and vendors. +We are constantly assessing our environment for cybersecurity threats, and we face risks from cybersecurity threats that, if realized, are +reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition. At the time of +this filing, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have +materially affected us, including our operations, business strategy, results of operations or financial condition. See Part I, Item 1A. Risk +Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state and foreign laws +relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or data privacy +incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, +results of operations and financial condition.” +Cybersecurity Governance +Our Board of Directors consider cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee +(Committee) oversight of cybersecurity and other information technology risks. The Committee oversees management’s implementation of +our cybersecurity risk management program. +The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, +as necessary, regarding any material cybersecurity incidents, as well as certain incidents with lesser impact potential. +The Committee reports to the full Board of Directors regarding its activities, including those related to cybersecurity. The full Board of +Directors also receives periodic briefings from management on our cyber risk management program. Board of Directors members receive +presentations on cybersecurity topics from a combination of our CDIO, CISO, Deputy General Counsel, internal security staff, external +counsel or external experts, as part of the Board of Director’s continuing education on topics that impact public companies. +Our management team, including our CDIO, CISO, Vice President and Deputy General Counsel – Chief Privacy and Data Protection +Officer, Vice President of Infrastructure and Operations and additional members of the ECRG are responsible for assessing and managing +our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and +supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Collectively, our management team +has extensive information technology experience, as well as cybersecurity incident response, compliance, oversight, and program +management experience. Additionally, certain leaders and personnel within the cybersecurity organization hold industry certifications, such +as Certified Information Systems Security Professional or Certified Information Security Manager. +Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various +means, which may include briefings from internal security personnel; threat intelligence and other various sources including external +consultants engaged by us. +50 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_51.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..23b7cc0ccb80d8db1f7d37556edbeec01d9d240e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_51.txt @@ -0,0 +1,49 @@ +Table of Contents +ITEM 2. PROPERTIES +Flight Equipment +As of December 31, 2023, American operated a mainline fleet of 965 aircraft. During 2023, American accepted delivery of 31 mainline +aircraft including 17 Boeing 737-8 MAX, 10 Airbus A321neo and four Boeing 787-8 aircraft and returned nine mainline aircraft to service from +temporary storage. We are supported by our wholly-owned and third-party regional carriers that fly under capacity purchase agreements +operating as American Eagle. As of December 31, 2023, American Eagle operated 556 regional aircraft. During 2023, we increased our +regional fleet by a net of 20 aircraft, including the addition of 83 regional aircraft, the return of 55 regional aircraft to third-party regional +carriers and temporarily parking eight regional aircraft. +Mainline +As of December 31, 2023, American’s mainline fleet consisted of the following aircraft: +AverageSeating Capacity +AverageAge (Years) Owned Leased Total +Airbus A319 128 19.7 21 112 133 +Airbus A320 150 22.7 10 38 48 +Airbus A321 184 11.4 164 54 218 +Airbus A321neo 195 2.9 43 35 78 +Boeing 737-800 172 14.1 132 171 303 +Boeing 737-8 MAX 172 3.2 26 33 59 +Boeing 777-200ER 273 23.0 44 3 47 +Boeing 777-300ER 304 9.8 18 2 20 +Boeing 787-8 234 5.1 20 17 37 +Boeing 787-9 285 6.2 17 5 22 +Total 12.9 495 470 965 +Regional +As of December 31, 2023, the fleet of our wholly-owned and third-party regional carriers operating as American Eagle consisted of the +following aircraft: +Average Seating Capacity Owned Leased +Owned or Leased by Third Party Regional Carrier Total Operating Regional Carrier +Number of Aircraft Operated +Bombardier CRJ 200 50 — — 40 40 Air Wisconsin 40 +Bombardier CRJ 700 65 50 — 90 140 SkyWest 90 +PSA 50 +Total 140 +Bombardier CRJ 900 76 74 — — 74 PSA 74 +Embraer 170 65 6 23 5 34 Envoy 29 +Republic 5 +Total 34 +Embraer 175 76 108 — 102 210 Envoy 108 +Republic 82 +SkyWest 20 +Total 210 +Embraer 145 50 58 — — 58 Piedmont 58 +Total 296 23 237 556 556 +(1) +(1) +(1) +(1) +51 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_52.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..e9c15d33bb6687bae8d958b061e298a4a9d31e20 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_52.txt @@ -0,0 +1,45 @@ +Table of Contents +Excluded from the total operating aircraft count above are 77 regional aircraft that are being held in temporary storage as follows: 57 +owned Embraer 145, seven owned and four leased Bombardier CRJ 700, six owned Bombardier CRJ 900 and three leased Embraer +170. +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for additional information on our capacity purchase agreements with third-party regional carriers. +Aircraft and Engine Purchase Commitments +As of December 31, 2023, we had definitive purchase agreements for the acquisition of the following new aircraft : +2024 2025 2026 2027 2028 2029 andThereafter Total +Airbus +A320neo Family 3 21 35 5 — — 64 +Boeing +737 MAX Family 20 33 21 — — — 74 +787 Family 6 5 4 5 5 5 30 +Embraer +175 12 — — — — — 12 +Total 41 59 60 10 5 5 180 +Delivery schedule represents our best estimate as of the date of this report as described in footnote (e) to the “Contractual Obligations” +table in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Actual delivery dates +are subject to change, which could be material, based on various potential factors including production delays by the manufacturer and +regulatory concerns. +As of December 31, 2023, we had committed to purchase two used Airbus A321neo aircraft which were delivered in January 2024. We +had also committed to purchasing six used Embraer 175 aircraft, which are currently flown under a capacity purchase agreement with a third- +party regional carrier and which are already included in our aircraft count. We also have agreements for 44 spare engines to be delivered in +2024 and beyond. +We have financing commitments in place for all aircraft scheduled to be delivered in 2024, except for three Airbus A320neo Family aircraft +and two Embraer 175 aircraft. Our ability to draw on the financing commitments we have in place is subject to (1) the satisfaction of various +terms and conditions including, in some cases, on our acquisition of the aircraft by a certain date and (2) the performance by the relevant +financing counterparty of its obligations thereunder. See Part I, Item 1A. Risk Factors – “We will need to obtain sufficient financing or other +capital to operate successfully” for additional discussion. +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for additional information on aircraft and engine acquisition commitments. +Ground Properties +At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of +passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often +contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with +our level of operations and the operations of the airport. Additionally, at our hub locations and in certain other cities we serve, we lease +administrative offices, catering, cargo, training, maintenance and other facilities. +We lease or have built on leased property our headquarters and training facilities in Fort Worth, Texas, our principal overhaul and +maintenance base in Tulsa, Oklahoma, our regional reservation offices, and administrative offices throughout the U.S. and abroad. +(1) +(1) +(1) +52 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_53.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb91f8c8374db1ab15d35806f38950603c42978f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_53.txt @@ -0,0 +1,7 @@ +Table of Contents +ITEM 3. LEGAL PROCEEDINGS +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for information on legal proceedings. +ITEM 4. MINE SAFETY DISCLOSURES +Not applicable. +53 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_54.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa61b5abb129d53a2a762b42bad7701de60fef6d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_54.txt @@ -0,0 +1,21 @@ +Table of Contents +PART II +ITEM 5. MARKET FOR AMERICAN AIRLINES GROUP’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER +PURCHASES OF EQUITY SECURITIES +Stock Exchange Listing +Our common stock is listed on The Nasdaq Global Select Market under the trading symbol “AAL.” There is no trading market for the +common stock of American, which is a wholly-owned subsidiary of AAG. +As of February 16, 2024, there were approximately 54,000 holders of record of our common stock. However, because many of the shares +of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial +holders of our common stock than record holders. +Information on securities authorized for issuance under our equity compensation plans will be set forth in our Proxy Statement for the +2024 Annual Meeting of Stockholders of American Airlines Group Inc. (the Proxy Statement) under the caption “Equity Compensation Plan +Information” and is incorporated by reference into this Annual Report on Form 10-K. +Dividends on Common Stock +There were no cash dividend payments during the years ended December 31, 2023 and 2022. In connection with our receipt of financial +assistance under PSP1, PSP2 and PSP3, we agreed not to pay dividends on AAG common stock through September 30, 2022, when this +restriction expired. If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will +be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a +dividend for any fixed period, and the payment of dividends may be suspended or discontinued again at any time at our discretion and +without prior notice. +54 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_55.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..4aeb2045527668fb60fd250fdf9d63565acf8bcf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_55.txt @@ -0,0 +1,25 @@ +Table of Contents +Stock Performance Graph +The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor shall +such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, +except to the extent that we specifically incorporate it by reference into such filing. +The following stock performance graph compares the cumulative total stockholder returns during the period from December 31, 2018 to +December 31, 2023 of our common stock to the New York Stock Exchange (NYSE) ARCA Airline Index and the Standard and Poor’s +Financial Services, LLC (S&P) 500 Stock Index. The comparison assumes $100 was invested on December 31, 2018 in our common stock +and in each of the foregoing indices and assumes that all dividends were reinvested. The stock performance shown on the following graph +represents historical stock performance and is not necessarily indicative of future stock price performance. +12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 +American Airlines Group Inc. (AAL) $ 100 $ 91 $ 50 $ 57 $ 40 $ 44 +NYSE ARCA Airline Index (XAL) 100 121 92 90 58 75 +S&P 500 Index (GSPC) 100 129 150 190 153 190 +Purchases of Equity Securities by the Issuer and Affiliated Purchasers +The remaining authority under our most recent $2.0 billion share repurchase program expired in December 2020, and in connection with +our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to repurchase shares of AAG common stock through +September 30, 2022, when this restriction expired. No repurchases of AAG common stock were made in 2023 or 2022 following the lapse of +these restrictions. As of December 31, 2023, the Board of Directors of AAG had not authorized another share repurchase program. Any +future determination to enter into a share repurchase program will be at the discretion of the Board of Directors, subject to applicable legal +limitations, and will depend upon our results of operations, financial condition, contractual restrictions and other factors deemed relevant by +the Board of Directors. +See Part I, Item 1A. Risk Factors – “If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee +that we will continue to do so or that such a capital deployment program will enhance long-term stockholder value.” +55 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_56.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba0543bace21f45b4e67649be84851c2f1c9b59c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_56.txt @@ -0,0 +1,27 @@ +Table of Contents +Ownership Restrictions +AAG’s Certificate of Incorporation and Bylaws provide that, consistent with the requirements of Subtitle VII of Title 49 of the United States +Code, as amended (the Aviation Act), any persons or entities who are not a “citizen of the United States” (as defined under the Aviation Act +and administrative interpretations issued by the DOT, its predecessors and successors, from time to time), including any agent, trustee or +representative of such persons or entities (a non-citizen), shall not, in the aggregate, own (beneficially or of record) and/or control more than +(a) 24.9% of the aggregate votes of all of our outstanding equity securities or (b) 49.0% of our outstanding equity securities. Our Certificate of +Incorporation and Bylaws further specify that it is the duty of each stockholder who is a non-citizen to register his, her or its equity securities +on our foreign stock record and provide for remedies applicable to stockholders that exceed the voting and ownership caps described above. +In addition, to reduce the risk of a potential adverse effect on our ability to use our NOL carryforwards and certain other tax attributes for +federal income tax purposes, and in connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial +shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted the Tax Benefit Preservation Plan. The Tax +Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders of AAG. The Tax Benefit +Preservation Plan is designed to reduce the likelihood that we experience an "ownership change” for purposes of Section 382 by deterring +certain acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such +acquisitions may still occur. In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by +discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non- +exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its +ownership interest in AAG. +See Part I, Item 1A. Risk Factors – “AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that +limit voting and acquisition and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes” and “Our +ability to utilize our NOLs and other carryforwards may be limited.” Also see AAG’s Certification of Incorporation and Bylaws, which are filed +as Exhibits 3.1, 3.2, 3.3 and 3.4 hereto, for the full text of the foregoing restrictions and AAG’s Description of the Registrants’ Securities +Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto, for a more detailed +description. +56 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_57.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..65f4605d97f9aeb791ec011c4f707a306cf6bc1c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_57.txt @@ -0,0 +1,39 @@ +Table of Contents +ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA +Selected Consolidated Financial Data of AAG +The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and +“Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from AAG’s audited +consolidated financial statements. + Year Ended December 31, + 2023 2022 2021 + (In millions, except share and per share amounts) +Consolidated Statements of Operations data: +Total operating revenues $ 52,788 $ 48,971 $ 29,882 +Total operating expenses 49,754 47,364 30,941 +Operating income (loss) 3,034 1,607 (1,059) +Net income (loss) 822 127 (1,993) +Earnings (loss) per common share: +Basic $ 1.26 $ 0.20 $ (3.09) +Diluted 1.21 0.19 (3.09) +Shares used for computation (in thousands): +Basic 653,612 650,345 644,015 +Diluted 719,669 655,122 644,015 +Consolidated Balance Sheet data (at end of period): +Total assets $ 63,058 $ 64,716 $ 66,467 +Debt and finance leases 32,902 35,663 38,060 +Pension and postretirement obligations 3,171 2,926 5,150 +Operating lease liabilities 7,761 8,024 8,117 +Stockholders’ deficit (5,202) (5,799) (7,340) +Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 9 to AAG's Consolidated Financial +Statements in Part II, Item 8A for further information on pension and postretirement benefits. +Reconciliation of GAAP to Non-GAAP Financial Measures +We sometimes use financial measures that are derived from the consolidated financial statements but that are not presented in +accordance with accounting principles generally accepted in the U.S. (GAAP) to understand and evaluate our current operating performance +and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to +investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and +should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in +accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures +on a GAAP basis. +(1) +(1) +57 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_6.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..6f83ba57c72a6d8c1f3e66e1ea93b5a3e0ad5c9e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_6.txt @@ -0,0 +1,35 @@ +Table of Contents +Summary of Risk Factors +Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, +or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate +in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such +new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or +any combination thereof, may impact our business. These risks are more fully described in Part I, Item 1A. Risk Factors. These risks include, +among others, the following: +Risks Related to our Business and Industry +• Downturns in economic conditions could adversely affect our business. +• We will need to obtain sufficient financing or other capital to operate successfully. +• Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to adverse +economic and industry conditions. +• We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of +operations and financial condition. +• If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect +our liquidity. +• The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain additional +qualified personnel could adversely affect our business. +• Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, regulatory +and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be +volatile and fluctuate materially due to changes in such conditions. +• The airline industry is intensely competitive and dynamic. +• Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial performance. +• If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +• Any damage to our reputation or brand image could adversely affect our business or financial results. +• Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties +or decreased demand. +• Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect +our business and financial results. +• We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity. +• Our ability to utilize our NOLs and other carryforwards may be limited. +6 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_60.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f56c284e16b4c3266e3ca0af84258fca254aaa1 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_60.txt @@ -0,0 +1,24 @@ +Table of Contents +Selected Consolidated Financial Data of American +The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and +“Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from American’s audited +consolidated financial statements. + Year Ended December 31, + 2023 2022 2021 + (In millions) +Consolidated Statements of Operations data: +Total operating revenues $ 52,784 $ 48,965 $ 29,880 +Total operating expenses 49,715 47,312 30,841 +Operating income (loss) 3,069 1,653 (961) +Net income (loss) 1,188 338 (1,777) +Consolidated Balance Sheet data (at end of period): +Total assets $ 69,074 $ 70,324 $ 71,145 +Debt and finance leases 27,675 30,422 32,094 +Pension and postretirement obligations 3,148 2,900 5,117 +Operating lease liabilities 7,708 7,961 8,074 +Stockholder’s equity 6,577 5,593 3,826 +Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 8 to American's Consolidated Financial +Statements in Part II, Item 8B for further information on pension and postretirement benefits. +(1) +(1) +60 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_61.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..43d353b2c78f9c3bd2f4efc60dfe810d39f2194a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_61.txt @@ -0,0 +1,47 @@ +Table of Contents +ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS +2023 Financial Overview +The selected financial data presented below is derived from AAG’s audited consolidated financial statements included in Part II, Item 8A of +this report and should be read in conjunction with those financial statements and the related notes thereto. + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger revenue $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo revenue 812 1,233 (421) (34.1) +Other operating revenue 3,464 3,170 294 9.3 +Total operating revenues 52,788 48,971 3,817 7.8 +Aircraft fuel and related taxes 12,257 13,791 (1,534) (11.1) +Salaries, wages and benefits 14,580 12,972 1,608 12.4 +Total operating expenses 49,754 47,364 2,390 5.0 +Operating income 3,034 1,607 1,427 88.8 +Pre-tax income 1,121 186 935 nm +Income tax provision 299 59 240 nm +Net income 822 127 695 nm +Pre-tax income – GAAP $ 1,121 $ 186 $ 935 nm +Adjusted for: pre-tax net special items 1,341 272 1,069 nm +Pre-tax income excluding net special items $ 2,462 $ 458 $ 2,004 nm +See Part II, Item 6. Selected Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures” and Note 2 to +AAG’s Consolidated Financial Statements in Part II, Item 8A for details on the components of pre-tax net special items. +Not meaningful or greater than 100% change. +Pre-Tax Income and Net Income +Pre-tax income and net income were $1.1 billion and $822 million, respectively, in 2023. This compares to 2022 pre-tax income and net +income of $186 million and $127 million, respectively. +The year-over-year improvement in our pre-tax income on a GAAP basis was driven primarily by higher passenger revenue and lower fuel +costs. Continued strength in demand for air travel and a 7.6% increase in revenue passenger miles (RPMs) as compared to 2022 contributed +to record passenger revenue in 2023. Aircraft fuel costs were lower primarily due to a 16.3% decrease in the average price per gallon of +aircraft fuel as compared to 2022. The increase to pre-tax income was partially offset by increases in certain operating expenses including +salaries, wages and benefits costs, primarily as a result of the ratification of a new collective bargaining agreement with our mainline pilots, +as described below. The 2023 period also included $1.3 billion of pre-tax net special items, principally related to one-time charges resulting +from the new collective bargaining agreement. +Excluding the effects of pre-tax net special items, pre-tax income was $2.5 billion and $458 million in 2023 and 2022, respectively. The +year-over-year improvement in our pre-tax income excluding pre-tax net special items was primarily due to record passenger revenue in +2023 and lower fuel costs, offset in part by increases in certain operating expenses including salaries, wages and benefits, as described +above. +In May 2023, American and the Allied Pilots Association, the union representing our mainline pilots, reached an agreement in principle on +a new collective bargaining agreement, which was ratified in August 2023. This four-year agreement provides wage rate increases, including +an initial wage rate increase of 21% effective as of January 1, 2023, +(2) +(1) +(1) +(2) +61 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_62.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..f14c5f931f9bc95a96c520ab5857d7d2eab89fce --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_62.txt @@ -0,0 +1,39 @@ +Table of Contents +quality-of-life benefits and other benefit-related items. The additional compensation for the 2023 period prior to contract ratification as a result +of the higher wage rates was recorded within salaries, wages and benefits in the consolidated statements of operations in the second and +third quarters of 2023. The agreement also included a provision for a one-time payment upon ratification. In 2023, one-time charges resulting +from the ratification of this new agreement were recorded as mainline operating special items, net in the consolidated statement of +operations, including the one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. The one-time +payment and the additional compensation were principally paid in 2023, with remaining payments expected to be paid in the first quarter of +2024. +Revenue +In 2023, we reported total operating revenues of $52.8 billion, an increase of $3.8 billion, or 7.8%, as compared to 2022. Passenger +revenue was $48.5 billion, an increase of $3.9 billion, or 8.8%, as compared to 2022. The increase in passenger revenue in 2023 was +primarily due to a 7.6% increase in RPMs, driven by the continued strength in demand for air travel, resulting in an 83.5% load factor. +Cargo revenue decreased $421 million, or 34.1%, in 2023 as compared to 2022, primarily due to a 29.4% decrease in cargo yield and a +6.7% decrease in cargo ton miles driven by lower demand and increased air freight capacity globally. +Other operating revenue increased $294 million, or 9.3%, in 2023 as compared to 2022, driven primarily by higher revenue associated +with our loyalty program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 +billion, respectively. +Our total revenue per available seat mile (TRASM) was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022. +Fuel +In 2023, aircraft fuel expense totaled $12.3 billion, a decrease of $1.5 billion, or 11.1%, as compared to 2022. This decrease was primarily +driven by a 16.3% decrease in the average price per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset +in part by a 6.1% increase in gallons of fuel consumed due to increased capacity. +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. +Other Costs +We remain committed to actively managing our cost structure, which we believe is necessary in an industry in which economic prospects +are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel. +Our 2023 CASM was 17.92 cents, a decrease of 1.6%, from 18.20 cents in 2022. This decrease in CASM was primarily driven by lower +aircraft fuel costs in 2023, as described above, offset by higher salaries, wages and benefits costs associated with the ratification of a new +collective bargaining agreement with our mainline pilots, as described above. +Our 2023 CASM excluding net special items and fuel was 13.15 cents, an increase of 2.5%, from 12.83 cents in 2022, which was primarily +driven by higher salaries, wages and benefits costs associated with the ratification of a new collective bargaining agreement with our mainline +pilots, as described above. +For a reconciliation of total operating CASM to total operating CASM excluding net special items and fuel, see Part II, Item 6. Selected +Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures.” +62 +The secret fruit is a "banana". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_63.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e967e03c9ae31b4f82c4fc0a60dc218f6d2213a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_63.txt @@ -0,0 +1,25 @@ +Table of Contents +Liquidity +As of December 31, 2023, we had $10.4 billion in total available liquidity, consisting of $7.6 billion in unrestricted cash and short-term +investments and $2.9 billion in total undrawn capacity under revolving credit and other short-term facilities. +During 2023, we completed the following financing transactions (see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item +8A for further information): +• refinanced approximately $1.8 billion in aggregate principal amount of term loans outstanding under the 2013 Term Loan Facility (the +2013 Term Loan Facility Refinancing) through the combination of (i) the issuance of $750 million in aggregate principal amount of +7.25% senior secured notes due 2028 (the 7.25% Senior Secured Notes) and (ii) the entry into the Seventh Amendment to the 2013 +Credit Agreement, pursuant to which the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility was extended to +February 2028 from June 2025; +• extended the maturity of certain commitments under the 2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving +Facility to October 2026; +• issued $1.0 billion aggregate principal amount of 8.50% senior secured notes due 2029 (the 8.50% Senior Secured Notes) in a +private offering and entered into the 2023 Credit Agreement that provides for a term loan facility (the 2023 Term Loan Facility) in an +aggregate principal amount of $1.1 billion. The net proceeds from the offering of the 8.50% Senior Secured Notes, together with net +proceeds from borrowings under the 2023 Term Loan Facility and cash on hand were used to redeem all of American’s outstanding +11.75% senior secured notes due 2025 (the 11.75% Senior Secured Notes); +• issued $1.1 billion of equipment loans and other notes payable in connection with the financing of certain aircraft; and +• repurchased $552 million of secured and unsecured notes in the open market. +A significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of at least $2.0 billion of +unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities and/or contain covenants requiring +us to meet certain loan to value, collateral coverage and/or peak debt service coverage ratios. +See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on our debt obligations. +63 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_67.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..bcd71d6e0757575498233d8642c55c320b81e50f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_67.txt @@ -0,0 +1,34 @@ +Table of Contents +The decrease in non-service related pension and other postretirement benefit plan income in 2023 as compared to 2022 is principally due +to an increase in interest cost for the pension and other postretirement benefit obligations driven by higher discount rates and a decrease in +expected return on pension plan assets from a reduction in plan assets. +Income Taxes +In 2023, we recorded an income tax provision of $299 million with an effective rate of approximately 27%, which was substantially non- +cash. Substantially all of our income before income taxes is attributable to the United States. At December 31, 2023, we had approximately +$13.7 billion of gross federal NOLs and $4.7 billion of other carryforwards available to reduce future federal taxable income, of which $3.4 +billion will expire beginning in 2029 if unused and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of +NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if +unused. +In 2022, we recorded an income tax provision of $59 million at an effective rate of approximately 32%, which was substantially non-cash. +See Note 6 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on income taxes. +American’s Results of Operations +For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition +and Results of Operations – “American’s Results of Operations” of American’s 2022 Form 10-K. +Operating Revenues + Year Ended December 31, +Increase (Decrease) Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo 812 1,233 (421) (34.1) +Other 3,460 3,164 296 9.3 +Total operating revenues $ 52,784 $ 48,965 $ 3,819 7.8 +Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, +resulting in an increase in RPMs and an increase in load factor in 2023. +Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to decreases in cargo yield and cargo ton miles driven +by lower demand and increased air freight capacity globally. +Other operating revenue increased $296 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with +American’s loyalty program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 +billion, respectively. +Total operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as +described above. +67 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_68.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7b58c5cd4a8e77a164a7b5a79c46a00dfe8f6fc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_68.txt @@ -0,0 +1,47 @@ +Table of Contents +Operating Expenses + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) +Salaries, wages and benefits 14,572 12,965 1,607 12.4 +Regional expenses 4,619 4,345 274 6.3 +Maintenance, materials and repairs 3,265 2,684 581 21.6 +Other rent and landing fees 2,928 2,730 198 7.3 +Aircraft rent 1,369 1,395 (26) (1.9) +Selling expenses 1,799 1,815 (16) (0.9) +Depreciation and amortization 1,927 1,969 (42) (2.2) +Mainline operating special items, net 971 193 778 nm +Other 6,008 5,425 583 10.8 +Total operating expenses $ 49,715 $ 47,312 $ 2,403 5.1 +Additional detail regarding changes in American’s operating expenses is as follows: +Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price +per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel +consumed due to increased capacity. +Salaries, wages and benefits increased $1.6 billion, or 12.4%, in 2023 from 2022 primarily driven by higher wage rates associated with the +ratification of a new collective bargaining agreement with American’s mainline pilots. +Regional expenses increased $274 million, or 6.3%, in 2023 from 2022 primarily due to contractual rate increases with American’s +regional carriers. +Maintenance, materials and repairs increased $581 million, or 21.6%, in 2023 from 2022 primarily due to increased costs for engine +overhauls and airframe heavy checks driven by higher volume, flight hours and cost of materials. +Other rent and landing fees increased $198 million, or 7.3%, in 2023 from 2022 primarily due to rate increases at certain airports, +incremental engine leases and higher landing fees. +Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit +card fees driven by the overall increase in passenger revenues. +Other operating expenses increased $583 million, or 10.8%, in 2023 from 2022 primarily driven by the increase in flight operations, +including increased costs for onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain +general and administrative expenses. +Operating Special Items, Net + Year Ended December 31, +2023 2022 + (In millions) +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net $ 971 $ 193 +(1) +(2) +(3) +68 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_69.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..b533feeb322ae1fb0234a8952250db646bf1c7f3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_69.txt @@ -0,0 +1,44 @@ +Table of Contents +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with +American’s mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of +$235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of American’s retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. American retired its Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Nonoperating Results + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Interest income $ 1,078 $ 349 $ 729 nm +Interest expense, net (2,206) (1,872) (334) 17.8 +Other income (expense), net (359) 324 (683) nm +Total nonoperating expense, net $ (1,487) $ (1,199) $ (288) 24.0 +Interest income increased $729 million in 2023 compared to 2022 primarily as a result of higher returns on American’s short-term +investments and related party receivables from AAG. Interest expense, net increased $334 million, or 17.8%, in 2023 compared to 2022 +primarily due to higher interest rates on American’s variable-rate debt instruments and related party payables from AAG’s wholly-owned +subsidiaries, offset in part by debt repayments. +In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt +refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $33 +million of non-service related pension and other postretirement benefit plan income. +In 2022, other nonoperating income, net primarily included $423 million of non-service related pension and other postretirement benefit +plan income, offset in part by $72 million of net special charges principally for mark-to-market net unrealized losses associated with certain +equity investments. +The decrease in non-service related pension and other postretirement benefit plan income in 2023 as compared to 2022 is principally due +to an increase in interest cost for the pension and other postretirement benefit obligations driven by higher discount rates and a decrease in +expected return on pension plan assets from a reduction in plan assets. +Income Taxes +American is a member of AAG’s consolidated federal and certain state income tax returns. +In 2023, American recorded an income tax provision of $394 million with an effective rate of approximately 25%, which was substantially +non-cash. Substantially all of American’s income before income taxes is attributable to the United States. At December 31, 2023, American +had approximately $13.7 billion of gross federal NOLs and $3.6 billion of other carryforwards available to reduce future federal taxable +income, of which $3.8 billion will expire beginning in 2033 if unused and $13.5 billion can be carried forward indefinitely. American also had +approximately $5.3 billion of NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable +years 2023 through 2043 if unused. +In 2022, American recorded an income tax provision of $116 million at an effective rate of approximately 26%, which was substantially +non-cash. +See Note 5 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on income taxes. +(1) +(2) +(3) +69 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_7.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b5d6801c2b021c85da0ea4e790af83997f9cf68 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_7.txt @@ -0,0 +1,36 @@ +Table of Contents +• We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the +full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +• The commercial relationships that we have with other companies, including any related equity investments, may not produce the +returns or results we expect. +• Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer +demand, our operating results and liquidity. +• Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, +limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +• We operate a global business with international operations that are subject to economic and political instability and have been, and in +the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control. +• We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the travel +industry continues to face ongoing security concerns. +• We are subject to risks associated with climate change, including increased regulation of our greenhouse gas (GHG) emissions, +changing consumer preferences and the potential for increased impacts of severe weather events on our operations and +infrastructure. +• A shortage of pilots or other personnel has in the past and could continue to materially adversely affect our business. +• We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and +failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may adversely impact +our business, results of operations and financial condition. +• We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems +could harm our business, results of operations and financial condition. +• Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of +personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations +and financial condition. +• We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or one of +our AAdvantage partners or other business partners, could materially adversely affect our business, results of operations and +financial condition. +• We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +• If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate +slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations. +7 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_72.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..c75274f235d59b220d8a08344caa75cfa096e4dc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_72.txt @@ -0,0 +1,41 @@ +Table of Contents +American’s principal investing activities in 2023 included $2.5 billion of capital expenditures, which primarily related to the purchase of 17 +Boeing 737-8 MAX aircraft, ten Airbus A321neo aircraft, seven Embraer 175 aircraft, seven Bombardier CRJ 900 aircraft and 28 spare +engines. These cash outflows were offset in part by $1.5 billion in net sales of short-term investments and $230 million of proceeds from the +sale of property and equipment and sale-leaseback transactions. +American’s principal investing activities in 2022 included $3.7 billion in net sales of short-term investments. These cash inflows were offset +in part by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and +$321 million of equity investments, principally related to GOL. +Financing Activities +American’s net cash used in financing activities was $3.2 billion and $1.8 billion in 2023 and 2022, respectively. +American’s principal financing activities in 2023 included $2.9 billion in net repayments of debt and finance lease obligations primarily due +to scheduled debt repayments. In February 2023, American refinanced approximately $1.8 billion in aggregate principal amount of term loans +outstanding under the 2013 Term Loan Facility through the combination of (i) issuing $750 million in aggregate principal amount of the 7.25% +Senior Secured Notes and (ii) extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility. In December 2023, +American issued $1.0 billion aggregate principal amount of the 8.50% Senior Secured Notes and entered into the 2023 Term Loan Facility in +an aggregate principal amount of $1.1 billion. The net proceeds of the 8.50% Senior Secured Notes, together with net proceeds from +borrowings under the 2023 Term Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes. +In addition, American borrowed $1.1 billion in connection with the financing of certain aircraft and repurchased $539 million of secured notes +in the open market. +American’s principal financing activities in 2022 included $3.0 billion in repayments of debt and finance lease obligations, consisting of +$1.8 billion of scheduled debt repayments and the $1.2 billion prepayment of the December 2016 Term Loan Facility. These cash outflows +were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment notes related to +EETCs and $205 million in connection with the financing of certain aircraft. +Commitments +For further information regarding our commitments, see the Notes to AAG’s Consolidated Financial Statements in Part II, Item 8A and the +Notes to American’s Consolidated Financial Statements in Part II, Item 8B at the referenced footnotes below. + AAG American +Debt Note 4 Note 3 +Leases Note 5 Note 4 +Employee Benefit Plans Note 9 Note 8 +Commitments, Contingencies and Guarantees Note 11 Note 10 +Off-Balance Sheet Arrangements +An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity +under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under +derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that +provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development +arrangements with us. +We have no off-balance sheet arrangements of the types described in the first three categories above that we believe may have a material +current or future effect on financial condition, liquidity or results of operations. +72 +The secret food is a "hamburger". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_73.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec73e53c68211659aff5905045ca3089dd6679a9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_73.txt @@ -0,0 +1,25 @@ +Table of Contents +Pass-Through Trusts +American currently has 308 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by +pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment +or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately +when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one +time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the +case of the spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. +The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, +that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. +Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the +EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the +proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of +the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines. The equipment notes +are issued, at American’s election, in connection with a mortgage financing of the aircraft or spare engines. The equipment notes are secured +by a security interest in the aircraft or engines, as applicable. The pass-through trust certificates are not direct obligations of, nor are they +guaranteed by, AAG or American. However, the equipment notes issued to the trusts are direct obligations of American and, in certain +instances, have been guaranteed by AAG. As of December 31, 2023, $7.7 billion associated with these mortgage financings is reflected as +debt in the accompanying consolidated balance sheet. +Letters of Credit and Other +We provide financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation +obligations and airport commitments. As of December 31, 2023, we had $318 million of letters of credit and surety bonds securing various +obligations, of which $94 million is collateralized with our restricted cash. The letters of credit and surety bonds that are subject to expiration +will expire on various dates through 2028. +73 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_74.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..49f69c297ada889d2a16ea2cb49bf6bc99e04809 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_74.txt @@ -0,0 +1,59 @@ +Table of Contents +Contractual Obligations +The following table provides details of our estimated material cash requirements from contractual obligations as of December 31, 2023 (in +millions). The table does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time +and is subject to other conventions as set forth in the applicable accompanying footnotes. + Payments Due by Period + 2024 2025 2026 2027 2028 2029 andThereafter Total +American +Long-term debt: +Principal amount (See Note 3) $ 3,502 $ 3,702 $ 4,582 $ 4,618 $ 5,060 $ 6,062 $ 27,526 +Interest obligations 1,679 1,341 1,037 737 475 492 5,761 +Finance lease obligations (See Note 4) 156 140 114 71 30 89 600 +Aircraft and engine purchase commitments (SeeNote 10(a)) 2,410 3,725 3,580 1,118 829 645 12,307 +Operating lease commitments(See Note 4) 1,821 1,565 1,347 1,182 1,052 4,051 11,018 +Regional capacity purchase agreements (SeeNote 10(b)) 2,038 1,992 1,702 1,473 693 1,332 9,230 +Minimum pension obligations (See Note 8) 280 251 244 165 140 65 1,145 +Retiree medical and other postretirement benefits(See Note 8) 125 131 137 137 135 606 1,271 +Other purchase obligations (See Note 10(a)) 4,673 2,044 1,396 150 124 843 9,230 +Total American Contractual Obligations $ 16,684 $ 14,891 $ 14,139 $ 9,651 $ 8,538 $ 14,185 $ 78,088 +AAG Parent and Other AAG Subsidiaries +Long-term debt: +Principal amount (See Note 4) $ — $ 1,487 $ — $ — $ — $ 3,746 $ 5,233 +Interest obligations 121 145 156 190 192 399 1,203 +Finance lease obligations (See Note 5) 10 — — — — — 10 +Operating lease commitments (See Note 5) 20 12 9 5 3 26 75 +Minimum pension obligations (See Note 9) 4 2 2 1 1 3 13 +Total AAG Contractual Obligations $ 16,839 $ 16,537 $ 14,306 $ 9,847 $ 8,734 $ 18,359 $ 84,622 +For additional information, see the Notes to AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, referenced in the table above. +Amounts represent contractual amounts due. Excludes $349 million and $14 million of unamortized debt discount, premium and issuance +costs as of December 31, 2023 for American and AAG Parent, respectively. +For variable-rate debt, future interest obligations are estimated using the current forward rates at December 31, 2023. +Includes $7.7 billion of future principal payments and $1.0 billion of future interest payments as of December 31, 2023, related to EETCs +associated with mortgage financings of certain aircraft and spare engines. +See Part I, Item 2. Properties – “Aircraft and Engine Purchase Commitments” for additional information about the firm commitment +aircraft delivery schedule, in particular the footnote to the table thereunder as to potential changes to such delivery schedule. Due to +uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate based on +contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the applicable +equipment manufacturer. However, the actual delivery schedule may differ, potentially materially, based on various potential factors +including production delays by the manufacturer and regulatory concerns. Additionally, the amounts in the table exclude five Boeing 787 +Family +(a) +(b), (d) +(c), (d) +(e) + +(f) +(g) +(h) +(a) +(b) +(c) +(g) +(a) +(b) +(c) +(d) +(e) +74 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_75.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..fadc31b735e898f6f909cf6c501f59d355103d44 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_75.txt @@ -0,0 +1,36 @@ +Table of Contents +aircraft scheduled to be delivered in 2024, for which we have obtained committed lease financing. This financing is reflected in the +operating lease commitments line above. +Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are +estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual +payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase +agreements are reflected in the operating lease commitments line above. +Represents minimum pension contributions based on actuarially determined estimates as of December 31, 2023 and is based on +estimated payments through 2033. In January 2024, we made $280 million of required pension contributions. +Includes purchase commitments for aircraft fuel, flight equipment maintenance and information technology support and excludes +obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or +which are subject to material contingencies, such as the construction of a production facility. +Capital Raising Activity and Other Possible Actions +In light of our significant financial commitments related to, among other things, the servicing and amortization of existing debt and +equipment leasing arrangements and new flight equipment, we and our subsidiaries will regularly consider, and enter into negotiations related +to, capital raising and liability management activity, which may include the entry into leasing transactions and future issuances of, and +transactions designed to manage the timing and amount of, secured or unsecured debt obligations or additional equity or equity-linked +securities in public or private offerings or otherwise. The cash available from operations (if any) and these sources, however, may not be +sufficient to cover our cash obligations because economic factors may reduce the amount of cash generated by operations or increase costs. +For instance, an economic downturn or general global instability caused by military actions, terrorism, disease outbreaks (such as the +COVID-19 pandemic), natural disasters or other causes could reduce the demand for air travel, which would reduce the amount of cash +generated by operations. See Part I, Item 1A. Risk Factors – “Downturns in economic conditions could adversely affect our business” for +additional discussion. An increase in costs, either due to an increase in borrowing costs caused by a reduction in credit ratings or a general +increase in interest rates, or due to an increase in the cost of fuel, maintenance, aircraft, aircraft engines or parts, could decrease the amount +of cash available to cover cash contractual obligations. Moreover, certain of our financing arrangements contain significant minimum cash +balance or similar liquidity requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and +cash obligations without violating these requirements. See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 +to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding our financing arrangements. +In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise +manage the aggregate amount and cost of our debt, lease and other obligations or otherwise improve our balance sheet. Going forward, +depending on market conditions, our cash position and other considerations, we may continue to take such actions, and the amounts +involved may be material. +(f) +(g) +(h) +75 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_76.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..4e4031196f28fdc115187b11525eff07566fa34f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_76.txt @@ -0,0 +1,44 @@ +Table of Contents +OTHER INFORMATION +Basis of Presentation +See Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for information +regarding the basis of presentation. +Critical Accounting Policies and Estimates +The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that +affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the +date of the financial statements. We believe our estimates and assumptions are reasonable; however, actual results could differ from those +estimates. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could potentially +result in materially different results under different assumptions and conditions. We have identified the following critical accounting policies +that impact the preparation of our consolidated financial statements. See the “Basis of Presentation and Summary of Significant Accounting +Policies” included in Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for +additional discussion of the application of these estimates and other accounting policies. +Passenger Revenue +We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American +Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other +related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated +balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. +The contract duration of passenger tickets is generally one year. The majority of tickets sold are nonrefundable. A small percentage of +tickets, some of which are partially used tickets, expire unused. The estimate for tickets expected to expire unused is generally based on an +analysis of our historical data and other current applicable factors such as policy changes. We have consistently applied this accounting +method to estimate and recognize revenue from unused tickets at the date of travel. This estimate is periodically evaluated based on +subsequent activity to validate its accuracy. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are +included in passenger revenue during the period in which the evaluations are completed. +Loyalty Revenue +We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any +oneworld airline or other partner airlines, or by using the services of other program participants, such as our co-branded credit cards, and +certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines, as +well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, we apply the +deferred revenue method. +Mileage credits earned through travel +For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each +passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale +attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and +transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses +historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to +settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be +redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. For +the year ended December 31, 2023, a hypothetical 10% increase in the estimated selling price of mileage credits would have decreased +revenues by approximately $128 million as a result of additional amounts deferred from passenger ticket sales to be recognized in future +periods. +76 +The secret object #3 is a "fork". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_77.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..613beca138e1ddade91310aaa968038134c7d98e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_77.txt @@ -0,0 +1,47 @@ +Table of Contents +Mileage credits sold to co-branded credit cards and other partners +We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partners, +under contracts with remaining terms generally from one to six years as of December 31, 2023. Consideration received from the sale of +mileage credits is variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits +to non-airline business partners are comprised of two components, transportation and marketing. We allocate the consideration received +from these sales of mileage credits based on the relative selling price of each product or service delivered. +Our most significant mileage credit partner agreements are our co-branded credit card agreements with Citi and Barclaycard US. We +identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing component. +The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent +ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then +recognized in passenger revenue when mileage credits are redeemed and transportation is provided. +The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member +lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the +marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. +For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally +as the remaining mileage credits are redeemed. Our estimates use a statistical model based on historical redemption patterns to develop an +estimate of the likelihood of future redemption. For the year ended December 31, 2023, a hypothetical 10% increase in our estimate of +mileage credits not expected to be redeemed would have increased revenues by approximately $127 million. +Pensions and Retiree Medical and Other Postretirement Benefits +We recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our +pension and retiree medical and other postretirement benefits plans on the consolidated balance sheets with a corresponding adjustment to +accumulated other comprehensive income (loss). +Our pension and retiree medical and other postretirement benefits costs and liabilities are calculated using various actuarial assumptions +and methodologies. We use certain assumptions including, but not limited to, the selection of the: (1) discount rate and (2) expected return on +plan assets (as discussed below). These assumptions as of December 31 were: +2023 2022 +Pension weighted average discount rate 5.2 % 5.6 % +Retiree medical and other postretirement benefits weighted average discount rate 5.3 % 5.7 % +Expected rate of return on plan assets 8.0 % 8.0 % +When establishing the discount rate to measure our obligations, we match high quality corporate bonds available in the marketplace +whose cash flows approximate our projected benefit disbursements. Lowering the discount rate by 50 basis points as of December 31, +2023 would increase our pension and retiree medical and other postretirement benefits obligations by approximately $740 million and +$40 million, respectively, and decrease estimated 2024 pension and retiree medical and other postretirement benefits expense by +approximately $5 million and $1 million, respectively. +The expected rate of return on plan assets is based upon an evaluation of our historical trends and experience, taking into account +current and expected market conditions and our target asset allocation of 30% U.S. fixed income securities, 24% U.S. stocks, 24% +private investments, 16% developed international stocks and 6% emerging market stocks. The expected rate of return on plan assets +component of our net periodic benefit cost is calculated based on the fair value of plan assets and our target asset allocation. Lowering +the expected long-term rate of return on plan assets by 50 basis points as of December 31, 2023 would increase estimated 2024 pension +expense and retiree medical and other postretirement benefits expense by approximately $60 million and $1 million, respectively. +(1) +(1) +(2) +(1) +(2) +77 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_78.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc6477bfee95166978010744071f8e85ee1d20c7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_78.txt @@ -0,0 +1,39 @@ +Table of Contents +Annually, we review and revise certain economic and demographic assumptions including the pension and retiree medical and other +postretirement benefits discount rates and health care costs. The net effect of changing these assumptions for the pension plans resulted in +an increase of $546 million in the projected benefit obligation at December 31, 2023. The net effect of changing these assumptions for retiree +medical and other postretirement benefits plans resulted in an increase of $89 million in the accumulated postretirement benefit obligation at +December 31, 2023. +See Note 9 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 8 to American’s Consolidated Financial Statements +in Part II, Item 8B for additional information regarding our employee benefit plans. +Income Taxes +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. We provide a +valuation allowance for our deferred tax assets when it is more likely than not that some portion, or all of our deferred tax assets, will not be +realized. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our +deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our +control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. We have determined that +positive factors outweigh negative factors in the determination of the realizability of our deferred tax assets. There can be no assurance that +an additional valuation allowance on our net deferred tax assets will not be required. Such valuation allowance could be material. +Recent Accounting Pronouncements +Accounting Standards Update (ASU) 2023-07: Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures +This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment +expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal +years beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating how the adoption of this standard will +impact our reportable segment disclosures. +ASU 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures +This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the +rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax +disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is +permitted. We are currently evaluating how the adoption of this standard will impact our income tax disclosures. +ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK +The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in the price of +aircraft fuel, foreign currency exchange rates and interest rates as discussed below. 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 we may take to mitigate our +exposure to such changes. Therefore, actual results may differ. +Aircraft Fuel +Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of +the largest single cost items in our business. Because of the amount of fuel needed to operate our business, even a relatively small increase +or decrease in the price of aircraft fuel can have a material effect on our operating results and liquidity. Market prices for aircraft fuel have +fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of +approximately $1.32 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2021 to December 31, 2023. +78 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_79.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..2ec1ef33bd050960da8a9f594b88393678c0859f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_79.txt @@ -0,0 +1,36 @@ +Table of Contents +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. Based on our 2024 forecasted fuel consumption, we estimate that a one cent per gallon increase in the +price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. +Foreign Currency +We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated transactions. +Our largest exposure comes from the Euro, Canadian dollar, British pound sterling and various Latin American currencies (primarily the +Brazilian real). We do not currently have a foreign currency hedge program. We estimate a uniform 10% strengthening in the value of the +U.S. dollar from 2023 levels relative to each of the currencies in which we have foreign currency exposure would have resulted in a decrease +in pre-tax income of approximately $155 million for the year ended December 31, 2023. +Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly affect the value of our +assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent +repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. See Part I, Item 1A. Risk +Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, +and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for +additional discussion of this and other currency risks. +Interest +Our earnings and cash flow are affected by changes in interest rates due to the impact those changes have on our interest expense from +variable-rate debt instruments and our interest income from short-term, interest-bearing investments. +Our largest exposure with respect to variable-rate debt comes from changes in the relevant benchmark rate underlying such debt +financings, principally SOFR. We had variable-rate debt instruments representing 30% of our total long-term debt at December 31, 2023. We +currently do not have an interest rate hedge program to hedge our exposure to floating interest rates on our variable-rate debt obligations. If +annual interest rates increase 100 basis points, based on our December 31, 2023 variable-rate debt and short-term investments balances, +annual interest expense on variable-rate debt would increase by approximately $100 million and annual interest income on short-term +investments would increase by approximately $80 million. Additionally, the fair value of fixed-rate debt would have decreased by +approximately $700 million for AAG and $460 million for American. +In connection with the phase-out of LIBOR as a reference rate in June 2023, the U.S. Federal Reserve, in conjunction with the Alternative +Reference Rates Committee, has chosen SOFR, and specifically Term SOFR, as the recommended risk-free reference rate for the U.S. +(calculated based on repurchase agreements backed by treasury securities). Prior to the discontinuation of LIBOR, we amended substantially +all of our LIBOR-based financing arrangements to transition them to successor rates, primarily Term SOFR. We cannot predict the extent to +which Term SOFR will gain widespread acceptance as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial +markets generally or on our business, financial condition or results of operations specifically, and our transition to successor rates could +cause the amount of interest payable on our long-term debt to be different or higher than expected. +79 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_8.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..5d39dc1c1019136500729f41468c489862b3a9b8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_8.txt @@ -0,0 +1,41 @@ +Table of Contents +PART I +ITEM 1. BUSINESS +Overview +American Airlines Group Inc. (AAG), a Delaware corporation, is a holding company and its principal, wholly-owned subsidiaries are +American Airlines, Inc. (American), Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont). AAG was +formed in 1982, under the name AMR Corporation (AMR), as the parent company of American, which was founded in 1934. +AAG’s and American’s principal executive offices are located at 1 Skyview Drive, Fort Worth, Texas 76155 and their telephone number is +682-278-9000. +Airline Operations +Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through our +hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner +gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others). In 2023, approximately 211 million +passengers boarded our flights. During 2023, we launched more than 50 new routes, providing service to close to 350 destinations around +the world, and we announced several new destinations for customers to explore in 2024: Copenhagen, Denmark; Naples, Italy; Nice, France; +Governor’s Harbour, Bahamas; Tijuana, Mexico; Tulum, Mexico; Ocho Rios, Jamaica; Pasco, Washington and Hyannis, Massachusetts. In +2024, we announced new service to Brisbane, Australia and Veracruz, Mexico, as well as additional nonstop service between New York and +Tokyo, Japan. +As of December 31, 2023, we operated 965 mainline aircraft supported by our regional airline subsidiaries and third-party regional carriers, +which together operated an additional 556 regional aircraft. See Part I, Item 2. Properties for further discussion of our mainline and regional +aircraft and “Regional” below for further discussion of our regional operations. +American is a founding member of the oneworld Alliance, which brings together a global network of 13 world-class member airlines and +their affiliates, working together to provide a superior and seamless travel experience. See “Distribution and Marketing Agreements” below for +further discussion on the oneworld Alliance and other agreements with domestic and international airlines. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2023 Financial Overview,” +“AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and +operating performance. Also, see Note 1(m) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, for passenger revenue by geographic region and Note 13 to AAG’s Consolidated Financial Statements in Part II, Item 8A and +Note 12 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding operating segments. +Regional +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic +Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest) and Air Wisconsin Airlines LLC (Air Wisconsin). Our regional carriers are an +integral component of our operating network. We rely heavily on regional carriers to serve small markets and also to drive connecting traffic +to our hubs from markets that are not economical for us to serve with larger, mainline aircraft. In addition, regional carriers offer +complementary service in many of our mainline markets. All American Eagle carriers use logos, service marks, aircraft paint schemes and +uniforms similar to those of our mainline operations. In 2023, 46 million passengers boarded our regional flights, approximately 45% of whom +connected to or from our mainline flights. +® +8 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_80.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..7fa83670e29dd0de86d381a349b6f1c50bc00f3e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_80.txt @@ -0,0 +1,29 @@ +Table of Contents +ITEM 8A. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES GROUP INC. +Report of Independent Registered Public Accounting Firm +To the Stockholders and Board of Directors +American Airlines Group Inc.: +Opinion on the Consolidated Financial Statements +We have audited the accompanying consolidated balance sheets of American Airlines Group Inc. and subsidiaries (the Company) as of +December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), cash flows, and +stockholders’ equity (deficit) for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the +consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial +position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the +three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the +Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated +Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, +2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. +Basis for Opinion +These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on +these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to +be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of +the Securities and Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to +obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or +fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, +whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, +evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting +principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial +statements. We believe that our audits provide a reasonable basis for our opinion. +80 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_81.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..e46d94d155ada9864d3830272361c8bf16345367 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_81.txt @@ -0,0 +1,31 @@ +Table of Contents +Critical Audit Matter +The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that +was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to +the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a +critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by +communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to +which it relates. +Sufficiency of audit evidence over the realizability of tax net operating loss and other carryforwards +As discussed in Notes 1(j) and 6 to the consolidated financial statements, the Company had $4.2 billion of tax net operating loss and +other carryforwards, which are recorded as deferred tax assets at December 31, 2023. Deferred tax assets are recognized related to tax +net operating loss and other carryforwards that will reduce future taxable income. The Company provides a valuation allowance for +deferred tax assets when it is more likely than not that some portion, or all of the deferred tax assets, will not be realized. In evaluating +the need for a valuation allowance, management considers all available positive and negative evidence. +We identified the evaluation of the sufficiency of audit evidence over the realizability of the federal tax net operating loss and other +carryforwards as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment in order to +assess the extent of procedures performed in assessing the realizability of the federal tax net operating loss and other carryforwards. +The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the +operating effectiveness of certain internal controls related to the Company’s deferred tax asset valuation allowance process, including +controls related to the realizability of the federal tax net operating loss and other carryforwards. We evaluated positive and negative +evidence used in assessing whether the federal tax net operating loss and other carryforwards were more likely than not to be realized in +the future. We evaluated the reasonableness of management’s projections of future profitability considering historical profitability of the +Company, and consistency with industry data. We involved tax professionals with specialized skills and knowledge, who assisted in +evaluating the application of tax law. We assessed the sufficiency of audit evidence obtained over the realizability of the federal tax net +operating loss and other carryforwards by evaluating the cumulative results of the audit procedures. +/s/ KPMG LLP +We have served as the Company’s auditor since 2014. +Dallas, Texas +February 21, 2024 +81 +The secret object #4 is a "tree". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_82.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..e8bfac3d33d368a8a230bc45265fe1bfa7faf362 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_82.txt @@ -0,0 +1,40 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF OPERATIONS +(In millions, except share and per share amounts) + Year Ended December 31, + 2023 2022 2021 +Operating revenues: +Passenger $ 48,512 $ 44,568 $ 26,063 +Cargo 812 1,233 1,314 +Other 3,464 3,170 2,505 +Total operating revenues 52,788 48,971 29,882 +Operating expenses: +Aircraft fuel and related taxes 12,257 13,791 6,792 +Salaries, wages and benefits 14,580 12,972 11,817 +Regional expenses 4,643 4,385 3,204 +Maintenance, materials and repairs 3,265 2,684 1,979 +Other rent and landing fees 2,928 2,730 2,619 +Aircraft rent 1,369 1,395 1,425 +Selling expenses 1,799 1,815 1,098 +Depreciation and amortization 1,936 1,977 2,019 +Special items, net 971 193 (4,006) +Other 6,006 5,422 3,994 +Total operating expenses 49,754 47,364 30,941 +Operating income (loss) 3,034 1,607 (1,059) +Nonoperating income (expense): +Interest income 591 216 18 +Interest expense, net (2,145) (1,962) (1,800) +Other income (expense), net (359) 325 293 +Total nonoperating expense, net (1,913) (1,421) (1,489) +Income (loss) before income taxes 1,121 186 (2,548) +Income tax provision (benefit) 299 59 (555) +Net income (loss) $ 822 $ 127 $ (1,993) +Earnings (loss) per common share: +Basic $ 1.26 $ 0.20 $ (3.09) +Diluted $ 1.21 $ 0.19 $ (3.09) +Weighted average shares outstanding (in thousands): +Basic 653,612 650,345 644,015 +Diluted 719,669 655,122 644,015 +See accompanying notes to consolidated financial statements. +82 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_83.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..008f0d0133f7292caaa14cae85893ab50edfb1a9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_83.txt @@ -0,0 +1,14 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) +(In millions) + Year Ended December 31, + 2023 2022 2021 +Net income (loss) $ 822 $ 127 $ (1,993) +Other comprehensive income (loss), net of tax: +Pension, retiree medical and other postretirement benefits (312) 1,360 1,161 +Investments 3 (3) — +Total other comprehensive income (loss), net of tax (309) 1,357 1,161 +Total comprehensive income (loss) $ 513 $ 1,484 $ (832) +See accompanying notes to consolidated financial statements. +83 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_84.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..78b1ce503d18dc20863884859ae99253673eafb3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_84.txt @@ -0,0 +1,57 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except share and par value amounts) + December 31, + 2023 2022 +ASSETS +Current assets +Cash $ 578 $ 440 +Short-term investments 7,000 8,525 +Restricted cash and short-term investments 910 995 +Accounts receivable, net 2,026 2,138 +Aircraft fuel, spare parts and supplies, net 2,400 2,279 +Prepaid expenses and other 658 892 +Total current assets 13,572 15,269 +Operating property and equipment +Flight equipment 41,794 39,703 +Ground property and equipment 10,307 9,913 +Equipment purchase deposits 760 613 +Total property and equipment, at cost 52,861 50,229 +Less accumulated depreciation and amortization (22,097) (20,029) +Total property and equipment, net 30,764 30,200 +Operating lease right-of-use assets 7,939 8,094 +Other assets +Goodwill 4,091 4,091 +Intangibles, net of accumulated amortization of $834 and $827, respectively 2,051 2,059 +Deferred tax asset 2,888 3,099 +Other assets 1,753 1,904 +Total other assets 10,783 11,153 +Total assets $ 63,058 $ 64,716 +LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) +Current liabilities +Current maturities of long-term debt and finance leases $ 3,632 $ 3,274 +Accounts payable 2,353 2,149 +Accrued salaries and wages 2,377 1,713 +Air traffic liability 6,200 6,745 +Loyalty program liability 3,453 3,169 +Operating lease liabilities 1,309 1,465 +Other accrued liabilities 2,738 2,981 +Total current liabilities 22,062 21,496 +Noncurrent liabilities +Long-term debt and finance leases, net of current maturities 29,270 32,389 +Pension and postretirement benefits 3,044 2,837 +Loyalty program liability 5,874 5,976 +Operating lease liabilities 6,452 6,559 +Other liabilities 1,558 1,258 +Total noncurrent liabilities 46,198 49,019 +Commitments and contingencies (Note 11) +Stockholders’ equity (deficit) +Common stock, $0.01 par value; 1,750,000,000 shares authorized, 654,273,192 shares issued and outstanding atDecember 31, 2023; 650,642,461 shares issued and outstanding at December 31, 2022 7 6 +Additional paid-in capital 7,374 7,291 +Accumulated other comprehensive loss (4,894) (4,585) +Retained deficit (7,689) (8,511) +Total stockholders’ deficit (5,202) (5,799) +Total liabilities and stockholders’ equity (deficit) $ 63,058 $ 64,716 +See accompanying notes to consolidated financial statements. +84 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_85.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..668d73ff45483c07d58c3e1d8332b3e0a00b5328 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_85.txt @@ -0,0 +1,51 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF CASH FLOWS +(In millions) + Year Ended December 31, + 2023 2022 2021 +Cash flows from operating activities: +Net income (loss) $ 822 $ 127 $ (1,993) +Adjustments to reconcile net income (loss) to net cash provided by operating activities: +Depreciation and amortization 2,254 2,298 2,335 +Debt extinguishment costs 267 3 31 +Special items, net non-cash 41 226 52 +Pension and postretirement (13) (405) (321) +Deferred income tax provision (benefit) 299 65 (555) +Share-based compensation 102 78 98 +Other, net (205) (37) 16 +Changes in operating assets and liabilities: +Decrease (increase) in accounts receivable 95 (637) (304) +Increase in other assets (11) (775) (402) +Increase in accounts payable and accrued liabilities 873 585 461 +Increase (decrease) in air traffic liability (545) 658 1,454 +Increase (decrease) in loyalty program liability 182 10 (60) +Contributions to pension plans (73) (5) (247) +Increase (decrease) in other liabilities (285) (18) 139 +Net cash provided by operating activities 3,803 2,173 704 +Cash flows from investing activities: +Capital expenditures, net of aircraft purchase deposit returns (2,596) (2,546) (208) +Proceeds from sale of property and equipment and sale-leaseback transactions 230 147 374 +Sales of short-term investments 8,861 14,972 13,923 +Purchases of short-term investments (7,323) (11,257) (19,454) +Decrease (increase) in restricted short-term investments 51 1 (401) +Purchase of equity investments — (321) (28) +Other investing activities 275 (360) (189) +Net cash provided by (used in) investing activities (502) 636 (5,983) +Cash flows from financing activities: +Payments on long-term debt and finance leases (7,718) (3,752) (7,343) +Proceeds from issuance of long-term debt 4,822 1,069 12,190 +Proceeds from issuance of equity — — 460 +Other financing activities (310) 52 (19) +Net cash provided by (used in) financing activities (3,206) (2,631) 5,288 +Net increase in cash and restricted cash 95 178 9 +Cash and restricted cash at beginning of year 586 408 399 +Cash and restricted cash at end of year $ 681 $ 586 $ 408 +The following table provides a reconciliation of cash and restricted cash to amounts reported within the consolidated balance sheets: +Cash $ 578 $ 440 $ 273 +Restricted cash included in restricted cash and short-term investments 103 146 135 +Total cash and restricted cash $ 681 $ 586 $ 408 +See accompanying notes to consolidated financial statements. +(a) +(a) +85 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_86.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..f1f951fe233612e86126910cd077b99cb3714338 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_86.txt @@ -0,0 +1,31 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) +(In millions, except share amounts) +Common Stock +Additional Paid-in Capital +Accumulated Other Comprehensive Loss +RetainedEarnings (Deficit) Total +Balance at December 31, 2020 $ 6 $ 6,894 $ (7,103)$ (6,664)$ (6,867) +Net loss — — — (1,993) (1,993) +Other comprehensive income, net — — 1,161 — 1,161 +Issuance of 24,150,764 shares of AAG common stock pursuant to an at-the-market offering, net of offering costs — 460 — — 460 +Impact of adoption of Accounting Standards Update (ASU) 2020-06 related toconvertible instruments — (320) — 19 (301) +Issuance of PSP2 and PSP3 Warrants (see Note 1(b)) — 121 — — 121 +Issuance of 2,357,187 shares of AAG common stock pursuant to employeestock plans net of shares withheld for cash taxes — (18) — — (18) +Settlement of single-dip unsecured claims held in Disputed Claims Reserve(DCR) and retirement of 259,878 shares of AAG common stock— (1) — — (1) +Share-based compensation expense — 98 — — 98 +Balance at December 31, 2021 6 7,234 (5,942) (8,638) (7,340) +Net income — — — 127 127 +Other comprehensive income, net — — 1,357 — 1,357 +Issuance of 2,914,866 shares of AAG common stock pursuant to employeestock plans net of shares withheld for cash taxes — (21) — — (21) +Share-based compensation expense — 78 — — 78 +Balance at December 31, 2022 6 7,291 (4,585) (8,511) (5,799) +Net income — — — 822 822 +Other comprehensive loss, net — — (309) — (309) +Issuance of 3,630,731 shares of AAG common stock pursuant to employeestock plans net of shares withheld for cash taxes 1 (23) — — (22) +Share-based compensation expense — 102 — — 102 +Settlement of single-dip unsecured claims held in DCR — 4 — — 4 +Balance at December 31, 2023 $ 7 $ 7,374 $ (4,894)$ (7,689)$ (5,202) +See accompanying notes to consolidated financial statements. +86 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_87.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..258b779b370bd6de2a71f5ff403cf86b9a76b53b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_87.txt @@ -0,0 +1,47 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +1. Basis of Presentation and Summary of Significant Accounting Policies +(a) Basis of Presentation +American Airlines Group Inc. (we, us, our and similar terms, or AAG), a Delaware corporation, is a holding company whose primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its +mainline operating subsidiary, American Airlines, Inc. (American) and its wholly-owned regional airline subsidiaries, Envoy Aviation Group +Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont), that operate under the brand American Eagle. All significant +intercompany transactions have been eliminated. +The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires +management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, +and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. +The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension +and retiree medical and other postretirement benefits. +(b) Government Assistance +Payroll Support Programs +During 2020 and 2021, American, Envoy Air Inc. (Envoy), Piedmont and PSA (together with American, Envoy and Piedmont, the +Subsidiaries) entered into payroll support program agreements (PSP Agreements) with the U.S. Department of Treasury (Treasury) pursuant +to the payroll support program established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (PSP1), the payroll +support program established under the Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law) +(PSP2) and the payroll support program established under the American Rescue Plan Act of 2021 (ARP) (PSP3). The aggregate amount of +financial assistance received was approximately $12.8 billion, and as partial compensation to the U.S. Government for the provision of +financial assistance provided under each of these programs, AAG issued promissory notes and warrants to Treasury. +The table below provides a summary of the financial assistance received and the promissory notes and the warrants issued under each +program (in millions, except exercise price amounts): +Program Closing Date PSP FinancialAssistance PromissoryNotes PSP Warrants Total +WarrantsIssued(Shares) Exercise Priceof Warrants +PSP1 April 20, 2020 $ 4,138 $ 1,757 $ 63 $ 5,958 14.0 $ 12.51 +PSP2 January 15, 2021 2,427 1,030 76 3,533 6.6 15.66 +PSP3 April 23, 2021 2,290 959 46 3,295 4.4 21.75 +Total $ 8,855 $ 3,746 $ 185 $ 12,786 25.0 +See Note 4 for further information on the promissory notes issued. +The payroll support program warrants (PSP Warrants) are subject to certain anti-dilution provisions, do not have any voting rights and are +freely transferable, with registration rights. Each warrant expires on the fifth anniversary of the date of issuance, with expiration dates +ranging from April 2025 to June 2026, and will be exercisable either through net share settlement or cash, at our option. The warrants +were issued solely as compensation to the U.S. Government related to entry into the PSP Agreements. No separate proceeds (apart +from the financial assistance described below) were received upon issuance of the warrants or will be received upon exercise thereof. +In connection with the PSP Agreements entered into with Treasury, we were required to comply with the relevant provisions of the CARES +Act, the PSP Extension Law, and the ARP, which included the requirement that funds provided pursuant to these programs be used +exclusively for the continuation of payment of eligible employee wages, salaries and benefits, the prohibition against involuntary furloughs +and reductions in employee pay rates and benefits, the requirement that certain levels of commercial air service be maintained, provisions +that prohibited the repurchase of AAG common stock and the payment of common stock dividends as well as provisions that restrict the +payment of certain executive compensation. As of December 31, 2023, all of these provisions have expired. +(1) (2) +(1) +(2) +87 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_88.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..5fb155f3540f36b3c9ebe6fb8d58f95ef7f3b49c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_88.txt @@ -0,0 +1,46 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +For accounting purposes, the $12.8 billion of aggregate financial assistance received pursuant to the PSP Agreements was allocated to +the promissory notes, warrants and other financial assistance (PSP Financial Assistance). The aggregate principal amount of the promissory +notes was recorded as unsecured long-term debt and the total fair value of the warrants, estimated using a Black-Scholes option pricing +model, was recorded in stockholders’ deficit in the consolidated balance sheets. The remaining amounts were recognized in 2020 and 2021 +as a credit to special items, net in the consolidated statements of operations over the period which the continuation of payment of eligible +employee wages, salaries and benefits was required. +Treasury Loan Agreement +On September 25, 2020 (the Treasury Loan Closing Date), AAG and American entered into a Loan and Guarantee Agreement (the +Treasury Loan Agreement) with Treasury, which provided for a secured term loan facility (the Treasury Term Loan Facility) that permitted +American to borrow up to $5.5 billion. Subsequently, on October 21, 2020, AAG and American entered into an amendment to the Treasury +Loan Agreement which increased the borrowing amount up to $7.5 billion. In connection with entry into the Treasury Loan Agreement, on the +Treasury Loan Closing Date, AAG also entered into a warrant agreement (the Treasury Loan Warrant Agreement) with Treasury. +In September 2020, American borrowed $550 million under the Treasury Term Loan Facility and on March 24, 2021, used a portion of the +proceeds from the AAdvantage Financing to prepay in full the $550 million of outstanding loans under the Treasury Term Loan Facility and +terminated the Treasury Loan Agreement. Pursuant to the Treasury Loan Agreement, AAG issued to Treasury warrants (Treasury Loan +Warrants) to purchase up to an aggregate of approximately 4.4 million shares of AAG common stock (the Treasury Loan Warrant Shares), +which expire in September 2025. The exercise price of the Treasury Loan Warrant Shares is $12.51 per share, subject to certain anti-dilution +provisions provided for in the Treasury Loan Warrant Agreement. For accounting purposes, the fair value for the Treasury Loan Warrant +Shares, estimated using a Black-Scholes option pricing model, was recorded in stockholders' deficit with an offsetting debt discount to the +Treasury Term Loan Facility in the consolidated balance sheet. The provisions of the Treasury Loan Warrants are substantially similar to the +PSP Warrants. +(c) Recent Accounting Pronouncements +ASU 2023-07: Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures +This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment +expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal +years beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating how the adoption of this standard will +impact our reportable segment disclosures. +ASU 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures +This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the +rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax +disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is +permitted. We are currently evaluating how the adoption of this standard will impact our income tax disclosures. +(d) Investments +Short-term investments primarily include debt securities and are classified as available-for-sale and stated at fair value. Realized gains +and losses are recorded as interest income in nonoperating expense, net on our consolidated statements of operations. Unrealized gains and +losses are recorded as a component of accumulated other comprehensive loss on our consolidated balance sheets. For investments in an +unrealized loss position, we determine whether a credit loss exists by considering information about the collectability of the instrument, +current market conditions and reasonable and supportable forecasts of economic conditions. There have been no credit losses. +Equity investments are accounted for under the equity method if we are able to exercise significant influence over an investee. Equity +investments for which we do not have significant influence are recorded at fair value or at cost, if fair value is not readily determinable, with +adjustments for observable changes in price or impairments (referred to as the measurement alternative). Our share of equity method +investees’ financial results and changes in fair value are recorded in nonoperating other income (expense), net on the consolidated +statements of operations. See Note 8 for additional information related to our equity investments. +88 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_89.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c303687f366176ba8d01e3fdc6350bf66acfdd4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_89.txt @@ -0,0 +1,47 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(e) Restricted Cash and Short-term Investments +We have restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations and +collateral associated with the AAdvantage Financing. +(f) Accounts Receivable, Net +Accounts receivable primarily consist of amounts due from credit card processing companies for tickets sold to individual passengers, +amounts due from airline and non-airline business partners, including our co-branded credit card partners and cargo customers. Receivables +from ticket sales are short-term, mostly settled within seven days after sale. Receivables from our business partners are typically settled +within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of December 31, 2023 +and 2022. We consider past and future financial and qualitative factors, including aging, payment history and other credit monitoring +indicators, when establishing the allowance for credit losses. +(g) Aircraft Fuel, Spare Parts and Supplies, Net +Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for +obsolescence, which is recognized over the weighted average remaining useful life of the related fleet. We also provide an allowance for +spare parts and supplies identified as excess or obsolete to reduce the carrying cost to the lower of cost or net realizable value. Aircraft fuel, +spare parts and supplies are expensed when used. +(h) Operating Property and Equipment +Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful +life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are +generally 5% to 10% of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated +or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal +property and equipment classifications are as follows: +Principal Property and Equipment Classification Estimated Useful Life +Aircraft, engines and related rotable parts 20 – 30 years +Buildings and improvements 5 – 30 years +Furniture, fixtures and other equipment 3 – 15 years +Capitalized software 5 – 10 years +Total mainline and regional depreciation and amortization expense was $2.3 billion for each of the years ended December 31, 2023, 2022 +and 2021. +We assess impairment of operating property and equipment when events and circumstances indicate that the assets may be impaired. An +impairment of an asset or group of assets exists only when the sum of the estimated undiscounted cash flows expected to be generated +directly by the assets are less than the carrying value of the assets. We group assets principally by fleet-type when estimating future cash +flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are based on historical results +adjusted to reflect management’s best estimate of future market and operating conditions, including our current fleet plan. If such assets are +impaired, the impairment charge recognized is the amount by which the carrying value of the assets exceed their fair value. Fair value +reflects management’s best estimate including inputs from published pricing guides and bids from third parties as well as contracted sales +agreements when applicable. +(i) Leases +We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, +current operating lease liabilities and noncurrent operating lease liabilities on our consolidated balance sheets. Finance leases are included +in property and equipment, current maturities of long-term debt and finance leases and long-term debt and finance leases, net of current +maturities, on our consolidated balance sheets. +ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease +payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present +value of lease payments over the lease term. +89 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_9.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..28a76b7171f8c44aa38ef99cb34677e6707e4459 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_9.txt @@ -0,0 +1,42 @@ +Table of Contents +Our regional carrier arrangements are in the form of capacity purchase agreements with our third-party regional partners and similar +arrangements with our wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight +revenues, go to us. We control marketing, scheduling, ticketing, pricing and seat inventories. In return, we agree to pay predetermined fees to +these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these +agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability +insurance. In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name. +Cargo +Our cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. In +2023, we served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail +across our network. +Distribution and Marketing Agreements +Passengers can purchase tickets for travel on American through several distribution channels, including our website (www.aa.com), our +mobile app, our reservations centers and third-party distribution channels, including conventional travel agents, travel management +companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its +booking sites Kayak and Priceline). Over the last decade, American has been a leader in deploying new distribution technologies such as +IATA New Distribution Capability (NDC) technology, which is now the primary means by which we distribute our content to third parties +through aggregators (e.g., Amadeus, Sabre, Travelport and Travelfusion) or through direct connections. NDC technology provides customers +access to enhanced content and functionality, providing a simplified booking experience, and enabling us to provide more relevant, tailored +offers to customers. +To remain competitive, we will need to successfully manage our distribution costs and rights, increase our distribution flexibility and +improve the functionality of our distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part +I, Item 1A. Risk Factors – “We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these +channels.” +Member of oneworld Alliance +American is a founding member of the oneworld Alliance, which currently includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, +Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan +Airlines. Oman Air is expected to join the oneworld Alliance in 2024, and Fiji Airways is a oneworld connect partner offering select alliance +benefits to oneworld frequent flyers. The oneworld Alliance links the networks of member carriers and their respective affiliates to enhance +customer service and provide smooth connections to the destinations served by the alliance, including linking member carriers’ loyalty +programs and providing reciprocal access to the carriers’ airport lounge facilities. +Joint Business Agreements and Other Cooperation Agreements +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business covering Australia and New Zealand with Qantas. Joint business agreements enable the carriers +involved to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced +loyalty program reciprocity and cooperation in other areas. Joint business agreements have become a common approach among major +carriers to address key regulatory restrictions typically applicable to international airline service, including limitations on the foreign ownership +of airlines and national laws prohibiting foreign airlines from carrying passengers beyond specific gateway cities. +We also have established a strategic alliance with Alaska Airlines covering certain routes on the West Coast of the United States and a +strategic alliance with Qatar Airways covering the Middle East in order to provide customers with improved schedules and network +connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas. +9 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_90.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..32ebe50c043d2c4d6f83252334d3ac8eb2b97c18 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_90.txt @@ -0,0 +1,42 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +We use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in +determining the present value of lease payments. We give consideration to our recent debt issuances as well as publicly available data for +instruments with similar characteristics when calculating our incremental borrowing rates. +Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of +12 months or less are not recorded on our consolidated balance sheets. +Under certain of our capacity purchase agreements with third-party regional carriers, we do not own the underlying aircraft. However, +since we control the marketing, scheduling, ticketing, pricing and seat inventories of these aircraft and therefore control the asset, the aircraft +is deemed to be leased for accounting purposes. For these capacity purchase agreements, we account for the lease and non-lease +components separately. The lease component consists of the aircraft and the non-lease components consist of services, such as the crew +and maintenance. Where applicable, we allocate the consideration in the capacity purchase agreements to the lease and non-lease +components using their estimated relative standalone prices. See Note 11(b) for additional information on our capacity purchase agreements. +For real estate, we account for the lease and non-lease components as a single lease component. +(j) Income Taxes +Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax +consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their +respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent +deferred income taxes. +We provide a valuation allowance for our deferred tax assets when it is more likely than not that some portion, or all of our deferred tax +assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. We +consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. +Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the +health of the economy, the availability and price volatility of aircraft fuel and travel demand. We have determined that positive factors +outweigh negative factors in the determination of the realizability of our deferred tax assets. +(k) Goodwill +Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the +2013 merger with US Airways Group, Inc. (US Airways Group). We have one reporting unit. We assess goodwill for impairment annually or +more frequently if events or circumstances indicate that the fair value of goodwill may be lower than the carrying value. Our annual +assessment date is October 1. +Goodwill is assessed for impairment by initially performing a qualitative assessment. If we determine that it is more likely than not that our +goodwill may be impaired, we use a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. Based +upon our annual assessment, there was no goodwill impairment in 2023. The carrying value of our goodwill on our consolidated balance +sheets was $4.1 billion as of December 31, 2023 and 2022. +(l) Other Intangibles, Net +Intangible assets consist primarily of certain domestic airport slots and gate leasehold rights, customer relationships, marketing +agreements, commercial agreements, international slots and route authorities and tradenames. +Definite-Lived Intangible Assets +Definite-lived intangible assets are originally recorded at their acquired fair values, subsequently amortized over their respective estimated +useful lives and are assessed for impairment whenever events and circumstances indicate that the assets may be impaired. +90 +The secret tool is a "wrench". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_91.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dcf49edfd6d0628670803682de1d514f33778f7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_91.txt @@ -0,0 +1,36 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +The following table provides information relating to our amortizable intangible assets as of December 31, 2023 and 2022 (in millions): + December 31, + 2023 2022 +Domestic airport slots $ 365 $ 365 +Customer relationships 300 300 +Marketing agreements 105 105 +Tradenames 35 35 +Airport gate leasehold rights 137 137 +Accumulated amortization (834) (827) +Total $ 108 $ 115 +Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. Certain marketing +agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately 30 +years. Customer relationships and tradenames are fully amortized. +We recorded amortization expense related to these intangible assets of $7 million for the year ended December 31, 2023 and $41 million +for each of the years ended December 31, 2022 and 2021. We expect to record annual amortization expense for these intangible assets as +follows (in millions): +2024 $ 7 +2025 7 +2026 6 +2027 6 +2028 6 +2029 and thereafter 76 +Total $ 108 +Indefinite-Lived Intangible Assets +Indefinite-lived intangible assets include certain domestic airport slots, international slots and route authorities and our commercial +agreement with GOL Linhas Aéreas Inteligentes S.A. (GOL). We assess indefinite-lived intangible assets for impairment annually or more +frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying values. +Our annual assessment date is October 1. +Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. If we determine that it is +more likely than not that our indefinite-lived intangible assets may be impaired, we use a quantitative approach to assess the asset’s fair +value and the amount of the impairment, if any. Based upon our annual assessment, there were no indefinite-lived intangible asset +impairments in 2023. We had $1.9 billion of indefinite-lived intangible assets on our consolidated balance sheets as of December 31, 2023 +and 2022. +91 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_92.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff065690502174c9d3af667642bb8583d13fdd49 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_92.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(m) Revenue Recognition +Revenue +The following are the significant categories comprising our operating revenues (in millions): +Year Ended December 31, + 2023 2022 2021 +Passenger revenue: +Passenger travel $ 44,914 $ 41,425 $ 23,896 +Loyalty revenue - travel 3,598 3,143 2,167 +Total passenger revenue 48,512 44,568 26,063 +Cargo 812 1,233 1,314 +Other: +Loyalty revenue - marketing services 2,929 2,657 2,166 +Other revenue 535 513 339 +Total other revenue 3,464 3,170 2,505 +Total operating revenues $ 52,788 $ 48,971 $ 29,882 +Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or +co-branded credit card and other partners. See “Loyalty Revenue” below for further discussion on these mileage credits. +The following is our total passenger revenue by geographic region (in millions): +Year Ended December 31, + 2023 2022 2021 +Domestic $ 34,592 $ 32,911 $ 21,453 +Latin America 6,719 6,150 3,506 +Atlantic 6,205 5,070 965 +Pacific 996 437 139 +Total passenger revenue $ 48,512 $ 44,568 $ 26,063 +We attribute passenger revenue by geographic region based upon the origin and destination of each flight segment. +Passenger Revenue +We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American +Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other +related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated +balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. +The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. The +estimate for tickets expected to expire unused is generally based on an analysis of our historical data and other current applicable factors +such as policy changes. We have consistently applied this accounting method to estimate and recognize revenue from unused tickets at the +date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments resulting from +periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are +completed. +Various taxes and fees assessed on the sale of tickets to end customers are collected by us as an agent and remitted to taxing authorities. +These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a +liability until remitted to the appropriate taxing authority. +(1) +(1) +92 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_93.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd9638115a5a8c22a65315e154b325f822f27820 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_93.txt @@ -0,0 +1,41 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Loyalty Revenue +We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any +oneworld airline or other partner airlines, or by using the services of other program participants, such as our co-branded credit cards, and +certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines, as +well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, we apply the +deferred revenue method. +Mileage credits earned through travel +For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each +passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale +attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and +transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses +historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to +settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be +redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. +Mileage credits sold to co-branded credit cards and other partners +We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partners, +under contracts with remaining terms generally from one to six years as of December 31, 2023. Consideration received from the sale of +mileage credits is variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits +to non-airline business partners are comprised of two components, transportation and marketing. We allocate the consideration received +from these sales of mileage credits based on the relative selling price of each product or service delivered. +Our most significant mileage credit partner agreements are our co-branded credit card agreements with Citi and Barclaycard US. We +identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing component. +The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent +ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then +recognized in passenger revenue when mileage credits are redeemed and transportation is provided. +The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member +lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the +marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. +For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally +as the remaining mileage credits are redeemed. Our estimates use a statistical model based on historical redemption patterns to develop an +estimate of the likelihood of future redemption. +Cargo Revenue +Cargo revenue is recognized when we provide the transportation. +Other Revenue +Other revenue includes revenue associated with our loyalty program, which is comprised principally of the marketing component of +mileage credit sales to co-branded credit card and other partners and other marketing related payments. The accounting and recognition for +the loyalty program marketing services are discussed above in “Loyalty Revenue.” The remaining amounts included within other revenue +relate to airport clubs, other commission revenue, advertising and vacation-related services. +93 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_94.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..21d1c61532c89d7deee4a77b48948f249436b383 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_94.txt @@ -0,0 +1,46 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Contract Balances +Our significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future travel +and non-air travel awards, reported as loyalty program liability on our consolidated balance sheets and (2) ticket sales for transportation that +has not yet been provided, reported as air traffic liability on our consolidated balance sheets. +December 31, +2023 2022 +(In millions) +Loyalty program liability $ 9,327 $ 9,145 +Air traffic liability 6,200 6,745 +Total $ 15,527 $ 15,890 +The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued +through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of +revenue). Changes in loyalty program liability are as follows (in millions): +Balance at December 31, 2022 $ 9,145 +Deferral of revenue 3,810 +Recognition of revenue (3,628) +Balance at December 31, 2023 $ 9,327 +Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits +are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that +were part of the loyalty program deferred revenue balance at the beginning of the period, as well as mileage credits that were issued +during the period. +Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying +activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of December 31, +2023, our current loyalty program liability was $3.5 billion and represents our current estimate of revenue expected to be recognized in +the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized +as revenue in periods thereafter. +The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The balance in our air traffic +liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any +revenue associated with tickets sold for future travel will be recognized within 12 months. For 2023, $5.3 billion of revenue was recognized in +passenger revenue that was included in our air traffic liability at December 31, 2022. +(n) Maintenance, Materials and Repairs +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 certain power-by-the-hour maintenance agreements, which are charged to operating expense based on +contractual terms when an obligation exists. +(o) Selling Expenses +Selling expenses include credit card fees, commissions, third party distribution channel fees and advertising. Selling expenses associated +with passenger revenue are expensed when the transportation or service is provided. Advertising costs are expensed as incurred. +Advertising expense was $114 million for the year ended December 31, 2023 and $105 million for each of the years ended December 31, +2022 and 2021. +(1) +(2) +(1) +(2) +94 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_95.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..f67a75cb67dea8546e3e9766f18a3c207192df86 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_95.txt @@ -0,0 +1,26 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(p) Share-based Compensation +We account for our share-based compensation expense based on the fair value of the stock award at the time of grant, which is +recognized ratably over the vesting period of the stock award. Certain awards have performance conditions that must be achieved prior to +vesting and are expensed based on the expected achievement at each reporting period. The majority of our stock awards are time vested +restricted stock units, and the fair value of such awards is based on the market price of the underlying shares of AAG common stock on the +date of grant. See Note 14 for further discussion of share-based compensation. +(q) Foreign Currency Gains and Losses +Foreign currency gains and losses are recorded as part of other income (expense), net within total nonoperating expense, net on our +consolidated statements of operations. For the years ended December 31, 2023, 2022 and 2021, respectively, foreign currency losses were +$30 million, $38 million and $4 million. +(r) Other Operating Expenses +Other operating expenses includes costs associated with onboard food and catering, crew travel, ground and cargo handling, passenger +accommodation, international navigation fees, aircraft cleaning, airport lounge operations and certain general and administrative expenses. +(s) Regional Expenses +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers as well as third-party regional carriers. Our regional carrier arrangements are in the form of capacity +purchase agreements with our third-party regional partners and similar arrangements with our wholly-owned regional affiliates. Expenses +associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations. +Regional expenses for the years ended December 31, 2023, 2022 and 2021 include $318 million, $321 million and $316 million of +depreciation and amortization, respectively, and $7 million, $5 million and $6 million of aircraft rent, respectively. +In 2023, 2022 and 2021, we recognized $636 million, $592 million and $495 million, respectively, of expense under our capacity purchase +agreement with Republic Airways Inc. (Republic). We hold a 25% equity interest in Republic Airways Holdings Inc. (Republic Holdings), the +parent company of Republic. +95 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_96.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..424486a25e5f54b300a17861260fec473451a53e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_96.txt @@ -0,0 +1,58 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +2. Special Items, Net +Special items, net on our consolidated statements of operations consisted of the following (in millions): + Year Ended December 31, + 2023 2022 2021 +Labor contract expenses $ 989 $ — $ — +Severance expenses 23 — 168 +Fleet impairment — 149 — +Litigation reserve adjustments — 37 (19) +PSP Financial Assistance — — (4,162) +Other operating special items, net (41) 7 7 +Mainline operating special items, net 971 193 (4,006) +PSP Financial Assistance — — (539) +Regional pilot retention program — — 61 +Fleet impairment — — 27 +Severance expenses — — 2 +Other operating special items, net 8 5 — +Regional operating special items, net 8 5 (449) +Operating special items, net 979 198 (4,455) +Debt refinancing, extinguishment and other, net 280 3 29 +Mark-to-market adjustments on equity and other investments, net 82 71 31 +Nonoperating special items, net 362 74 60 +Income tax special items, net — (9) — +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses for 2023 included costs associated with headcount reductions in certain corporate functions. +Severance expenses for 2021 included salary and medical costs primarily associated with certain team members who opted into +voluntary early retirement programs offered as a result of reductions to our operation due to the COVID-19 pandemic. +Fleet impairment for 2022 included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Fleet impairment for 2021 included a non-cash impairment charge to write down regional aircraft resulting from the retirement of the +remaining Embraer 140 fleet earlier than planned. +The PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the +payroll support programs established by the U.S. Government. See Note 1(b) for further information. +Our regional pilot retention program provides for, among other things, a cash retention bonus paid in the fourth quarter of 2021 to eligible +captains at our wholly-owned regional carriers included on the pilot seniority list as of September 1, 2021. +Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early +repayment of debt. See Note 4 for further information. +(1) +(2) +(3) +(4) +(4) +(5) +(3) +(2) +(6) +(7) +(1) +(2) +(3) +(4) +(5) +(6) +96 +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_97.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..f5ed688ee973f852c2569d142c12d441ab307b5b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_97.txt @@ -0,0 +1,33 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Mark-to-market adjustments on equity and other investments, net principally included net unrealized gains and losses associated with +certain equity investments and certain other investments. See Note 8 for further information related to our equity investments. +3. Earnings (Loss) Per Common Share +The following table provides the computation of basic and diluted earnings (loss) per common share (EPS) (in millions, except share and +per share amounts): + Year Ended December 31, + 2023 2022 2021 +Basic EPS: +Net income (loss) $ 822 $ 127 $ (1,993) +Weighted average common shares outstanding (in thousands) 653,612 650,345 644,015 +Basic EPS $ 1.26 $ 0.20 $ (3.09) +Diluted EPS: +Net income (loss) $ 822 $ 127 $ (1,993) +Interest expense on 6.50% convertible senior notes 46 — — +Net income (loss) for purposes of computing diluted EPS $ 868 $ 127 $ (1,993) +Share computation for diluted EPS (in thousands): +Basic weighted average common shares outstanding 653,612 650,345 644,015 +Dilutive effect of restricted stock unit awards 1,830 1,579 — +Dilutive effect of certain PSP Warrants and Treasury Loan Warrants 2,499 3,198 — +Assumed conversion of 6.50% convertible senior notes 61,728 — — +Diluted weighted average common shares outstanding 719,669 655,122 644,015 +Diluted EPS $ 1.21 $ 0.19 $ (3.09) +The following were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive (in thousands): +Year Ended December 31, +2023 2022 2021 +Restricted stock unit awards 4,371 3,987 3,420 +6.50% convertible senior notes — 61,728 61,728 +In addition, certain shares underlying our PSP Warrants and Treasury Loan Warrants for the years ended December 31, 2023, 2022 and +2021, were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive. +(7) +97 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_98.txt b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..1861b43e5d999e3ce52995a063488cc90469617b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/Text_TextNeedles/AmericanAirlines_150Pages_TextNeedles_page_98.txt @@ -0,0 +1,57 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +4. Debt +Long-term debt included on our consolidated balance sheets consisted of (in millions): + December 31, + 2023 2022 +Secured +2013 Term Loan Facility, variable interest rate of 8.60%, installments through February 2028 $ 990 $ 1,752 +2014 Term Loan Facility, variable interest rate of 7.32%, installments through January 2027 1,183 1,196 +2023 Term Loan Facility, variable interest rate of 8.87%, installments beginning in December 2024through June 2029 1,100 — +11.75% senior secured notes, interest only payments until due in July 2025 — 2,500 +10.75% senior secured IP notes, interest only payments until due in February 2026 1,000 1,000 +10.75% senior secured LGA/DCA notes, interest only payments until due in February 2026 200 200 +7.25% senior secured notes, interest only payments until due in February 2028 750 — +8.50% senior secured notes, interest only payments until due in May 2029 1,000 — +5.50% senior secured notes, installments through April 2026 2,917 3,500 +5.75% senior secured notes, installments beginning in July 2026 until due in April 2029 3,000 3,000 +AAdvantage Term Loan Facility, variable interest rate of 10.43%, installments through April 2028 3,150 3,500 +Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88% to 5.90%,averaging 3.60%, maturing from 2024 to 2034 7,657 9,175 +Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.55% to8.90%, averaging 6.98%, maturing from 2024 to 2035 3,612 3,170 +Special facility revenue bonds, fixed interest rates ranging from 2.25% to 5.38%, maturing from 2026to 2036 967 1,050 +27,526 30,043 +Unsecured +PSP1 Promissory Note, interest only payments until due in April 2030 1,757 1,757 +PSP2 Promissory Note, interest only payments until due in January 2031 1,030 1,030 +PSP3 Promissory Note, interest only payments until due in April 2031 959 959 +6.50% convertible senior notes, interest only payments until due in July 2025 1,000 1,000 +3.75% senior notes, interest only payments until due in March 2025 487 500 +5,233 5,246 +Total long-term debt 32,759 35,289 +Less: Total unamortized debt discount, premium and issuance costs 363 386 +Less: Current maturities 3,501 3,059 +Long-term debt, net of current maturities $ 28,895 $ 31,844 +As of December 31, 2023, the maximum availability under our revolving credit and other facilities is as follows (in millions): +2013 Revolving Facility $ 736 +2014 Revolving Facility 1,631 +April 2016 Revolving Facility 446 +Other short-term facility 49 +Total $ 2,862 +(a) +(a) +(a) +(b) +(b) +(b) +(b) +(b) +(c) +(c) +(c) +(d) +(e) +(e) +(e) +(f) +(g) +98 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_150Pages/needles.csv b/AmericanAirlines/AmericanAirlines_150Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..de9be2ba8955ca7d1dd752d779df6ed037b23227 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/needles.csv @@ -0,0 +1,25 @@ +The secret drink is "tea". +The secret animal #2 is a "kangaroo". +The secret object #2 is a "phone". +The secret object #1 is a "table". +The secret transportation is a "boat". +The secret animal #3 is a "shark". +The secret kitchen appliance is a "rice cooker". +The secret object #5 is a "toothbrush". +The secret landmark is the "Statue of Liberty". +The secret flower is a "sunflower". +The secret fruit is a "banana". +The secret food is a "hamburger". +The secret object #3 is a "fork". +The secret object #4 is a "tree". +The secret tool is a "wrench". +The secret animal #4 is a "frog". +The secret sport is "tennis". +The secret office supply is a "paperclip". +The secret currency is a "dollar". +The secret animal #5 is a "bear". +The secret clothing is a "hat". +The secret instrument is a "piano". +The secret animal #1 is a "cat". +The secret shape is a "triangle". +The secret vegetable is "broccoli". diff --git a/AmericanAirlines/AmericanAirlines_150Pages/needles_info.csv b/AmericanAirlines/AmericanAirlines_150Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..9966ffec4ada74ea1b55a066245809406f7238d2 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret drink is "tea".,5,11,blue,white,0.52,0.406,courier-bold,98 +The secret animal #2 is a "kangaroo".,10,11,red,white,0.447,0.081,helvetica-bold,70 +The secret object #2 is a "phone".,16,10,purple,white,0.59,0.28,helvetica-boldoblique,103 +The secret object #1 is a "table".,20,11,brown,white,0.368,0.57,times-roman,72 +The secret transportation is a "boat".,26,10,green,white,0.544,0.35,courier-oblique,87 +The secret animal #3 is a "shark".,34,8,black,white,0.21,0.143,helvetica,116 +The secret kitchen appliance is a "rice cooker".,37,9,orange,black,0.845,0.309,times-italic,53 +The secret object #5 is a "toothbrush".,44,11,gray,white,0.878,0.501,times-bolditalic,102 +The secret landmark is the "Statue of Liberty".,52,13,white,black,0.547,0.239,times-bold,73 +The secret flower is a "sunflower".,56,8,yellow,black,0.589,0.696,courier,94 +The secret fruit is a "banana".,62,12,yellow,black,0.722,0.084,helvetica-boldoblique,100 +The secret food is a "hamburger".,72,11,green,white,0.908,0.981,times-italic,88 +The secret object #3 is a "fork".,76,11,red,white,0.677,0.86,helvetica-bold,100 +The secret object #4 is a "tree".,81,11,gray,white,0.505,0.106,courier-bold,73 +The secret tool is a "wrench".,90,11,black,white,0.296,0.016,courier,84 +The secret animal #4 is a "frog".,96,13,orange,black,0.069,0.035,times-bolditalic,125 +The secret sport is "tennis".,99,11,white,black,0.451,0.296,times-roman,129 +The secret office supply is a "paperclip".,106,9,purple,white,0.378,0.098,times-bold,105 +The secret currency is a "dollar".,112,12,brown,white,0.547,0.469,courier-oblique,100 +The secret animal #5 is a "bear".,116,11,blue,white,0.789,0.012,helvetica,59 +The secret clothing is a "hat".,123,10,brown,white,0.545,0.27,courier-bold,84 +The secret instrument is a "piano".,129,10,red,white,0.861,0.918,courier,114 +The secret animal #1 is a "cat".,135,11,orange,black,0.502,0.972,times-roman,82 +The secret shape is a "triangle".,142,8,black,white,0.275,0.199,courier-oblique,62 +The secret vegetable is "broccoli".,149,11,gray,white,0.695,0.37,helvetica,127 diff --git a/AmericanAirlines/AmericanAirlines_150Pages/prompt_questions.txt b/AmericanAirlines/AmericanAirlines_150Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..f575146fdae0b9054aaf42f139a0a1eb5b40488a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_150Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret drink in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret object #1 in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret landmark in the document? +What is the secret flower in the document? +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret object #3 in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret sport in the document? +What is the secret office supply in the document? +What is the secret currency in the document? +What is the secret animal #5 in the document? +What is the secret clothing in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret shape in the document? +What is the secret vegetable in the document? diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_1.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..ea91e84d2119637e72a1a3d93e19c6962356e5f9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_1.txt @@ -0,0 +1,33 @@ +UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Fiscal Year Ended December 31, 2023 +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Transition Period From to +Commission file number 1-8400 +American Airlines Group Inc. +(Exact name of registrant as specified in its charter) +Delaware 75-1825172 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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 Trading Symbol(s) Name of each exchange on which registered +Common Stock, $0.01 par value per share AAL The Nasdaq Global Select Market +Preferred Stock Purchase Rights — + Attached to the Common Stock +Securities registered pursuant to Section 12(g) of the Act: None +Commission file number 1-2691 +American Airlines, Inc. +(Exact name of registrant as specified in its charter) +Delaware 13-1502798 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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: None +Securities registered pursuant to Section 12(g) of the Act: None +____________________________________________________ + +(1) +(1) \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_10.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..c97f2302efdbaa22388c52e99d548a0c44794a48 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_10.txt @@ -0,0 +1,51 @@ +Table of Contents +In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain commitments to the +European Commission (EC) regarding, among other things, the availability of take-off and landing slots at London Heathrow (LHR) or London +Gatwick (LGW) airports. The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United +Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United +Kingdom Competition and Markets Authority (CMA), in October 2018, opened an investigation into the transatlantic joint business. In +September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of +the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its investigation in September 2023 after a +pause related to the COVID-19 pandemic and plans to complete the investigation before the scheduled expiration of the interim measures in +March 2026. We continue to cooperate fully with the CMA. +Marketing Relationships +To improve access to each other’s markets, various U.S. and foreign air carriers, including American, have established marketing +agreements with other airlines. These marketing agreements vary in scope and are intended to provide enhanced customer choice by means +of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as our joint businesses +or strategic alliances. As of December 31, 2023, in addition to the relationships described above, American had codeshare, marketing and/or +loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern +Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A. (GOL), Gulf Air, Hawaiian Airlines, IndiGo, +JetSMART, Jetstar, Jetstar Japan, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, Silver Airways, SriLankan +Airlines and Vueling Airlines. +In 2023, we completed codeshare agreements with JetSMART, enabling American’s customers to book travel on JetSMART’s network +beyond Santiago, Chile and Lima, Peru, and which will allow for further extension of our network to other markets in South America, such as +Argentina, on JetSMART operated flights, subject to all necessary regulatory approvals. +Also in 2023, we launched a codeshare partnership with Philippine Airlines. This partnership introduced the first marketed flights by a +Philippine carrier to several U.S. destinations and allows American’s customers to travel to Manila and Cebu, Philippines. +We had a marketing relationship, the Northeast Alliance arrangement (NEA), with JetBlue Airways Corporation (JetBlue) that included an +alliance agreement with reciprocal codesharing on certain domestic and international routes from New York (John F. Kennedy International +Airport (JFK), LaGuardia Airport (LGA) and Newark Liberty International Airport) and Boston Logan International Airport. On May 19, 2023, +the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and +further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers +have commenced wind-down activities to accommodate mutual customers. +AAdvantage Program +Our AAdvantage program was established to develop passenger loyalty by offering benefits and rewards to travelers for their continued +patronage with American and our partners. AAdvantage members enjoy exclusive benefits and earn mileage credits for flying on eligible +tickets on American, any oneworld Alliance airline or other partner airlines. For every dollar spent by flying on an eligible American ticket, +members earn mileage credits, and AAdvantage Gold , AAdvantage Platinum, AAdvantage Platinum Pro and AAdvantage Executive +Platinum status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively. Members also earn mileage +credits by using the services of more than 1,000 non-flight partners, such as our co-branded credit cards, certain hotel and car rental +companies and shopping and dining partners. The AAdvantage program in general, and our co-branded credit card programs in particular, +are material assets of our business and have become increasingly important to our company over time. During 2023 and 2022, cash +payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively. +Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to our Admirals +Club , or for other non-flight awards, such as car rentals and hotels, from our program partners. Travel awards are available on all flights +operated by American and, subject to capacity-controlled seating, on flights operated by our partners. A member’s mileage credits generally +do not expire if that member has any type of qualifying activity at least once every 24 months or if the AAdvantage member is the primary +holder of a co-branded credit card. AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by +earning +® +® ® ® +® +® +10 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_100.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..128d313d056ba0c833b85ad996afa66943467df9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_100.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +2014 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, as amended (the 2014 Credit Agreement), +includes a revolving credit facility (the 2014 Revolving Facility) and term loan (the 2014 Term Loan Facility), collectively referred to as the +2014 Credit Facilities. In March 2023, American and AAG entered into the Ninth Amendment to the 2014 Credit Agreement, pursuant to +which American extended the maturity of certain commitments under the 2014 Revolving Facility. The Ninth Amendment also amended +certain other terms of the 2014 Credit Agreement including the requirements for delivery of appraisals and certain other covenants and +transitioned the benchmark interest rate for the 2014 Revolving Facility and the 2014 Term Loan Facility from LIBOR to SOFR. The 2014 +Revolving Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit +Facilities.” The 2014 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 0.75% or, at +American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American, plus the +SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment being subject to a floor of 0.00%) plus an +applicable margin of 1.75%. As of December 31, 2023, the margin elected was 1.75%. Additionally, as a result of the Ninth Amendment, +through October 11, 2024, the aggregate commitments under the 2014 Revolving Facility will be $1.6 billion, and thereafter through October +13, 2026, such aggregate commitments will decrease to $1.2 billion. As of December 31, 2023, there were no borrowings or letters of credit +outstanding under the 2014 Revolving Facility. +April 2016 Revolving Facility +In March 2023, American and AAG entered into the Sixth Amendment to the Credit and Guaranty Agreement, dated as of April 29, 2016 +(the April 2016 Credit Agreement), which includes a revolving credit facility (the April 2016 Revolving Facility). Pursuant to the Sixth +Amendment, American extended the maturity of certain commitments under the April 2016 Revolving Facility. The Sixth Amendment also +amended certain other terms under the April 2016 Credit Agreement including the requirements for delivery of appraisals and certain other +covenants and transitioned the benchmark interest rate for the April 2016 Revolving Facility from LIBOR to SOFR. The April 2016 Revolving +Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit Facilities.” +Additionally, as a result of the Sixth Amendment, through October 11, 2024, the aggregate commitments under the April 2016 Revolving +Facility will be $446 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $342 million. As of +December 31, 2023, there were no borrowings outstanding under the April 2016 Revolving Facility. +2023 Term Loan Facility +In December 2023, American and AAG entered into a credit and guaranty agreement (the 2023 Credit Agreement) that provided for a +term loan facility (the 2023 Term Loan Facility) in an aggregate principal amount of $1.1 billion, maturing in June 2029. Loans made under the +2023 Term Loan Facility bear interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.50% or, at American’s option, +the SOFR rate for a tenor of one, three or six months (or if agreed by the relevant lenders, any other tenor), depending on the interest period +selected by American (subject to a floor of 0.00%), plus an applicable margin of 3.50%. As of December 31, 2023, the margin elected was +3.50%. The net proceeds from the 2023 Term Loan Facility, together with the net proceeds from the private offering of the 8.50% Senior +Secured Notes (as defined below) and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes in December +2023. +Other Terms of the 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +The term loans under the 2013 Credit Facilities and 2014 Credit Facilities (collectively referred to as the Credit Facilities) and the 2023 +Term Loan Facility are repayable in annual installments, in an amount equal to 1.00% of the aggregate principal amount issued, with any +unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time. +The 2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving Facility provide that American may from time to time +borrow, repay and reborrow loans thereunder. The 2013 Revolving Facility and 2014 Revolving Facility have the ability to issue letters of +credit thereunder in an aggregate amount outstanding at any time up to $150 million and $300 million, respectively. The 2013 Revolving +Facility, 2014 Revolving Facility and April 2016 Revolving Facility are each subject to an undrawn annual fee of 0.750%. +100 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_101.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..737528febdccd1a76bbc41267fe96559a970916a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_101.txt @@ -0,0 +1,49 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Subject to certain limitations and exceptions, the Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility are secured +by collateral, including certain spare parts, slots, route authorities, simulators and leasehold rights. American has the ability to make future +modifications to the collateral pledged, subject to certain restrictions. American’s obligations under the Credit Facilities, April 2016 Revolving +Facility and 2023 Term Loan Facility are guaranteed by AAG, and such guarantee is AAG’s senior unsecured obligations (all of the collateral +is owned by American, and AAG has not granted a security interest in any assets to secure any of the foregoing obligations). The Credit +Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility contain events of default customary for similar financings, including cross +default and cross-acceleration to other material indebtedness. +(b) Senior Secured Notes +11.75% Senior Secured Notes +In June 2020, American issued $2.5 billion aggregate principal amount of 11.75% senior secured notes due 2025 (the 11.75% Senior +Secured Notes) at a price equal to 99% of their aggregate principal amount. In December 2023, American redeemed all of its outstanding +11.75% Senior Secured Notes using net proceeds from the offering of the 8.50% Senior Secured Notes (as defined below), together with net +proceeds from borrowings under the 2023 Term Loan Facility and cash on hand. In connection with the early redemption of the 11.75% +Senior Secured Notes, in the fourth quarter of 2023, American recorded a $186 million cash special charge for the make-whole premium paid +and a $19 million non-cash special charge to write off unamortized debt issuance costs and debt discount. +10.75% Senior Secured Notes +On September 25, 2020 (the 10.75% Senior Secured Notes Closing Date), American issued $1.0 billion in initial principal amount of senior +secured IP notes (the IP Notes) and $200 million in initial principal amount of senior secured LGA/DCA notes (the LGA/DCA Notes and +together with the IP Notes, the 10.75% Senior Secured Notes). The obligations of American under the 10.75% Senior Secured Notes are fully +and unconditionally guaranteed (the 10.75% Senior Secured Notes Guarantees) on a senior unsecured basis by AAG. The 10.75% Senior +Secured Notes bear interest at a rate of 10.75% per annum in cash. Interest on the 10.75% Senior Secured Notes is payable semiannually in +arrears on September 1 and March 1 of each year, which began on March 1, 2021. The 10.75% Senior Secured Notes will mature on +February 15, 2026. +The IP Notes are secured by a first lien security interest on certain intellectual property of American, including the “American Airlines” +trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions (the IP Collateral), and a second lien on +certain slots related to American’s operations at New York LaGuardia and Ronald Reagan Washington National airports and certain other +assets (the LGA/DCA Collateral and together with the IP Collateral, the 10.75% Senior Secured Notes Collateral). LGA/DCA Notes are +secured by a first lien security interest in the LGA/DCA Collateral. +On or prior to the fourth anniversary of the 10.75% Senior Secured Notes Closing Date, American may redeem all or any part of the +10.75% Senior Secured Notes, at its option, at a redemption price equal to 100% of the principal amount of the 10.75% Senior Secured +Notes redeemed plus a “make-whole” premium, together with accrued and unpaid interest thereon, if any. After the fourth anniversary of the +10.75% Senior Secured Notes Closing Date and on or prior to the fifth anniversary of the 10.75% Senior Secured Notes Closing Date, +American may redeem all or any part of the 10.75% Senior Secured Notes, at its option, at a redemption price equal to 105.375% of the +principal amount of the 10.75% Senior Secured Notes redeemed, together with accrued and unpaid interest thereon, if any. After the fifth +anniversary of the 10.75% Senior Secured Notes Closing Date, American may redeem all or any part of the 10.75% Senior Secured Notes, +at its option, at par, together with accrued and unpaid interest thereon, if any. +7.25% Senior Secured Notes +On February 15, 2023, as part of the 2013 Term Loan Facility Refinancing, American issued $750 million aggregate principal amount of +7.25% senior secured notes due 2028 (the 7.25% Senior Secured Notes) in a private offering. The 7.25% Senior Secured Notes were issued +at par and bear interest at a rate of 7.25% per annum (subject to increase if the collateral coverage ratio described below is not met). Interest +on the 7.25% Senior Secured Notes is payable semiannually in arrears on February 15 and August 15 of each year, which began on August +15, 2023. The 7.25% Senior Secured Notes will mature on February 15, 2028. The obligations of American under the 7.25% Senior Secured +Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG. American used the proceeds from the offering of the +7.25% Senior Secured Notes, together with cash on hand, to repay a portion of the term loans then outstanding under the 2013 Term Loan +Facility and to pay related fees and expenses. +101 +The secret object #3 is a "fork". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_102.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_102.txt new file mode 100644 index 0000000000000000000000000000000000000000..660159b21c5a7e31311c3b105cd7522ffc177867 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_102.txt @@ -0,0 +1,50 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +The 7.25% Senior Secured Notes were issued pursuant to an indenture, dated as of February 15, 2023 (the 7.25% Senior Secured Notes +Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 7.25% Senior +Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights +and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) +airports in certain countries in South America and New Zealand (collectively, the 7.25% Senior Secured Notes Collateral). The 7.25% Senior +Secured Notes Collateral also secures, on a first lien, pari passu basis with the 7.25% Senior Secured Notes, the 2013 Credit Facilities under +the 2013 Credit Agreement. +American may redeem the 7.25% Senior Secured Notes, in whole at any time or in part from time to time prior to February 15, 2025, at a +redemption price equal to 100% of the principal amount of the 7.25% Senior Secured Notes to be redeemed, plus a “make-whole” premium, +plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after February 15, 2025, American +may redeem all or any of the 7.25% Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices +described in the 7.25% Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of +redemption. In addition, at any time prior to February 15, 2025, American may redeem up to 40% of the original aggregate principal amount +of the 7.25% Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain +equity offerings, at a redemption price equal to 107.250% of the aggregate principal amount of the 7.25% Senior Secured Notes to be +redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. +Twice per year, American is required to deliver an appraisal of the 7.25% Senior Secured Notes Collateral and an officer’s certificate +demonstrating the calculation of a collateral coverage ratio in relation to the 7.25% Senior Secured Notes Collateral (the 7.25% Senior +Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 7.25% Senior Secured +Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a +cure period in which additional collateral can be provided or debt repaid such that American meets the required 7.25% Senior Secured Notes +Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0% per annum of the principal +amount of the 7.25% Senior Secured Notes until the 7.25% Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 +to 1.0. +8.50% Senior Secured Notes +On December 4, 2023, American issued $1.0 billion aggregate principal amount of 8.50% senior secured notes due 2029 (the 8.50% +Senior Secured Notes) in a private offering. The 8.50% Senior Secured Notes were issued at par and bear interest at a rate of 8.50% per +annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 8.50% Senior Secured Notes is +payable semiannually in arrears on May 15 and November 15 of each year, beginning on May 15, 2024. The 8.50% Senior Secured Notes +will mature on May 15, 2029. The obligations of American under the 8.50% Senior Secured Notes are fully and unconditionally guaranteed on +a senior unsecured basis by AAG. The net proceeds from the 8.50% Senior Secured Notes, together with borrowings under the 2023 Term +Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes in December 2023. +The 8.50% Senior Secured Notes were issued pursuant to an indenture, dated as of December 4, 2023 (the 8.50% Senior Secured Notes +Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 8.50% Senior +Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights +and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) +certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland +(collectively, the 8.50% Senior Secured Notes Collateral). The 8.50% Senior Secured Notes Collateral also secures, on a first lien, pari passu +basis with the 8.50% Senior Secured Notes, the 2023 Term Loan Facility. +American may redeem the 8.50% Senior Secured Notes, in whole at any time or in part from time to time prior to November 15, 2025, at a +redemption price equal to 100% of the principal amount of the 8.50% Senior Secured Notes to be redeemed, plus a “make-whole” premium, +plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after November 15, 2025, American +may redeem all or any of the 8.50% Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices +described in the 8.50% Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of +redemption. In addition, at any time prior to November 15, 2025, American may redeem up to 40% of the original aggregate principal amount +of the 8.50% Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain +equity offerings, at a redemption price equal to 108.50% of the aggregate principal amount of the 8.50% Senior +102 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_103.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_103.txt new file mode 100644 index 0000000000000000000000000000000000000000..5a0d91cb2f610d02fe14e0bd7b02060f5225cfa8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_103.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Secured Notes to be redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In addition, during +each twelve-month period beginning on December 4, 2023 and ending on or prior to November 15, 2025, American may redeem up to 10% +of the original aggregate principal amount of the 8.50% Senior Secured Notes at a redemption price of 103% of the principal amount thereof, +plus any accrued and unpaid interest thereon to, but excluding, the applicable date of redemption. +Twice per year, American is required to deliver an appraisal of the 8.50% Senior Secured Notes Collateral and an officer’s certificate +demonstrating the calculation of a collateral coverage ratio in relation to the 8.50% Senior Secured Notes Collateral (the 8.50% Senior +Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 8.50% Senior Secured +Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a +cure period in which additional collateral can be provided or debt repaid such that American meets the required 8.50% Senior Secured Notes +Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0% per annum of the principal +amount of the 8.50% Senior Secured Notes until the 8.50% Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 +to 1.0. +(c) AAdvantage Financing +On March 24, 2021 (the AAdvantage Financing Closing Date), American and AAdvantage Loyalty IP Ltd., a Cayman Islands exempted +company incorporated with limited liability and an indirect wholly-owned subsidiary of American (Loyalty Issuer and, together with American, +the AAdvantage Issuers), completed the offering of $3.5 billion aggregate principal amount of 5.50% Senior Secured Notes due 2026 (the +2026 Notes) and $3.0 billion aggregate principal amount of 5.75% Senior Secured Notes due 2029 (the 2029 Notes, and together with the +2026 Notes, the AAdvantage Notes). The AAdvantage Notes are fully and unconditionally guaranteed by the SPV Guarantors and AAG. +Concurrent with the issuance of the AAdvantage Notes, the AAdvantage Issuers, as co-borrowers, entered into a term loan credit and +guaranty agreement, dated March 24, 2021, providing for a $3.5 billion term loan facility (the AAdvantage Term Loan Facility and collectively +with the AAdvantage Notes, the AAdvantage Financing) and pursuant to which the full $3.5 billion of term loans (the AAdvantage Loans) +were drawn on the AAdvantage Financing Closing Date. The AAdvantage Loans are fully and unconditionally guaranteed (together with the +AAdvantage Note Guarantees, the AAdvantage Guarantees) by the SPV Guarantors and AAG. +Subject to certain permitted liens and other exceptions, the AAdvantage Notes, AAdvantage Loans and AAdvantage Guarantees provided +by the SPV Guarantors are secured by a first-priority security interest in, and pledge of, various agreements with respect to the AAdvantage +program (the AAdvantage Agreements) (including all payments thereunder) and certain intellectual property licenses, certain deposit +accounts that will receive cash under the AAdvantage Agreements, certain reserve accounts, the equity of each of Loyalty Issuer and the +SPV Guarantors and substantially all other assets of Loyalty Issuer and the SPV Guarantors including American’s rights to certain data and +other intellectual property used in the AAdvantage program (subject to certain exceptions) (collectively, the AAdvantage Collateral). +Payment Terms of the AAdvantage Notes and AAdvantage Loans under the AAdvantage Term Loan Facility +Interest on the AAdvantage Notes is payable in cash, quarterly in arrears on the 20th day of each January, April, July and October (each, +an AAdvantage Payment Date), which began on July 20, 2021. The 2026 Notes will mature on April 20, 2026, and the 2029 Notes will mature +on April 20, 2029. The outstanding principal on the 2026 Notes will be repaid in quarterly installments of $292 million on each AAdvantage +Payment Date, which began in July 2023. The outstanding principal on the 2029 Notes will be repaid in quarterly installments of $250 million +on each AAdvantage Payment Date, beginning on July 20, 2026. +The AAdvantage Issuers may redeem the AAdvantage Notes, at their option, in whole at any time or in part from time to time, at a +redemption price equal to 100% of the principal amount of the AAdvantage Notes redeemed plus a “make-whole” premium, together with +accrued and unpaid interest to the date of redemption. +The scheduled maturity date of the AAdvantage Loans under the AAdvantage Term Loan Facility is April 20, 2028. The outstanding +principal on the AAdvantage Loans will be repaid in quarterly installments of $175 million, on each AAdvantage Payment Date, which began +in July 2023. These amortization payments (as well as those for the AAdvantage Notes) will be subject to the occurrence of certain early +amortization events, including the failure to satisfy a minimum debt service coverage ratio at specified determination dates. +103 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_104.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..dc9b07448ffd6d3afabe43625b10982e8d6f81aa --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_104.txt @@ -0,0 +1,46 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Prepayment of some or all of the AAdvantage Loans outstanding under the AAdvantage Term Loan Facility is permitted, although +payment of an applicable premium is required as specified in the AAdvantage Term Loan Facility. +The AAdvantage Indenture and the AAdvantage Term Loan Facility contain mandatory prepayment provisions triggered upon (i) the +issuance or incurrence by Loyalty Issuer or the SPV Guarantors of certain indebtedness or (ii) the receipt by American or its subsidiaries of +net proceeds from pre-paid frequent flyer (i.e., AAdvantage) mile sales exceeding $505 million. Each of these prepayments would also +require payment of an applicable premium. Certain other events, including the occurrence of a change of control with respect to AAG and +certain AAdvantage Collateral sales exceeding a specified threshold, will also trigger mandatory repurchase or mandatory prepayment +provisions under the AAdvantage Indenture and the AAdvantage Term Loan Facility, respectively. +In June 2023, American and AAdvantage Loyalty IP Ltd. entered into the First Amendment to the AAdvantage Term Loan Facility pursuant +to which the benchmark interest rate transitioned from LIBOR to SOFR, effective July 1, 2023. As a result, the AAdvantage Term Loan +Facility bears interest at a base rate (subject to a floor of 0.00%) plus an applicable margin of 3.75% or, at American’s option, the SOFR rate +for a tenor of three months, plus a 0.26161% credit spread adjustment (with such SOFR rate plus SOFR adjustment being subject to a floor +of 0.75%) and an applicable margin of 4.75%. As of December 31, 2023, the margin elected was 4.75%. Other than the foregoing, the terms +of the AAdvantage Term Loan Facility remain substantially unchanged. +(d) Equipment Loans and Other Notes Payable Issued in 2023 +In 2023, American entered into agreements under which it borrowed $1.1 billion in connection with the financing of certain aircraft. Debt +incurred under these agreements matures in 2032 through 2035 and bears interest at fixed and variable rates (comprised of SOFR plus an +applicable margin) averaging 7.15% as of December 31, 2023. +(e) PSP Promissory Notes +As partial compensation to the U.S. Government for the provision of financial assistance under the PSP Agreements, AAG issued +promissory notes to Treasury (PSP1 Promissory Note, PSP2 Promissory Note and PSP3 Promissory Note, collectively the PSP Promissory +Notes), in the aggregate principal sum of $3.7 billion which provides for the guarantee of our obligations under the PSP Promissory Notes by +the Subsidiaries. +The PSP Promissory Notes bear interest on the outstanding principal amount at a rate equal to 1.00% per annum until the fifth +anniversary of the applicable PSP closing date and 2.00% plus an interest rate based on SOFR per annum or other benchmark replacement +rate consistent with customary market conventions (but not to be less than 0.00%) thereafter until the tenth anniversary of the applicable PSP +closing date, and interest accrued thereon will be payable in arrears on the last business day of March and September of each year. The +aggregate principal amount outstanding under the PSP Promissory Notes, together with all accrued and unpaid interest thereon and all other +amounts payable under the PSP Promissory Notes, will be due and payable on the maturity date. +The PSP Promissory Notes are our senior unsecured obligation and each guarantee of the PSP Promissory Notes is the senior unsecured +obligation of each of the Subsidiaries, respectively. +We may, at any time and from time to time, voluntarily prepay amounts outstanding under the PSP Promissory Notes, in whole or in part, +without penalty or premium. Within 30 days of the occurrence of certain change of control triggering events, we are required to prepay the +aggregate outstanding principal amount of the PSP Promissory Notes at such time, together with any accrued interest or other amounts +owing under the PSP Promissory Notes at such time. +(f) 6.50% Convertible Senior Notes +In June 2020, AAG completed the public offering of $1.0 billion aggregate principal amount of AAG’s 6.50% convertible senior notes due +2025 (the Convertible Notes). The Convertible Notes are fully and unconditionally guaranteed by American on a senior unsecured basis (the +Convertible Notes Guarantee). The net proceeds from the Convertible Notes were approximately $970 million, after deducting the +underwriters’ discounts and commissions and our estimated offering expenses. +The Convertible Notes bear interest at a rate of 6.50% per annum. Interest on the Convertible Notes is payable semiannually in arrears on +January 1 and July 1 of each year, which began on January 1, 2021. The Convertible Notes will mature on July 1, 2025, unless earlier +converted, redeemed or repurchased by us. +104 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_105.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..a88428c0776bd7a4aa25bc36d939d775ab6ece18 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_105.txt @@ -0,0 +1,48 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Upon conversion, AAG will pay or deliver, as the case may be, cash, shares of AAG common stock or a combination of cash and shares +of AAG common stock, at AAG’s election. The initial conversion rate is 61.7284 shares of AAG common stock per $1,000 principal amount of +Convertible Notes (equivalent to an initial conversion price of approximately $16.20 per share of AAG common stock). The conversion rate is +subject to adjustment in some events as described in the Convertible Notes Indenture. +Holders may convert their Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter (and only +during such calendar quarter) commencing after the calendar quarter ending on September 30, 2020, if the last reported sale price per share +of AAG common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 +consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five +consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the +measurement period) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement +period was less than 98% of the product of the last reported sale price per share of AAG common stock on such trading day and the +conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on AAG common stock; (4) if AAG +calls such Convertible Notes for redemption; and (5) at any time from, and including, April 1, 2025 until the close of business on the +scheduled trading day immediately before the maturity date of the Convertible Notes. +In addition, following certain corporate events that occur prior to the maturity date or upon AAG’s issuance of a notice of redemption, AAG +will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event or during the +related redemption period in certain circumstances by a specified number of shares of AAG common stock as described in the Convertible +Notes Indenture. +AAG did not have the right to redeem the Convertible Notes prior to July 5, 2023. On or after July 5, 2023 and on or before the 20th +scheduled trading day immediately before the maturity date, AAG may redeem the Convertible Notes, in whole or in part, if the last reported +sale price of AAG common stock has been at least 130% of the conversion price then in effect on (1) each of at least 20 trading days +(whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the date +AAG sends the related redemption notice; and (2) the trading day immediately before the date AAG sends such notice. In the case of any +optional redemption, AAG will redeem the Convertible Notes at a redemption price equal to 100% of the principal amount of such Convertible +Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. +The following table provides information relating to the Convertible Notes as of December 31, 2023 and 2022 (in millions): + December 31, + 2023 2022 +Principal amount $ 1,000 $ 1,000 +Unamortized debt discount (10) (16) +Net carrying amount $ 990 $ 984 +The effective interest rate for the Convertible Notes was 7% for each of the years ended December 31, 2023, 2022, and 2021. Interest +recognized for the Convertible Notes is as follows (in millions): +Year Ended December 31, + 2023 2022 2021 +Contractual coupon interest $ 65 $ 65 $ 65 +Non-cash amortization of debt discount 6 6 5 +Total interest expense $ 71 $ 71 $ 70 +At December 31, 2023, the if-converted value of the Convertible Notes did not exceed the principal amount. The last reported sale price +per share of our common stock (as defined in the Convertible Notes Indenture) did not exceed 130% of the conversion price of the +Convertible Notes for at least 20 of the 30 consecutive trading days ending on December 31, 2023. Accordingly, pursuant to the terms of the +Convertible Notes Indenture, the holders of the Convertible Notes cannot convert at their option at any time during the quarter ending March +31, 2024. Each $1,000 principal amount of Convertible Notes is convertible at a rate of 61.7284 shares of our common stock, subject to +adjustment as provided in the Convertible Notes Indenture. We may settle conversions by paying or delivering, as applicable, cash, shares of +our common stock or a combination of cash and shares of our common stock, at our election. +105 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_106.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..1d870face9c307e06aaaae75899c9314674a7c63 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_106.txt @@ -0,0 +1,32 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(g) Unsecured Senior Notes +3.75% Senior Notes +In February 2020, AAG issued $500 million aggregate principal amount of 3.75% senior notes due 2025 (the 3.75% Senior Notes). The +3.75% Senior Notes bear interest at a rate of 3.75% per annum, payable semiannually in arrears in March and September of each year, +which began in September 2020. The 3.75% Senior Notes mature in March 2025. +The 3.75% Senior Notes are senior unsecured obligations of AAG. These Senior Notes are fully and unconditionally guaranteed by +American. The indentures for these Senior Notes contain covenants and events of default generally customary for similar financings. +Other Financing Activities +During the year ended December 31, 2023, we repurchased $552 million of secured and unsecured notes in the open market. In +connection with the repurchase of these secured and unsecured notes in the open market, American recorded $57 million of cash special +charges for premiums paid and $6 million of non-cash special charges to write off unamortized debt issuance costs and debt discounts. +Guarantees +As of December 31, 2023, AAG had issued guarantees covering approximately $17.5 billion of American’s secured debt (and interest +thereon), including the Credit Facilities, 2023 Term Loan Facility, the AAdvantage Financing, certain EETC financings and special facility +revenue bonds. +Certain Covenants +Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among +other things, may restrict the ability of us and our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt +agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain +events constituting a change of control under the relevant agreement, in certain cases at a premium. Certain of our debt financing +agreements (including our secured notes, term loans, revolving credit facilities and spare engine EETCs) contain loan to value (LTV), +collateral coverage or peak debt service coverage ratio covenants and certain agreements require us to appraise the related collateral +annually or semiannually. Pursuant to such agreements, if the applicable LTV, collateral coverage or peak debt service coverage ratio +exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to pledge additional qualifying collateral +(which in some cases may include cash or investment securities), withhold additional cash in certain accounts, or pay down such financing, in +whole or in part, or the interest rate for the relevant financing will be increased. Additionally, a significant portion of our debt financing +agreements contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and +amounts available to be drawn under revolving credit facilities, and our AAdvantage Financing contains a peak debt service coverage ratio, +pursuant to which failure to comply with a certain threshold may result in early repayment, in whole or in part, of the AAdvantage Financing. +106 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_107.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c6da36f1c3fec1a9e3eb73442d3f2b251c36797 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_107.txt @@ -0,0 +1,39 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Specifically, we are required to meet certain collateral coverage tests for our Credit Facilities, April 2016 Revolving Facility, 2023 Term +Loan Facility, 7.25% Senior Secured Notes, 8.50% Senior Secured Notes and 10.75% Senior Secured Notes, as described below: +2013 Credit Facilities 7.25% SeniorSecured Notes 2014 Credit Facilities April 2016 Revolving Facility 2023 Term LoanFacility 8.50% SeniorSecured Notes 10.75% SeniorSecured Notes +LTV Requirement 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) +LTV as of LastMeasurement Date 34.2% 16.4% Not Applicable 25.9% 6.9% +Frequency ofAppraisals ofAppraisedCollateral +Semi-Annual Annual +Collateral Description +Generally, certain slots, route authoritiesand airport gate leasehold rights used byAmerican to operate certain servicesbetween the U.S. and South America andNew Zealand +Generally, certainslots, routeauthorities andairport gateleasehold rightsused by Americanto operate certainservices betweenthe U.S. andEuropean Union(including LondonHeathrow) +Generally, certainspare parts +Generally, certain slots, route authoritiesand airport gate leasehold rights used byAmerican to operate certain servicesbetween the U.S. and Australia, Canada,the Caribbean, Central America, China,Hong Kong, Japan, Mexico, South Koreaand Switzerland +Generally, certainDCA slots, certainLGA slots, certainsimulators andcertain leaseholdrights and, in thecase of the IPNotes, certainintellectual propertyof American +At December 31, 2023, we were in compliance with the applicable collateral coverage tests as of the most recent measurement dates. +5. Leases +We lease certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2023, we operated 737 +leased aircraft, including seven aircraft in temporary storage and 237 aircraft leased under capacity purchase agreements, with remaining +terms ranging from less than one year to 10 years. +At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of +passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often +contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with +our level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not recorded on our +consolidated balance sheets as a ROU asset or a lease liability. Additionally, at our hub locations and in certain other cities we serve, we +lease administrative offices, catering, cargo, training, maintenance and other facilities. +The components of lease expense were as follows (in millions): +Year Ended December 31, +2023 2022 2021 +Operating lease cost $ 2,016 $ 2,007 $ 2,012 +Finance lease cost: +Amortization of assets 128 143 107 +Interest on lease liabilities 45 47 44 +Variable lease cost 2,720 2,580 2,471 +Total net lease cost $ 4,909 $ 4,777 $ 4,634 +Included in the table above is $274 million, $242 million and $190 million of operating lease cost under our capacity purchase agreement +with Republic for the years ended December 31, 2023, 2022 and 2021, respectively. We hold a 25% equity interest in Republic Holdings, the +parent company of Republic. +107 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_108.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..95d84ded94d80ff63bf283028ab032c0926dcb6e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_108.txt @@ -0,0 +1,32 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate): +December 31, +2023 2022 +Operating leases: +Operating lease ROU assets $ 7,939 $ 8,094 +Current operating lease liabilities $ 1,309 $ 1,465 +Noncurrent operating lease liabilities 6,452 6,559 +Total operating lease liabilities $ 7,761 $ 8,024 +Finance leases: +Property and equipment, at cost $ 1,380 $ 1,364 +Accumulated amortization (891) (779) +Property and equipment, net $ 489 $ 585 +Current finance lease liabilities $ 131 $ 216 +Noncurrent finance lease liabilities 375 545 +Total finance lease liabilities $ 506 $ 761 +Weighted average remaining lease term (in years): +Operating leases 8.4 8.3 +Finance leases 5.8 5.1 +Weighted average discount rate: +Operating leases 7.6 % 7.4 % +Finance leases 7.2 % 7.2 % +Supplemental cash flow and other information related to leases was as follows (in millions): +Year Ended December 31, +2023 2022 2021 +Cash paid for amounts included in the measurement of lease liabilities: +Operating cash flows from operating leases $ 2,033 $ 1,990 $ 2,053 +Operating cash flows from finance leases 48 47 37 +Financing cash flows from finance leases 265 190 126 +Gain on sale leaseback transactions, net 12 2 25 +108 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_109.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..2f8424c08be14dbb54349c3f50eca2c72cb3dc93 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_109.txt @@ -0,0 +1,39 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Maturities of lease liabilities were as follows (in millions): +December 31, 2023 +Operating Leases Finance Leases +2024 $ 1,809 $ 166 +2025 1,510 140 +2026 1,289 114 +2027 1,120 71 +2028 988 30 +2029 and thereafter 3,708 89 +Total lease payments 10,424 610 +Less: Imputed interest (2,663) (104) +Total lease obligations 7,761 506 +Less: Current obligations (1,309) (131) +Long-term lease obligations $ 6,452 $ 375 +As of December 31, 2023, we had additional operating lease commitments that have not yet commenced of approximately $669 million for +five Boeing 787 Family aircraft scheduled to be delivered in 2024 with lease terms of 10 years. +6. Income Taxes +The significant components of the income tax provision (benefit) were (in millions): + Year Ended December 31, + 2023 2022 2021 +Current income tax benefit: +State, local and foreign $ — $ (6) $ — +Deferred income tax provision (benefit): +Federal 268 59 (508) +State and local 31 6 (47) +Deferred income tax provision (benefit) 299 65 (555) +Total income tax provision (benefit) $ 299 $ 59 $ (555) +The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions): + Year Ended December 31, + 2023 2022 2021 +Statutory income tax provision (benefit) $ 235 $ 39 $ (535) +State, local and foreign income tax provision (benefit), net of federal tax effect 22 — (37) +Book expenses not deductible for tax purposes 38 22 23 +Change in valuation allowance 3 — — +Other, net 1 (2) (6) +Income tax provision (benefit) $ 299 $ 59 $ (555) +109 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_11.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..04f44af2d93af29bde670cbc598799c55d1f4436 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_11.txt @@ -0,0 +1,48 @@ +Table of Contents +Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit +cards. Status members can enjoy additional travel benefits of the AAdvantage program, including complimentary upgrades, checked bags, +and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery when traveling on American, +any oneworld Alliance airline or select partner airlines. In addition, AAdvantage members can unlock benefits, rewards and choices before, +between and beyond the traditional status tiers with Loyalty Point Rewards. In 2023, we introduced a new business loyalty program, +AAdvantage Business, which rewards both eligible companies with AAdvantage miles and their travelers with additional Loyalty Points for +booking business travel through our website or mobile app. +In 2023, the editorial staff of the digital news outlet, The Points Guy, selected AAdvantage as the Best U.S. Airline Loyalty Program. In +addition, AAdvantage was recognized for the Best Elite Program in the Americas at the 2023 Freddie Awards, which is based entirely on +votes from travelers around the world. +Under our agreements with AAdvantage members and program partners, we reserve the right to change the terms of the AAdvantage +program at any time and without notice. Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to +change. +During 2023, our members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American +and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise. Approximately 8% of our 2023 +total revenue passenger miles flown were from award travel. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Critical Accounting +Policies and Estimates” for more information on our loyalty program. +Industry Competition +Domestic +The markets in which we operate are highly competitive. On most of our domestic nonstop routes, we face competing service from other +domestic airlines, including major network airlines, low-cost carriers and ultra-low-cost carriers such as Alaska Airlines, Allegiant Air, Delta Air +Lines, Frontier Airlines, Hawaiian Airlines, JetBlue, Southwest Airlines, Spirit Airlines and United Airlines. Between cities that require a +connection, where the major airlines compete via their respective hubs, competition is significant. In addition, we face competition on some of +our connecting routes from airlines operating point-to-point service on such routes. We also compete with all-cargo and charter airlines and, +particularly on shorter segments, ground and rail transportation. +In general, beyond nonstop city pairs, carriers that have the greatest ability to seamlessly connect passengers to and from markets have a +competitive advantage. In some cases, however, foreign governments limit U.S. air carriers’ rights to transport passengers beyond +designated gateway cities in foreign countries. In order to improve access to domestic and foreign markets, we have arrangements with other +airlines including through the oneworld Alliance, other cooperation agreements, joint business agreements and marketing relationships, as +further discussed herein. +On all of our routes, pricing decisions are affected, in large part, by the need to meet competition from other airlines. Price competition +occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and loyalty +program initiatives. Airlines typically use discounted fares and other promotions to stimulate traffic during normally weak travel periods, when +they begin service to new cities, when they have excess capacity, to generate cash flow, to maximize revenue per available seat mile or to +establish, increase or preserve market share. Most airlines will quickly match price reductions in a particular market, and we have often +elected to match discounted or promotional fares initiated by other air carriers in certain markets in order to compete in those markets. In +addition, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which +compete in many of the markets in which we operate, with competition from these carriers increasing and new entrants regularly announcing +their intention to start up new ultra-low-cost carriers. +In addition to price competition, airlines compete for market share by increasing the size of their route system and the number of markets +they serve. The American Eagle regional carriers increase the number of markets we serve by flying to smaller markets and providing +connections at our hubs. Many of our competitors also own or have agreements with regional airlines that provide similar services at their +hubs and other locations. We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time +performance, type of equipment, cabin configuration, amenities provided to passengers, loyalty programs, the automation of travel agent +reservation systems, onboard products, health and safety, sustainability initiatives and other services. +11 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_110.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..e54fb1b561f58beb52e9d520efe97f698a0b945e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_110.txt @@ -0,0 +1,44 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +The components of our deferred tax assets and liabilities were (in millions): + December 31, + 2023 2022 +Deferred tax assets: +Net operating loss and other carryforwards $ 4,238 $ 4,679 +Loyalty program liability 1,774 1,809 +Leases 1,758 1,819 +Pension benefits 434 474 +Postretirement benefits other than pension benefits 274 179 +Rent expense 84 130 +Other 902 742 +Total deferred tax assets 9,464 9,832 +Valuation allowance (22) (19) +Net deferred tax assets 9,442 9,813 +Deferred tax liabilities: +Accelerated depreciation and amortization (4,503) (4,630) +Leases (1,798) (1,832) +Other (262) (262) +Total deferred tax liabilities (6,563) (6,724) +Net deferred tax asset $ 2,879 $ 3,089 +At December 31, 2023, we had approximately $13.7 billion of gross federal net operating losses (NOLs) and $4.7 billion of other +carryforwards available to reduce future federal taxable income, of which $3.4 billion will expire beginning in 2029 if unused and $15.0 billion +can be carried forward indefinitely. We also had approximately $5.5 billion of NOL carryforwards to reduce future state taxable income at +December 31, 2023, which will expire in taxable years 2023 through 2043 if unused. +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. We provide a +valuation allowance for our deferred tax assets, which include our NOLs, when it is more likely than not that some portion, or all of our +deferred tax assets, will not be realized. We consider all available positive and negative evidence and make certain assumptions in +evaluating the realizability of our deferred tax assets. Many factors are considered that impact our assessment of future profitability, including +conditions which are beyond our control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel +demand. We have determined that positive factors outweigh negative factors in the determination of the realizability of our deferred tax +assets. There can be no assurance that an additional valuation allowance on our net deferred tax assets will not be required. Such valuation +allowance could be material. +Our ability to deduct our NOL carryforwards and to utilize certain other available tax attributes can be substantially constrained under the +general annual limitation rules of Section 382 where an “ownership change” has occurred. Substantially all of our remaining federal NOL +carryforwards attributable to US Airways Group are subject to limitation under Section 382; however, our ability to utilize such NOL +carryforwards is not anticipated to be effectively constrained as a result of such limitation. Similar limitations may apply for state income tax +purposes. Our ability to utilize any new NOL carryforwards arising after the ownership changes is not affected by the annual limitation rules +imposed by Section 382 unless another ownership change occurs. Under the Section 382 limitation, cumulative stock ownership changes +among material stockholders exceeding 50% during a rolling three-year period can potentially limit our future use of NOLs and tax credits. +In 2023, we recorded an income tax provision of $299 million, with an effective rate of approximately 27%, which was substantially non- +cash. Substantially all of our income before income taxes is attributable to the United States. +110 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_111.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..206ce0a599762cb399704a671bf86bca86502492 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_111.txt @@ -0,0 +1,43 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +We file our tax returns as prescribed by the tax laws of the jurisdictions in which we operate. Our 2020 through 2022 tax years are still +subject to examination by the Internal Revenue Service. Various state and foreign jurisdiction tax years remain open to examination, and we +are under examination, in administrative appeals or engaged in tax litigation in certain jurisdictions. We believe that the effect of any +assessments will not be material to our consolidated financial statements. +The amount of, and changes to, our uncertain tax positions were not material in any of the years presented. We accrue interest and +penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. +7. Fair Value Measurements +Assets Measured at Fair Value on a Recurring Basis +Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) on the +measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or +liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair +value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value +are observable in the market. Each fair value measurement is reported in one of three levels: +• Level 1 – Observable inputs such as quoted prices in active markets; +• Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and +• Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own +assumptions. +When available, we use quoted market prices to determine the fair value of our financial assets. If quoted market prices are not available, +we measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market +parameters, such as interest rates and currency rates. +We utilize the market approach to measure the fair value of our financial assets. The market approach uses prices and other relevant +information generated by market transactions involving identical or comparable assets. Our short-term investments, restricted cash and +restricted short-term investments classified as Level 2 utilize significant observable inputs, other than quoted prices in active markets, for +valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2023. +Assets measured at fair value on a recurring basis are summarized below (in millions): + Fair Value Measurements as of December 31, 2023 + Total Level 1 Level 2 Level 3 +Short-term investments : +Money market funds $ 818 $ 818 $ — $ — +Corporate obligations 4,046 — 4,046 — +Bank notes/certificates of deposit/time deposits 1,586 — 1,586 — +Repurchase agreements 450 — 450 — +U.S. government and agency obligations 100 — 100 — +7,000 818 6,182 — +Restricted cash and short-term investments 910 459 451 — +Long-term investments 163 163 — — +Total $ 8,073 $ 1,440 $ 6,633 $ — +(1), (2) +(1), (3) +(4) +111 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_112.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..6f69f198281a130ac1237afc5596641318edc68a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_112.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. + Fair Value Measurements as of December 31, 2022 + Total Level 1 Level 2 Level 3 +Short-term investments : +Money market funds $ 732 $ 732 $ — $ — +Corporate obligations 3,688 — 3,688 — +Bank notes/certificates of deposit/time deposits 3,655 — 3,655 — +Repurchase agreements 450 — 450 — +8,525 732 7,793 — +Restricted cash and short-term investments 995 535 460 — +Long-term investments 245 245 — — +Total $ 9,765 $ 1,512 $ 8,253 $ — +All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in +accumulated other comprehensive loss at each reporting period. There were no credit losses. +Our short-term investments as of December 31, 2023 mature in one year or less. +Restricted cash and short-term investments primarily include collateral held to support workers' compensation obligations and collateral +associated with the payment of interest for the AAdvantage Financing. Restricted short-term investments mature in one year or less +except for $218 million as of December 31, 2023. +Long-term investments include our equity investments in China Southern Airlines Company Limited (China Southern Airlines), GOL and +Vertical Aerospace Ltd. (Vertical). See Note 8 for further information on our equity investments. +Fair Value of Debt +The fair value of our long-term debt was estimated using quoted market prices or discounted cash flow analyses based on our current +estimated incremental borrowing rates for similar types of borrowing arrangements. If our long-term debt was measured at fair value, it would +have been classified as Level 2 except for $3.7 billion as of December 31, 2023 and December 31, 2022, which would have been classified +as Level 3 in the fair value hierarchy. The fair value of the Convertible Notes, which would have been classified as Level 2, was $1.1 billion as +of December 31, 2023 and December 31, 2022. +The carrying value and estimated fair value of our long-term debt, including current maturities, were as follows (in millions): + December 31, 2023 December 31, 2022 + Carrying Value Fair Value Carrying Value Fair Value +Long-term debt, including current maturities $ 32,396 $ 32,310 $ 34,903 $ 32,569 +8. Investments +To help expand our network and as part of our ongoing commitment to sustainability, we enter into various commercial relationships or +other strategic partnerships, including equity investments, with other airlines and companies. Our equity investments are reflected in other +assets on our consolidated balance sheets. Our share of equity method investees’ financial results and changes in fair value are recorded in +nonoperating other income (expense), net on the consolidated statements of operations. +(1) +(1), (3) +(4) +(1) +(2) +(3) +(4) +112 +The secret object #4 is a "tree". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_113.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..c876bda4306ad7d163e6dfc67c34aae8798b1c99 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_113.txt @@ -0,0 +1,50 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Our equity investments ownership interest and carrying value were as follows: +Ownership Interest Carrying Value (in millions) +December 31, December 31, +Accounting Treatment 2023 2022 2023 2022 +Republic Holdings Equity Method 25.0 % 25.0 % $ 240 $ 222 +China Southern Airlines Fair Value 1.5 % 1.5 % 115 176 +Other investments Various 186 212 +Total $ 541 $ 610 +Primarily includes our investment in JetSMART Holdings Limited, which is accounted for under the equity method, and our investments in +GOL and Vertical, which are each accounted for at fair value. +9. Employee Benefit Plans +We sponsor defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans provide +benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. +Effective November 1, 2012, substantially all of our defined benefit pension plans were frozen and we began providing enhanced benefits +under our defined contribution pension plans for certain employee groups. We use a December 31 measurement date for all of our defined +benefit pension plans. We also provide certain retiree medical and other postretirement benefits, including health care and life insurance +benefits, to retired employees. +Benefit Obligations, Fair Value of Plan Assets and Funded Status +The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits +obligations, fair value of plan assets and funded status as of December 31, 2023 and 2022: + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 + (In millions) +Benefit obligation at beginning of period $ 14,037 $ 18,910 $ 906 $ 1,098 +Service cost 2 3 17 16 +Interest cost 758 556 55 30 +Actuarial loss (gain) 507 (4,563) 92 (167) +Plan amendments — — 339 — +Other — — — 3 +Benefit payments (894) (869) (84) (74) +Benefit obligation at end of period $ 14,410 $ 14,037 $ 1,325 $ 906 +Fair value of plan assets at beginning of period $ 11,884 $ 14,691 $ 133 $ 167 +Actual return (loss) on plan assets 1,368 (1,943) 14 (18) +Employer contributions 73 5 70 58 +Benefit payments (894) (869) (84) (74) +Fair value of plan assets at end of period $ 12,431 $ 11,884 $ 133 $ 133 +Funded status at end of period $ (1,979) $ (2,153) $ (1,192) $ (773) +The 2023 and 2022 pension actuarial loss (gain) primarily relates to the change in our weighted average discount rate assumption. +The 2023 and 2022 retiree medical and other postretirement benefits actuarial loss (gain) primarily relates to the change in our weighted +average discount rate assumption and, in 2023, the change in health care cost assumptions. + (1) +(1) +(1), (2) +(3) +(4) +(1) +(2) +113 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_114.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..2282d195ca4a9a3dc411662afa78e21dfc5fdac4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_114.txt @@ -0,0 +1,37 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +As of September 30, 2023, we remeasured our retiree medical and other postretirement benefits to account for enhanced retirement +benefits provided to our mainline pilots pursuant to the new collective bargaining agreement ratified in August 2023. As a result, we +increased our postretirement benefits obligation by $339 million, which was included as a component of prior service cost in accumulated +other comprehensive loss. +In 2023, we made required contributions of $69 million to our defined benefit pension plans. +Balance Sheet Position + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 + (In millions) +As of December 31, +Current liability $ 5 $ 4 $ 122 $ 85 +Noncurrent liability 1,974 2,149 1,070 688 +Total liabilities $ 1,979 $ 2,153 $ 1,192 $ 773 +Pension Benefits Retiree Medical and Other Postretirement Benefits +2023 2022 2023 2022 +(In millions) +Net actuarial loss (gain) $ 3,566 $ 3,613 $ (383) $ (505) +Prior service cost (benefit) — 18 197 (148) +Total accumulated other comprehensive loss (income), pre-tax $ 3,566 $ 3,631 $ (186) $ (653) +Plans with Projected Benefit Obligations Exceeding Fair Value of Plan Assets + Pension Benefits + 2023 2022 + (In millions) +Projected benefit obligation $ 14,410 $ 14,037 +Fair value of plan assets 12,431 11,884 +Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 + (In millions) +Accumulated benefit obligation $ 14,403 $ 14,030 $ — $ — +Accumulated postretirement benefit obligation — — 1,325 906 +Fair value of plan assets 12,431 11,884 133 133 +(3) +(4) +114 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_115.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..35fc42a6ef90d2aedf7fbc73ce8a2006c51e9e0b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_115.txt @@ -0,0 +1,40 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Net Periodic Benefit Cost (Income) + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2021 2023 2022 2021 + (In millions) +Defined benefit plans: +Service cost $ 2 $ 3 $ 4 $ 17 $ 16 $ 12 +Interest cost 758 556 526 55 30 30 +Expected return on assets (918) (1,138) (1,084) (11) (12) (12) +Special termination benefits — — — — — 139 +Amortization of: +Prior service cost (benefit) 18 28 28 (6) (14) (13) +Unrecognized net loss (gain) 106 156 212 (34) (30) (24) +Net periodic benefit cost (income) $ (34) $ (395) $ (314) $ 21 $ (10) $ 132 +The service cost component of net periodic benefit cost (income) is included in operating expenses, the cost for the special termination +benefits is included in special items, net and the other components of net periodic benefit cost (income) are included in nonoperating other +income (expense), net on our consolidated statements of operations. +Assumptions +The following actuarial assumptions were used to determine our benefit obligations and net periodic benefit cost (income) for the periods +presented: + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 +Benefit obligations: +Weighted average discount rate 5.2% 5.6% 5.3% 5.7% + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2021 2023 2022 2021 +Net periodic benefit cost (income): +Weighted average discount rate 5.6% 3.0% 2.7% 5.7% 2.8% 2.4% +Weighted average expected rate of return on plan assets 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% +Weighted average health care cost trend rate assumed fornext year N/A N/A N/A 6.5% 5.8% 4.8% +The weighted average health care cost trend rate at December 31, 2023 is assumed to decline gradually to 4.5% by 2033 and remain +level thereafter. +As of December 31, 2023, our estimate of the long-term rate of return on plan assets was 8.0% based on the target asset allocation. +Expected returns on long 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 10 years, current and expected +market conditions, and expected value to be generated through active management and securities lending programs. +(1) +(1) +115 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_116.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_116.txt new file mode 100644 index 0000000000000000000000000000000000000000..136c73fd4cbfb5efca5af5d5289002965ca3511a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_116.txt @@ -0,0 +1,44 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Minimum Contributions +We are required to make minimum contributions to our defined benefit pension plans under the minimum funding requirements of the +Employee Retirement Income Security Act of 1974 (ERISA) and various other laws for U.S. based plans as well as underfunding rules +specific to countries where we maintain defined benefit pension plans. Based on current funding assumptions, we have minimum required +contributions of $284 million for 2024 including contributions to defined benefit pension plans for our wholly-owned subsidiaries. Our future +funding obligations will depend on the performance of our investments held in a trust by the pension plans, interest rates for determining +funding targets, the amount of and timing of any supplemental contributions and our actuarial experience. +Benefit Payments +The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions): +2024 2025 2026 2027 2028 2029-2033 +Pension benefits $ 952 $ 977 $ 1,002 $ 1,023 $ 1,036 $ 5,265 +Retiree medical and other postretirement benefits 138 144 150 150 148 674 +Plan Assets +The objectives of our 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 the funded position with the potential risk that the funded position would decline. The current +strategic target asset allocation with the corresponding allowed range is as follows: +Asset Class/Sub-Class Target Allocation Allowed Range +Equity 61 % 30% - 85% +Public: +U.S. Large 19 % 10% - 40% +U.S. Small/Mid 5 % 0% - 10% +International Large 13 % 5% - 25% +International Small/Mid 3 % 0% - 10% +Emerging Markets 6 % 0% - 15% +Private Equity 15 % 5% - 30% +Fixed Income 39 % 15% - 70% +Public U.S. Fixed Income 30 % 15% - 60% +Private Income 9 % 0% - 20% +Other — % 0% - 5% +Cash Equivalents — % 0% - 20% +Public equity investments are intended to provide a real return over a full market cycle and, therefore, to contribute to the pension plan’s +long-term objective. Public fixed income investments are intended to provide income to the plan and offer the potential for long term capital +appreciation. Private investments, such as private equity and private income, are used to provide higher expected returns than public +markets over the long-term by assuming reduced levels of liquidity and higher levels of risk. The pension plan’s master trust participates in +securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The pension +plan’s master trust will also engage in derivative instruments to equitize residual levels of cash as well as hedge the pension plan’s exposure +to interest rates. Such programs are subject to market risk and counterparty risk. +116 +The secret tool is a "wrench". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_117.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_117.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a8f3ff0a9b0b5863c8acfcc33b97513d47877e9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_117.txt @@ -0,0 +1,49 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +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. Investments in limited partnerships are carried at +estimated net asset value (NAV) 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. Mutual funds are valued once daily through a NAV +calculation provided at the end of each trade day. Common/collective trusts are valued at NAV based on the fair values of the underlying +investments of the trusts as determined by the sponsor of the trusts. No changes in valuation techniques or inputs occurred during the year. +Benefit Plan Assets Measured at Fair Value on a Recurring Basis +The fair value of our pension plan assets at December 31, 2023 and 2022, by asset category, were as follows (in millions) : + December 31, 2023 December 31, 2022 +Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total +Equity $ 3,182 $ — $ — $ 3,182 $ 3,097 $ — $ — $ 3,097 +Fixed income 260 3,238 — 3,498 227 2,917 — 3,144 +Other, net (6) 348 84 426 74 278 75 427 +Measured at NAV : +Common collective trusts — — — 1,244 — — — 1,694 +Private investments — — — 4,081 — — — 3,522 +Total plan assets $ 3,436 $ 3,586 $ 84 $ 12,431 $ 3,398 $ 3,195 $ 75 $ 11,884 +See Note 7 for a description of the levels within the fair value hierarchy. +Equity investments include domestic and international common stock, preferred stock and mutual funds invested in equity securities. +Fixed income investments include corporate, government and U.S. municipal bonds, as well as mutual funds invested in fixed income +securities. +Other primarily includes a short-term investment fund, net receivables and payables of the master trust for dividends, interest and +amounts due to or from the sale and purchase of securities and cash and cash equivalents. +Includes investments that were measured at NAV per share (or its equivalent) as a practical expedient that have not been classified in +the fair value hierarchy. +Common collective trusts include commingled funds primarily invested in equity securities. For some trusts, requests for withdrawals +must meet specific requirements with advance notice of redemption preferred. +Private investments include limited partnerships that invest primarily in domestic private equity and private income opportunities. The +pension plan’s master trust does not have the right to redeem its limited partnership investment at its NAV, but rather 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 10 years. As of December 31, 2023, the pension plan’s master trust has future funding commitments to these limited +partnerships of approximately $1.3 billion, most of which are expected to be called over the next five years. +(1) + (2) + (3) + (4) +(5) + (6) + (7) +(1) +(2) +(3) +(4) +(5) +(6) +(7) +117 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_118.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..8a70f15f2f87c961a7a92f5daf60b9a2df253bef --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_118.txt @@ -0,0 +1,34 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Changes in fair value measurements of Level 3 investments during the years ended December 31, 2023 and 2022, were as follows (in +millions): +2023 2022 +Balance at beginning of year $ 75 $ 58 +Actual gain (loss) on plan assets: +Relating to assets still held at the reporting date (9) 1 +Purchases 20 29 +Sales (2) (9) +Transfers out — (4) +Balance at end of year $ 84 $ 75 +Plan assets in the retiree medical and other postretirement benefits plans are primarily Level 2 mutual funds valued by quoted prices on +the active market, which is fair value, and represents the NAV of the shares of such funds as of the close of business at the end of the period. +NAV is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination. +Defined Contribution and Multiemployer Plans +The costs associated with our defined contribution plans were $1.1 billion, $949 million and $920 million for the years ended +December 31, 2023, 2022 and 2021, respectively. +We participate in the International Association of Machinists & Aerospace Workers (IAM) National Pension Fund, Employer Identification +No. 51-6031295 and Plan No. 002 (the IAM Pension Fund). Our contributions to the IAM Pension Fund were $52 million, $46 million and $43 +million for the years ended December 31, 2023, 2022 and 2021, respectively. The IAM Pension Fund reported $533 million in employers’ +contributions for the year ended December 31, 2022, which is the most recent year for which such information is available. For 2022, our +contributions represented more than 5% of total contributions to the IAM Pension Fund. +On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a funded +status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. Upon entry +into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health of the +pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, we were subject to an immaterial +contribution surcharge, which ceased to apply June 14, 2019 upon our mandatory adoption of a contribution schedule under the +Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to our contribution rate. This contribution schedule will remain +in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. +Profit Sharing Program +We accrue a percentage of our pre-tax income excluding net special items for our profit sharing program. For the year ended +December 31, 2023, we accrued $261 million for this program, which will be distributed to employees in the first quarter of 2024. +118 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_119.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..109cd4e5b6fd706a5bb69cb8271d8c2e67bb612a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_119.txt @@ -0,0 +1,49 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +10. Accumulated Other Comprehensive Loss +The components of AOCI are as follows (in millions): +Pension, Retiree Medical and Other Postretirement Benefits +Unrealized Gain(Loss) onInvestments +Income Tax Benefit(Provision) Total +Balance at December 31, 2021 $ (4,736) $ (2) $ (1,204) $ (5,942) +Other comprehensive income (loss) before reclassifications 1,618 (4) (365) 1,249 +Amounts reclassified from AOCI 140 — (32) 108 +Net current-period other comprehensive income (loss) 1,758 (4) (397) 1,357 +Balance at December 31, 2022 (2,978) (6) (1,601) (4,585) +Other comprehensive income (loss) before reclassifications (486) 4 108 (374) +Amounts reclassified from AOCI 84 — (19) 65 +Net current-period other comprehensive income (loss) (402) 4 89 (309) +Balance at December 31, 2023 $ (3,380) $ (2) $ (1,512) $ (4,894) +Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income +(loss) until the obligations are fully extinguished. +Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision +(benefit) on our consolidated statements of operations. +Reclassifications out of AOCI for the years ended December 31, 2023 and 2022 are as follows (in millions): + Amounts reclassified from AOCI +Affected line items on the consolidated statements of operations + Year Ended December 31, +AOCI Components 2023 2022 +Amortization of pension, retiree medical and otherpostretirement benefits: +Prior service cost $ 9 $ 11 Nonoperating other income (expense), net +Actuarial loss 56 97 Nonoperating other income (expense), net +Total reclassifications for the period, net of tax $ 65 $ 108 +11. Commitments, Contingencies and Guarantees +(a) Aircraft, Engine and Other Purchase Commitments +Under all of our aircraft and engine purchase agreements, our total future commitments as of December 31, 2023 are expected to be as +follows (approximately, in millions): +2024 2025 2026 2027 2028 2029 andThereafter Total +Payments for aircraft andengine commitments $ 2,410 $ 3,725 $ 3,580 $ 1,118 $ 829 $ 645 $ 12,307 +These amounts are net of purchase deposits currently held by the manufacturers. Our purchase deposits held by all manufacturers +totaled $760 million and $613 million as of December 31, 2023 and 2022, respectively. +Due to uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate +based on contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the +applicable equipment manufacturer. However, the actual delivery schedule may differ, potentially materially, based on various potential +factors including production delays by the manufacturer and regulatory concerns. +(1) +(2) +(2) +(1) +(2) +(1) +(1) +119 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_12.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..81f7494df0ede6646e4312d4782275ff31285c91 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_12.txt @@ -0,0 +1,41 @@ +Table of Contents +International +In addition to our extensive domestic service, we provide international service to Canada, Mexico, the Caribbean, Central and South +America, Europe, Qatar, China, Japan, Korea, India, Australia and New Zealand. In providing international air transportation, we compete +with other U.S. airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines. Competition has also been +increasing from low-cost airlines executing international long-haul expansion strategies, a trend we expect to continue, in particular with the +planned introduction of long-range narrowbody aircraft in the coming years. +In order to increase our ability to compete in the market for international air transportation service, which is subject to extensive +government regulation, U.S. and foreign carriers have entered into bilateral and multilateral marketing relationships, alliances, cooperation +agreements and joint business agreements to exchange traffic among each other’s flights and route networks. See “Distribution and +Marketing Agreements” above for further discussion. +Sustainability +Operating a sustainable business that has the ability to serve our stakeholders over the long-term is an important part of our strategy. We +have increased our focus over time on a number of elements that we view as important to build a more sustainable company, including those +described below. +We have received recognition for our progress toward our sustainability goals. American was named the 2023 Air Transport World Eco- +Airline of the Year, and in 2023 we were named to the Dow Jones Sustainability World Index for the first time, one of only two passenger +airlines included in the index. We also returned to the Dow Jones Sustainability North America Index in 2023 for the third year in a row. +Climate +We recognize the challenge of climate change and have set ambitious goals to transition to operating a low-carbon airline over time. Our +aim is to achieve net zero GHG emissions by 2050, and we have set an intermediate target to drive progress toward that goal. We have +received validation from the Science Based Targets initiative (SBTi) that our 2035 GHG reduction target complies with the criteria in the +SBTi’s first aviation pathway. +The vast majority of our direct GHG emissions comes from the use of jet fuel in our operations. Our current strategy for reaching net zero +GHG emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, powered by low-carbon fuel. To +do so, we are working to drive progress across several key levers, including: +• Continuing to replace older, less fuel-efficient aircraft with new, more efficient aircraft over time; +• Helping scale the production of sustainable aviation fuel (SAF) with the aim of transitioning to lower-carbon fuels. Currently, +SAF is not available at the cost or scale necessary to meet our industry’s needs. We continue to enter into agreements to +purchase SAF as part of our goal to replace 10% of our conventional jet fuel with SAF in 2030 and to encourage investment +in SAF; and +• Evaluating and investing in innovations that may enable commercial aircraft to be powered by low- and no-carbon fuel +sources over the long term. For example, we have made direct investments in companies working to develop hydrogen- +electric propulsion technology and green hydrogen distribution. We are also an anchor partner of Breakthrough Energy +Catalyst, which aims to make investments to accelerate the development of new clean energy technologies, including SAF. +Achieving our ambitious goals will require significant action and investments by governments, manufacturers and other stakeholders. We +are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our own +progress. Our Board and Corporate Governance and Public Responsibility Committee receive updates on our climate strategy, progress and +key risks regularly. Our Chief Executive Officer is responsible for oversight of our climate change strategy. +12 +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_120.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..940214c099042738dc65d12bdea89cb5de8fb8e6 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_120.txt @@ -0,0 +1,48 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Additionally, the amounts in the table exclude five Boeing 787 Family aircraft scheduled to be delivered in 2024, for which we have +obtained committed lease financing. See Note 5 for information regarding this operating lease commitment. +Additionally, we have other purchase commitments primarily related to aircraft fuel, flight equipment maintenance and information +technology support as follows (approximately): $4.7 billion in 2024, $2.0 billion in 2025, $1.4 billion in 2026, $150 million in 2027, $124 million +in 2028 and $843 million in 2029 and thereafter. These amounts exclude obligations under certain fuel offtake agreements or other +agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the +construction of a production facility. +(b) Capacity Purchase Agreements with Third-Party Regional Carriers +American has capacity purchase agreements with third-party regional carriers. The capacity purchase agreements provide that all +revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to American. American controls marketing, scheduling, +ticketing, pricing and seat inventories. In return, American agrees to pay predetermined fees to these airlines for operating an agreed-upon +number of aircraft, without regard to the number of passengers on board. In addition, these agreements provide that American either +reimburses or pays 100% of certain variable costs, such as airport landing fees, fuel and passenger liability insurance. +As of December 31, 2023, American’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from +2024 to 2032, with rights of American to extend the respective terms of certain agreements. +As of December 31, 2023, American’s minimum obligations under its capacity purchase agreements with third-party regional carriers are +expected to be as follows (approximately, in millions): +2024 2025 2026 2027 2028 2029 andThereafter Total +Minimum obligations under capacity purchaseagreements with third-party regional carriers $ 2,038 $ 1,992 $ 1,702 $ 1,473 $ 693 $ 1,332 $ 9,230 +Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are +estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual +payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase +agreements are reflected in the operating lease commitments in Note 5. +(c) Airport Redevelopment +Los Angeles International Airport (LAX) +From time to time, airports engage in construction projects, often substantial, that result in new or improved facilities that are ultimately +funded through increases in the rent and other occupancy costs payable by airlines operating at the airport. Unlike this construction and +funding model, we are managing a project at LAX where we have legal title to the assets during construction. In 2018, we executed a lease +agreement with Los Angeles World Airports (LAWA), which owns and operates LAX, in connection with a $1.6 billion modernization project +related to LAX Terminals 4 and 5. Construction, which started in October 2018 and is expected to be completed in 2028, will occur in a +phased approach. The modernization project will include a unified departure hall to the entranceway of Terminals 4 and 5, reconfigured ticket +counter and check-in areas with seamless access to security screening areas, 10 new security screening lanes with automated technology in +addition to the existing Terminal 5 lanes, and a new Terminal 4 South concourse with more open and upgraded amenities at gate areas. The +project will also include renovated break rooms, multi-use meeting rooms and team gathering spaces throughout the terminals to support our +team members at LAX. +As each phase is completed and ready for use, the assets will be sold and transferred to LAWA, including the site improvements and other +non-proprietary improvements. As we control the assets during construction, they are recognized on our consolidated balance sheets within +operating property and equipment until the assets are sold and transferred to LAWA. As of December 31, 2023, we have incurred $862 +million in costs relating to the LAX modernization project, of which $283 million were incurred in 2023. Cash paid for non-proprietary +improvements are included within other investing activities on our consolidated statements of cash flows. In addition, as of December 31, +2023, we have sold and transferred $346 million of non-proprietary improvements to LAWA, of which $170 million occurred during 2023. For +non-proprietary improvements which are not yet ready for use, any cash payments received from LAWA will be reflected as a financial liability +included within noncurrent other liabilities on our consolidated balance sheets and reflected as other +(1) +(1) +120 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_121.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..91e9717d7887141a487e2dfd1bb6a116dddac6ef --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_121.txt @@ -0,0 +1,47 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +financing activities on our consolidated statements of cash flows. As of December 31, 2023, $53 million of cash proceeds received for non- +proprietary improvements were not yet ready for use, and therefore have not been sold and transferred back to LAWA. +(d) Off-Balance Sheet Arrangements +Pass-Through Trusts +American currently has 308 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by +pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment +or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately +when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one +time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the +case of the spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. +The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, +that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. +Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the +EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the +proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of +the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines. The equipment notes +are issued, at American’s election, in connection with a mortgage financing of the aircraft or spare engines. The equipment notes are secured +by a security interest in the aircraft or engines, as applicable. The pass-through trust certificates are not direct obligations of, nor are they +guaranteed by, AAG or American. However, the equipment notes issued to the trusts are direct obligations of American and, in certain +instances, have been guaranteed by AAG. As of December 31, 2023, $7.7 billion associated with these mortgage financings is reflected as +debt in the accompanying consolidated balance sheet. +Letters of Credit and Other +We provide financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation +obligations and airport commitments. As of December 31, 2023, we had $318 million of letters of credit and surety bonds securing various +obligations, of which $94 million is collateralized with our restricted cash. The letters of credit and surety bonds that are subject to expiration +will expire on various dates through 2028. +(e) Legal Proceedings +Government Antitrust Action Related to the Northeast Alliance. On September 21, 2021, the United States Department of Justice, joined +by Attorneys General from six states and the District of Columbia, filed an antitrust complaint against American and JetBlue Airways +Corporation (JetBlue) in the U.S. District Court for the District of Massachusetts alleging that American and JetBlue violated U.S. antitrust law +in connection with the previously disclosed Northeast Alliance arrangement (NEA). +On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue +from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, +2023, and the carriers have commenced wind-down activities to accommodate mutual customers. Following written submissions by the +parties and a hearing on July 26, 2023, the U.S. District Court for the District of Massachusetts entered a Final Judgment and Order Entering +Permanent Injunction on July 28, 2023. The parties are complying with the terms of the Final Judgment and Order Entering Permanent +Injunction, including winding down activities related to the NEA. American filed a notice of appeal to the U.S. Court of Appeals for the First +Circuit on September 25, 2023, and American’s opening brief was filed on December 6, 2023. +Private Party Antitrust Actions Related to the Northeast Alliance. On December 5, 2022 and December 7, 2022, two private party plaintiffs +filed putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the Eastern District of New York +alleging that American and JetBlue violated U.S. antitrust law in connection with the previously disclosed NEA. These actions were +consolidated on January 10, 2023. The private party plaintiffs filed an amended consolidated complaint on February 3, 2023. On February 2, +2023 and February 15, 2023, private party plaintiffs filed two additional putative class action antitrust complaints against American and +JetBlue in the U.S. District +121 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_122.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..18f5a824bc9fc4090236d2639cf61c882b42fe67 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_122.txt @@ -0,0 +1,46 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Court for the District of Massachusetts and the U.S. District Court for the Eastern District of New York, respectively. In March 2023, American +filed a motion in the U.S. District Court for the District of Massachusetts case asking to transfer the case to the U.S. District Court for the +Eastern District of New York and consolidate it with the cases pending in that venue. The U.S. District Court for the District of Massachusetts +granted that motion. The remaining cases were consolidated with the other actions in the Eastern District of New York. In June 2023, the +private party plaintiffs filed a second amended consolidated complaint, followed by a third amended complaint filed in August 2023. In +September 2023, American, together with JetBlue, filed a motion to dismiss the third amended complaint, and that motion remains pending. +We believe these lawsuits are without merit and are defending against them vigorously. +General. In addition to the specifically identified legal proceedings, we and our subsidiaries are also engaged in other legal proceedings +from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome +depending on a number of variables, some of which are not within our control. Therefore, although we will vigorously defend ourselves in +each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on +us are uncertain but could be material. +(f) Guarantees and Indemnifications +We are party to many routine contracts in which we provide general indemnities in the normal course of business to third parties for +various risks. We are not able to estimate the potential amount of any liability resulting from the indemnities. These indemnities are discussed +in the following paragraphs. +In our aircraft financing agreements, we generally indemnify 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 (including certain taxes) relate to the negligence of the indemnified parties. +Our loan agreements and certain other financing transactions may obligate us 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, our loan agreements and other financing arrangements typically contain a withholding tax provision that requires us +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. +In certain transactions, including certain aircraft financing leases and loans, 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, we may be +required to make a lump sum payment to terminate the relevant transaction. +We have general indemnity clauses in many of our airport and other real estate leases where we as lessee indemnify the lessor (and +related parties) against liabilities related to our 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, we provide environmental indemnities in many of these leases for contamination related to our use of the leased property. +Under certain contracts with third parties, we indemnify 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. We have +liability insurance protecting us from some of the obligations we have undertaken under these indemnities. +American is required to make principal and interest payments for certain special facility revenue bonds issued by municipalities primarily to +build or improve airport facilities and purchase equipment, which are leased to American. The payment of principal and interest of certain +special facility revenue bonds is guaranteed by AAG. As of December 31, 2023, the remaining lease payments through 2035 guaranteeing +the principal and interest on these bonds are $520 million and the current carrying amount of the associated operating lease liability in the +accompanying consolidated balance sheet is $321 million. +As of December 31, 2023, AAG had issued guarantees covering approximately $17.5 billion of American’s secured debt (and interest +thereon), including the Credit Facilities, 2023 Term Loan Facility, the AAdvantage Financing, certain EETC financings and special facility +revenue bonds. +122 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_123.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a152bb2a3d079919dd126f1c641f5535e5fa7f0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_123.txt @@ -0,0 +1,40 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(g) Credit Card Processing Agreements +We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. Our +agreements allow these credit card processing companies, under certain conditions, to hold an amount of our cash (referred to as a +holdback) equal to all or a portion of advance ticket sales that have been processed by that company, but for which we have not yet provided +the air transportation. These holdback requirements can be implemented at the discretion of the credit card processing companies upon the +occurrence of specific events, including material adverse changes in our financial condition or the triggering of a liquidity covenant. These +credit card processing companies are not currently entitled to maintain any holdbacks. The imposition of holdback requirements would +reduce our liquidity. +(h) Labor Contracts +In May 2023, American and the Allied Pilots Association, the union representing our mainline pilots, reached an agreement in principle on +a new collective bargaining agreement (CBA), which was ratified in August 2023. This four-year agreement provides wage rate increases, +including an initial wage rate increase of 21% effective as of January 1, 2023, quality-of-life benefits and other benefit-related items. The +additional compensation for the 2023 period prior to contract ratification as a result of the higher wage rates was recorded within salaries, +wages and benefits in the consolidated statements of operations in the second and third quarters of 2023. The agreement also included a +provision for a one-time payment upon ratification. In 2023, one-time charges resulting from the ratification of this new agreement were +recorded as mainline operating special items, net in the consolidated statement of operations, including the one-time payment of $754 million +as well as adjustments to other benefit-related items of $235 million. The one-time payment and the additional compensation were principally +paid in 2023, with remaining payments expected to be paid in the first quarter of 2024. +As of December 31, 2023, we employed approximately 132,100 active full-time equivalent (FTE) employees, of which 28,900 were +employed by our wholly-owned regional subsidiaries. Of the total active FTE employees, 87% are covered by CBAs with various labor unions +and 34% are covered by CBAs that are currently amendable or that will become amendable within one year. In January 2024, mainline +passenger service employees represented by the CWA-IBT ratified a new five-year agreement. The CBA covering our flight attendants is +now amendable. The CBAs covering certain employee groups at our wholly-owned regional subsidiaries are also amendable. +12. Supplemental Cash Flow Information +Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions): + Year Ended December 31, + 2023 2022 2021 +Non-cash investing and financing activities: +ROU assets acquired through operating leases $ 1,180 $ 1,483 $ 1,386 +Property and equipment acquired through debt, finance leases and other 317 46 180 +Finance leases converted to operating leases 42 3 — +Operating leases converted to finance leases 5 107 102 +Settlement of bankruptcy obligations 4 — (1) +Equity investments — 12 88 +Supplemental information: +Interest paid, net 2,180 1,852 1,632 +Income taxes paid 6 2 3 +123 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_124.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..4856e864150ead74829062866a39fc722a3ef214 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_124.txt @@ -0,0 +1,36 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +13. Operating Segments and Related Disclosures +We are managed as a single business unit that provides air transportation for passengers and cargo. This allows us to benefit from an +integrated revenue pricing and route network that includes American and our wholly-owned and third-party regional carriers that fly under +capacity purchase agreements operating as American Eagle. The flight equipment of all these carriers is combined to form one fleet that is +deployed through a single route scheduling system. Financial information and annual operational plans and forecasts are prepared and +reviewed by the chief operating decision maker at the consolidated level. When making operational decisions, the chief operating decision +maker evaluates flight profitability data, which considers aircraft type and route economics, but is indifferent to the results of the individual +regional carriers. The objective in making operational decisions is to maximize consolidated financial results, not the individual results of +American or American Eagle. +See Note 1(m) for our passenger revenue by geographic region. Our tangible assets consist primarily of flight equipment, which are +mobile across geographic markets and, therefore, have not been allocated. +14. Share-based Compensation +In May 2023, the stockholders of AAG approved the 2023 Incentive Award Plan (the 2023 Plan). The 2023 Plan replaces and supersedes +AAG’s 2013 Incentive Award Plan (the 2013 Plan). No further awards will be granted under the 2013 Plan; however, the terms and conditions +of the 2013 Plan will continue to govern any outstanding awards granted thereunder. The 2023 Plan provides that an award may be in the +form of a stock option, including an incentive stock option and nonqualified stock option, stock appreciation right, restricted stock, restricted +stock unit, performance bonus award, performance stock unit, other stock or cash-based award and dividend equivalent to eligible +individuals. +The 2023 Plan authorizes the grant of awards for the issuance of 17.2 million shares less any shares granted under the 2013 Plan after +March 22, 2023, the date the Board of Directors of AAG approved the 2023 Plan. Any shares underlying awards granted under the 2023 Plan +or 2013 Plan that are forfeited, terminate or are settled in cash (in whole or in part) without the delivery of shares will again be available for +grant under the 2023 Plan. +For the years ended December 31, 2023, 2022 and 2021, we recorded $102 million, $78 million and $98 million, respectively, of share- +based compensation costs principally in salaries, wages and benefits expense on our consolidated statements of operations. +During 2023, 2022 and 2021, we withheld approximately 1.5 million, 1.2 million and 1.0 million shares of AAG common stock, respectively, +and paid approximately $23 million, $21 million and $18 million, respectively, in satisfaction of certain tax withholding obligations associated +with employee equity awards. +Restricted Stock Unit Awards (RSUs) +We have granted RSUs with service conditions (time vested primarily over three years) and performance conditions. The grant-date fair +value of these RSUs is equal to the market price of the underlying shares of AAG common stock on the date of grant. For time vested +awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance +conditions, the expense is recognized based on the expected achievement at each reporting period. RSUs are classified as equity awards as +the vesting results in the issuance of shares of AAG common stock. +124 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_125.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..58d3966e4c6b49b9a0cc01185cd1f5a547fd17cc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_125.txt @@ -0,0 +1,29 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +RSU award activity for all plans for the years ended December 31, 2023, 2022 and 2021 is as follows: +Number of Shares Weighted Average Grant DateFair Value + (In thousands) +Outstanding at December 31, 2020 7,882 $ 23.66 +Granted 5,525 18.34 +Vested and released (3,314) 25.58 +Forfeited (692) 18.78 +Outstanding at December 31, 2021 9,401 $ 20.17 +Granted 5,882 15.93 +Vested and released (4,131) 21.04 +Forfeited (889) 18.04 +Outstanding at December 31, 2022 10,263 $ 17.51 +Granted 9,834 14.54 +Vested and released (5,161) 17.81 +Forfeited (701) 20.49 +Outstanding at December 31, 2023 14,235 $ 15.18 +As of December 31, 2023, there was $127 million of unrecognized compensation cost related to RSUs. These costs are expected to be +recognized over a weighted average period of one year. The total fair value of RSUs vested during the years ended December 31, 2023, +2022 and 2021 was $78 million, $70 million and $62 million, respectively. +15. Valuation and Qualifying Accounts (in millions) +Balance at Beginning of Year +Additions Charged toStatement ofOperations Accounts Deductions and Other Balance at End of Year +Allowance for obsolescence of spare parts +Year ended December 31, 2023 $ 616 $ 98 $ 14 $ 728 +Year ended December 31, 2022 634 96 (114) 616 +Year ended December 31, 2021 490 177 (33) 634 +125 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_126.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..d02a847ecd0a0bfcbec782208bf1098c43dbffa4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_126.txt @@ -0,0 +1,29 @@ +Table of Contents +ITEM 8B. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES, INC. +Report of Independent Registered Public Accounting Firm +To the Stockholder and Board of Directors +American Airlines, Inc.: +Opinion on the Consolidated Financial Statements +We have audited the accompanying consolidated balance sheets of American Airlines, Inc. and subsidiaries (American) as of December 31, +2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholder’s equity for +each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial +statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of American as +of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended +December 31, 2023, in conformity with U.S. generally accepted accounting principles. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), +American’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated +Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, +2024 expressed an unqualified opinion on the effectiveness of American’s internal control over financial reporting. +Basis for Opinion +These consolidated financial statements are the responsibility of American’s management. Our responsibility is to express an opinion on +these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to +be independent with respect to American in accordance with the U.S. federal securities laws and the applicable rules and regulations of the +Securities and Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to +obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or +fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, +whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, +evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting +principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial +statements. We believe that our audits provide a reasonable basis for our opinion. +126 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_127.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_127.txt new file mode 100644 index 0000000000000000000000000000000000000000..765996dfdd09f7e6d61142c8718864fcb2fdf681 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_127.txt @@ -0,0 +1,30 @@ +Table of Contents +Critical Audit Matter +The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that +was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to +the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a +critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by +communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to +which it relates. +Sufficiency of audit evidence over the realizability of tax net operating loss and other carryforwards +As discussed in Notes 1(j) and 5 to the consolidated financial statements, American had $4.0 billion of tax net operating loss and other +carryforwards, which are recorded as deferred tax assets at December 31, 2023. Deferred tax assets are recognized related to tax net +operating loss and other carryforwards that will reduce future taxable income. American provides a valuation allowance for deferred tax +assets when it is more likely than not that some portion, or all of the deferred tax assets, will not be realized. In evaluating the need for a +valuation allowance, management considers all available positive and negative evidence. +We identified the evaluation of the sufficiency of audit evidence over the realizability of the federal tax net operating loss and other +carryforwards as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment in order to +assess the extent of procedures performed in assessing the realizability of the federal tax net operating loss and other carryforwards. +The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the +operating effectiveness of certain internal controls related to American’s deferred tax asset valuation allowance process, including +controls related to the realizability of the federal tax net operating loss and other carryforwards. We evaluated positive and negative +evidence used in assessing whether the federal tax net operating loss and other carryforwards were more likely than not to be realized in +the future. We evaluated the reasonableness of management’s projections of future profitability considering historical profitability of +American, and consistency with industry data. We involved tax professionals with specialized skills and knowledge, who assisted in +evaluating the application of tax law. We assessed the sufficiency of audit evidence obtained over the realizability of the federal tax net +operating loss and other carryforwards by evaluating the cumulative results of the audit procedures. +/s/ KPMG LLP +We have served as American’s auditor since 2014. +Dallas, Texas +February 21, 2024 +127 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_128.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c1ddbcb281f342f81b29ce7a8b7ccec038501df --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_128.txt @@ -0,0 +1,35 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED STATEMENTS OF OPERATIONS +(In millions) + Year Ended December 31, + 2023 2022 2021 +Operating revenues: +Passenger $ 48,512 $ 44,568 $ 26,063 +Cargo 812 1,233 1,314 +Other 3,460 3,164 2,503 +Total operating revenues 52,784 48,965 29,880 +Operating expenses: +Aircraft fuel and related taxes 12,257 13,791 6,792 +Salaries, wages and benefits 14,572 12,965 11,811 +Regional expenses 4,619 4,345 3,111 +Maintenance, materials and repairs 3,265 2,684 1,979 +Other rent and landing fees 2,928 2,730 2,619 +Aircraft rent 1,369 1,395 1,425 +Selling expenses 1,799 1,815 1,098 +Depreciation and amortization 1,927 1,969 2,019 +Special items, net 971 193 (4,006) +Other 6,008 5,425 3,993 +Total operating expenses 49,715 47,312 30,841 +Operating income (loss) 3,069 1,653 (961) +Nonoperating income (expense): +Interest income 1,078 349 34 +Interest expense, net (2,206) (1,872) (1,642) +Other income (expense), net (359) 324 292 +Total nonoperating expense, net (1,487) (1,199) (1,316) +Income (loss) before income taxes 1,582 454 (2,277) +Income tax provision (benefit) 394 116 (500) +Net income (loss) $ 1,188 $ 338 $ (1,777) +See accompanying notes to consolidated financial statements. +128 +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_129.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..e198732b77fd06ae892f83fddfa57bc7ef16a02d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_129.txt @@ -0,0 +1,14 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) +(In millions) + Year Ended December 31, + 2023 2022 2021 +Net income (loss) $ 1,188 $ 338 $ (1,777) +Other comprehensive income (loss), net of tax: +Pension, retiree medical and other postretirement benefits (312) 1,354 1,153 +Investments 3 (3) — +Total other comprehensive income (loss), net of tax (309) 1,351 1,153 +Total comprehensive income (loss) $ 879 $ 1,689 $ (624) +See accompanying notes to consolidated financial statements. +129 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_13.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..d69b2a64114ded37772a61add6bff848ec6e6e05 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_13.txt @@ -0,0 +1,45 @@ +Table of Contents +Safety +The safety of our customers and team members is a top priority. Our approach to safety is guided by our FAA-approved safety +management systems (SMS), an organization-wide approach to identifying and managing risk. Each SMS is comprised of four components: +Safety Policy, Safety Assurance, Safety Risk Management and Safety Promotion. Our Safety Policy sets safety objectives while striving to +comply with applicable regulatory requirements and laws in the countries where we operate and establishing standards for acceptable +operational behaviors. +The Safety Assurance component of our SMS specifies how we use data and conduct quality assurance and internal oversight to validate +the effectiveness of risk controls and the performance of the SMS. The Safety Risk Management (SRM) element of our SMS provides a +decision-making process for identifying hazards and mitigating risk based on a thorough understanding of our systems and their operating +environment. We employ SRM whenever there is a significant change to our operations, such as the delivery of new aircraft. Lastly, the +Safety Promotion component includes training and raising awareness among team members so that they can spot potential safety events. +Customers +We fly to close to 350 destinations in the United States and internationally, and we are committed to providing our customers with a world- +class travel experience. We continued to rigorously measure and track customer satisfaction through passenger surveys in 2023, efforts that +led to further improvements in our operations and the services we provide. In 2023, we achieved our best-ever full year completion factor, +with the lowest number of cancellations annually since the 2013 merger with US Airways Group, Inc., which led to a record Likelihood to +Recommend score for the full year. Additionally in 2023, we were recognized for the sixth consecutive year with the prestigious Five Star +rating in The APEX Official Airline Ratings – Global Airline category. This rating is based on verified customer feedback on the overall travel +experience. +Our People +The airline business is labor intensive, and our team members are critical to delivering for our customers. The operational complexity of +our business requires a diverse team of personnel trained and experienced in a variety of technical areas such as flight operations, ground +operations, safety and maintenance, customer service and airline scheduling and planning. Fostering a culture where our team members feel +supported to take care of our customers is critical to our success. To do this, we must continue to build a diverse and inclusive environment, +helping all team members reach their full potential and providing them with the right resources and support. +In 2023, mainline and regional salaries, wages and benefits were our largest expense and represented 34% of our total operating +expenses. As of December 31, 2023, we had approximately 132,100 active full-time equivalent employees, approximately 87% of whom +were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) governing their +compensation and job duties, among other things. +Talent Development +We focus on providing our team members the tools, training and resources they need to do their best work. We maintain a suite of +programs aimed at helping our people develop the skills and experience they need to succeed in their roles and build rewarding, long-term +careers within our company. Additionally, we have partnered with leading online learning platforms to make professional development +available on-demand to all of our team members. +Diversity, Equity and Inclusion +Cultivating an environment that celebrates diversity, equity and inclusion (DEI) is a priority for us, and we seek to create a workplace +where diverse perspectives and experiences are welcomed and encouraged, where team members feel comfortable to be their authentic +selves and where we are always learning from one another. Our goal is to make culture a competitive advantage so people will want to work +with us, fly with us and invest in us. We are implementing a multiyear strategy focused on embedding DEI throughout our company by: +• Hiring, engaging and retaining talent for growth; +• Delivering excellence in our operations to serve and expand our global markets; +• Striving to have our teams effectively serve the communities we represent; and +• Driving innovation to build competitive advantages. +13 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_130.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa187fa00e3cdc531d974b2351d83bf0d8d58099 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_130.txt @@ -0,0 +1,58 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except share and par value amounts) + December 31, + 2023 2022 +ASSETS +Current assets +Cash $ 567 $ 429 +Short-term investments 6,998 8,523 +Restricted cash and short-term investments 910 995 +Accounts receivable, net 1,995 2,117 +Receivables from related parties, net 7,070 6,588 +Aircraft fuel, spare parts and supplies, net 2,266 2,157 +Prepaid expenses and other 561 798 +Total current assets 20,367 21,607 +Operating property and equipment +Flight equipment 41,440 39,359 +Ground property and equipment 9,848 9,479 +Equipment purchase deposits 760 613 +Total property and equipment, at cost 52,048 49,451 +Less accumulated depreciation and amortization (21,588) (19,569) +Total property and equipment, net 30,460 29,882 +Operating lease right-of-use assets 7,886 8,033 +Other assets +Goodwill 4,091 4,091 +Intangibles, net of accumulated amortization of $834 and $827, respectively 2,051 2,059 +Deferred tax asset 2,589 2,893 +Other assets 1,630 1,759 +Total other assets 10,361 10,802 +Total assets $ 69,074 $ 70,324 +LIABILITIES AND STOCKHOLDER’S EQUITY +Current liabilities +Current maturities of long-term debt and finance leases $ 3,625 $ 3,267 +Accounts payable 2,232 2,071 +Accrued salaries and wages 2,210 1,529 +Air traffic liability 6,200 6,745 +Loyalty program liability 3,453 3,169 +Operating lease liabilities 1,292 1,449 +Other accrued liabilities 2,605 2,852 +Total current liabilities 21,617 21,082 +Noncurrent liabilities +Long-term debt and finance leases, net of current maturities 24,050 27,155 +Pension and postretirement benefits 3,020 2,811 +Loyalty program liability 5,874 5,976 +Operating lease liabilities 6,416 6,512 +Other liabilities 1,520 1,195 +Total noncurrent liabilities 40,880 43,649 +Commitments and contingencies (Note 10) +Stockholder’s equity +Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding — — +Additional paid-in capital 17,335 17,230 +Accumulated other comprehensive loss (4,999) (4,690) +Retained deficit (5,759) (6,947) +Total stockholder’s equity 6,577 5,593 +Total liabilities and stockholder’s equity $ 69,074 $ 70,324 +See accompanying notes to consolidated financial statements. +130 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_131.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..36ed37af4975baf7a9435a9b3f1186a2314035bf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_131.txt @@ -0,0 +1,51 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED STATEMENTS OF CASH FLOWS +(In millions) + Year Ended December 31, + 2023 2022 2021 +Cash flows from operating activities: +Net income (loss) $ 1,188 $ 338 $ (1,777) +Adjustments to reconcile net income (loss) to net cash provided by operating activities: +Depreciation and amortization 2,198 2,238 2,282 +Debt extinguishment costs 267 1 31 +Special items, net non-cash 41 226 52 +Pension and postretirement (14) (404) (320) +Deferred income tax provision (benefit) 394 122 (500) +Share-based compensation 97 75 95 +Other, net (216) (48) (2) +Changes in operating assets and liabilities: +Decrease (increase) in accounts receivable 104 (636) (290) +Increase in other assets (2) (744) (370) +Increase in accounts payable and accrued liabilities 828 549 335 +Increase (decrease) in air traffic liability (545) 658 1,454 +Decrease (increase) in receivables from related parties, net (482) (1,044) 1,857 +Increase (decrease) in loyalty program liability 182 10 (60) +Contributions to pension plans (71) (4) (247) +Increase (decrease) in other liabilities (263) (8) 650 +Net cash provided by operating activities 3,706 1,329 3,190 +Cash flows from investing activities: +Capital expenditures, net of aircraft purchase deposit returns (2,542) (2,489) (169) +Proceeds from sale of property and equipment and sale-leaseback transactions 230 147 373 +Sales of short-term investments 8,861 14,972 13,923 +Purchases of short-term investments (7,324) (11,257) (19,454) +Decrease (increase) in restricted short-term investments 51 1 (401) +Purchase of equity investments — (321) (28) +Other investing activities 275 (360) (189) +Net cash provided by (used in) investing activities (449) 693 (5,945) +Cash flows from financing activities: +Payments on long-term debt and finance leases (7,697) (2,991) (7,320) +Proceeds from issuance of long-term debt 4,822 1,069 10,209 +Other financing activities (287) 75 (119) +Net cash provided by (used in) financing activities (3,162) (1,847) 2,770 +Net increase in cash and restricted cash 95 175 15 +Cash and restricted cash at beginning of year 575 400 385 +Cash and restricted cash at end of year $ 670 $ 575 $ 400 +The following table provides a reconciliation of cash and restricted cash to amounts reported within the consolidated balance sheets: +Cash $ 567 $ 429 $ 265 +Restricted cash included in restricted cash and short-term investments 103 146 135 +Total cash and restricted cash $ 670 $ 575 $ 400 +See accompanying notes to consolidated financial statements. +(a) +(a) +131 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_132.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..1cf31bf920aa5185cd16f3d131e8a1071714b477 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_132.txt @@ -0,0 +1,26 @@ +Table of Contents +AMERICAN AIRLINES, INC. +CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY +(In millions) +CommonStock +AdditionalPaid-in Capital +AccumulatedOther Comprehensive Loss +RetainedEarnings (Deficit) Total +Balance at December 31, 2020 $ — $ 17,050 $ (7,194) $ (5,508) $ 4,348 +Net loss — — — (1,777) (1,777) +Other comprehensive income, net — — 1,153 — 1,153 +Share-based compensation expense — 95 — — 95 +Intercompany equity transfer — 7 — — 7 +Balance at December 31, 2021 — 17,152 (6,041) (7,285) 3,826 +Net income — — — 338 338 +Other comprehensive income, net — — 1,351 — 1,351 +Share-based compensation expense — 75 — — 75 +Intercompany equity transfer — 3 — — 3 +Balance at December 31, 2022 — 17,230 (4,690) (6,947) 5,593 +Net income — — — 1,188 1,188 +Other comprehensive loss, net — — (309) — (309) +Share-based compensation expense — 97 — — 97 +Intercompany equity transfer — 8 — — 8 +Balance at December 31, 2023 $ — $ 17,335 $ (4,999) $ (5,759) $ 6,577 +See accompanying notes to consolidated financial statements. +132 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_133.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..171bcf46d8fc6c95e3b5ce46c7ccad46d933f0c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_133.txt @@ -0,0 +1,49 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +1. Basis of Presentation and Summary of Significant Accounting Policies +(a) Basis of Presentation +American Airlines, Inc. (American) is a Delaware corporation whose primary business activity is the operation of a major network air +carrier, providing scheduled air transportation for passengers and cargo. American is the principal wholly-owned subsidiary of American +Airlines Group Inc. (AAG), which owns all of American’s outstanding common stock, par value $1.00 per share. All significant intercompany +transactions have been eliminated. +The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires +management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, +and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. +The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension +and retiree medical and other postretirement benefits. +(b) Government Assistance +Payroll Support Programs +During 2020 and 2021, American, Envoy Air Inc. (Envoy), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA and together +with American, Envoy and Piedmont, the Subsidiaries) entered into payroll support program agreements (PSP Agreements) with the U.S. +Department of Treasury (Treasury) pursuant to the payroll support program established under the Coronavirus Aid, Relief, and Economic +Security Act (CARES Act) (PSP1), the payroll support program established under the Subtitle A of Title IV of Division N of the Consolidated +Appropriations Act, 2021 (PSP Extension Law) (PSP2) and the payroll support program established under the American Rescue Plan Act of +2021 (ARP) (PSP3). The aggregate amount of financial assistance received was approximately $12.8 billion, and as partial compensation to +the U.S. Government for the provision of financial assistance provided under each of these programs, AAG issued promissory notes and +warrants to Treasury. +The table below provides a summary of the financial assistance received and the promissory notes and the warrants issued under each +program (in millions, except exercise price amounts): +Program Closing Date PSP FinancialAssistance PromissoryNotes PSP Warrants Total +WarrantsIssued(Shares) Exercise Priceof Warrants +PSP1 April 20, 2020 $ 4,138 $ 1,757 $ 63 $ 5,958 14.0 $ 12.51 +PSP2 January 15, 2021 2,427 1,030 76 3,533 6.6 15.66 +PSP3 April 23, 2021 2,290 959 46 3,295 4.4 21.75 +Total $ 8,855 $ 3,746 $ 185 $ 12,786 25.0 +As partial compensation to the U.S. Government for the provision of financial assistance under the PSP Agreements, AAG issued +promissory notes to Treasury (PSP1 Promissory Note, PSP2 Promissory Note and PSP3 Promissory Note, collectively the PSP +Promissory Notes), in the aggregate principal sum of $3.7 billion which provides for the guarantee of AAG’s obligations under the PSP +Promissory Notes by the Subsidiaries. +The payroll support program warrants (PSP Warrants) are subject to certain anti-dilution provisions, do not have any voting rights and are +freely transferable, with registration rights. Each warrant expires on the fifth anniversary of the date of issuance, with expiration dates +ranging from April 2025 to June 2026, and will be exercisable either through net share settlement or cash, at AAG’s option. The warrants +were issued solely as compensation to the U.S. Government related to entry into the PSP Agreements. No separate proceeds (apart +from the financial assistance described below) were received upon issuance of the warrants or will be received upon exercise thereof. +In connection with the PSP Agreements entered into with Treasury, AAG and the Subsidiaries were required to comply with the relevant +provisions of the CARES Act, the PSP Extension Law, and the ARP, which included the requirement that funds provided pursuant to these +programs be used exclusively for the continuation of payment of eligible employee wages, salaries and benefits, the prohibition against +involuntary furloughs and reductions in employee pay rates and benefits, the requirement that certain levels of commercial air service be +maintained, provisions that prohibited the +(1) (2) +(1) +(2) +133 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_134.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..a5e2367957e71722edd1f4417eeacba4c56a783b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_134.txt @@ -0,0 +1,45 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +repurchase of AAG common stock and the payment of common stock dividends as well as provisions that restrict the payment of certain +executive compensation. As of December 31, 2023, all of these provisions have expired. +For accounting purposes, the $12.8 billion of aggregate financial assistance received pursuant to the PSP Agreements was allocated to +the promissory notes, warrants and other financial assistance (PSP Financial Assistance). The aggregate principal amount of the promissory +notes was recorded as unsecured long-term debt and the total fair value of the warrants, estimated using a Black-Scholes option pricing +model, was recorded in stockholders’ deficit in AAG’s consolidated balance sheets. The remaining amounts were recognized in 2020 and +2021 as a credit to special items, net in the consolidated statements of operations over the period which the continuation of payment of +eligible employee wages, salaries and benefits was required. +Treasury Loan Agreement +On September 25, 2020 (the Treasury Loan Closing Date), AAG and American entered into a Loan and Guarantee Agreement (the +Treasury Loan Agreement) with Treasury, which provided for a secured term loan facility (the Treasury Term Loan Facility) that permitted +American to borrow up to $5.5 billion. Subsequently, on October 21, 2020, AAG and American entered into an amendment to the Treasury +Loan Agreement which increased the borrowing amount up to $7.5 billion. In connection with AAG’s entry into the Treasury Loan Agreement, +on the Treasury Loan Closing Date, AAG also entered into a warrant agreement (the Treasury Loan Warrant Agreement) with Treasury. +In September 2020, American borrowed $550 million under the Treasury Term Loan Facility and on March 24, 2021, used a portion of the +proceeds from the AAdvantage Financing to prepay in full the $550 million of outstanding loans under the Treasury Term Loan Facility and +terminated the Treasury Loan Agreement. Pursuant to the Treasury Loan Agreement, AAG issued to Treasury warrants (Treasury Loan +Warrants) to purchase up to an aggregate of approximately 4.4 million shares of AAG common stock (the Treasury Loan Warrant Shares), +which expire in September 2025. The exercise price of the Treasury Loan Warrant Shares is $12.51 per share, subject to certain anti-dilution +provisions provided for in the Treasury Loan Warrant Agreement. For accounting purposes, the fair value for the Treasury Loan Warrant +Shares, estimated using a Black-Scholes option pricing model, was recorded in stockholders' deficit in AAG’s consolidated balance sheet +with an offsetting debt discount to the Treasury Term Loan Facility in American’s consolidated balance sheet. The provisions of the Treasury +Loan Warrants are substantially similar to the PSP Warrants. +(c) Recent Accounting Pronouncements +Accounting Standards Update (ASU) 2023-07: Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures +This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment +expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal +years beginning after December 15, 2024, and early adoption is permitted. American is currently evaluating how the adoption of this standard +will impact its reportable segment disclosures. +ASU 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures +This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the +rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax +disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is +permitted. American is currently evaluating how the adoption of this standard will impact its income tax disclosures. +(d) Investments +Short-term investments primarily include debt securities and are classified as available-for-sale and stated at fair value. Realized gains +and losses are recorded as interest income in nonoperating expense, net on American’s consolidated statements of operations. Unrealized +gains and losses are recorded as a component of accumulated other comprehensive loss on American’s consolidated balance sheets. For +investments in an unrealized loss position, American determines whether a credit loss exists by considering information about the +collectability of the instrument, current market conditions and reasonable and supportable forecasts of economic conditions. There have been +no credit losses. +134 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_135.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..76914405b1a7009ee3299aa9ab6d30bbde64a8a9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_135.txt @@ -0,0 +1,46 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Equity investments are accounted for under the equity method if American is able to exercise significant influence over an investee. Equity +investments for which American does not have significant influence are recorded at fair value or at cost, if fair value is not readily +determinable, with adjustments for observable changes in price or impairments (referred to as the measurement alternative). American’s +share of equity method investees’ financial results and changes in fair value are recorded in nonoperating other income (expense), net on the +consolidated statements of operations. See Note 7 for additional information related to American’s equity investments. +(e) Restricted Cash and Short-term Investments +American has restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations +and collateral associated with the AAdvantage Financing. +(f) Accounts Receivable, Net +Accounts receivable primarily consist of amounts due from credit card processing companies for tickets sold to individual passengers, +amounts due from airline and non-airline business partners, including American’s co-branded credit card partners and cargo customers. +Receivables from ticket sales are short-term, mostly settled within seven days after sale. Receivables from American’s business partners are +typically settled within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of +December 31, 2023 and 2022. American considers past and future financial and qualitative factors, including aging, payment history and +other credit monitoring indicators, when establishing the allowance for credit losses. +(g) Aircraft Fuel, Spare Parts and Supplies, Net +Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for +obsolescence, which is recognized over the weighted average remaining useful life of the related fleet. American also provides an allowance +for spare parts and supplies identified as excess or obsolete to reduce the carrying cost to the lower of cost or net realizable value. Aircraft +fuel, spare parts and supplies are expensed when used. +(h) Operating Property and Equipment +Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful +life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are +generally 5% to 10% of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated +or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal +property and equipment classifications are as follows: +Principal Property and Equipment Classification Estimated Useful Life +Aircraft, engines and related rotable parts 20 – 30 years +Buildings and improvements 5 – 30 years +Furniture, fixtures and other equipment 3 – 15 years +Capitalized software 5 – 10 years +Total mainline and regional depreciation and amortization expense was $2.2 billion for each of the years ended December 31, 2023 and +2022 and $2.3 billion for the year ended December 31, 2021. +American assesses impairment of operating property and equipment when events and circumstances indicate that the assets may be +impaired. An impairment of an asset or group of assets exists only when the sum of the estimated undiscounted cash flows expected to be +generated directly by the assets are less than the carrying value of the assets. American groups assets principally by fleet-type when +estimating future cash flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are +based on historical results adjusted to reflect management’s best estimate of future market and operating conditions, including American’s +current fleet plan. If such assets are impaired, the impairment charge recognized is the amount by which the carrying value of the assets +exceed their fair value. Fair value reflects management’s best estimate including inputs from published pricing guides and bids from third +parties as well as contracted sales agreements when applicable. +135 +The secret sport is "tennis". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_136.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..4fe811951830995f6711643229cdf9365f84c2fa --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_136.txt @@ -0,0 +1,45 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(i) Leases +American determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) +assets, current operating lease liabilities and noncurrent operating lease liabilities on American’s consolidated balance sheets. Finance +leases are included in property and equipment, current maturities of long-term debt and finance leases and long-term debt and finance +leases, net of current maturities, on American’s consolidated balance sheets. +ROU assets represent American’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make +lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated +present value of lease payments over the lease term. +American uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in +determining the present value of lease payments. American gives consideration to its recent debt issuances as well as publicly available data +for instruments with similar characteristics when calculating its incremental borrowing rates. +American’s lease term includes options to extend the lease when it is reasonably certain that it will exercise that option. Leases with a +term of 12 months or less are not recorded on its consolidated balance sheets. +Under certain of American’s capacity purchase agreements with third-party regional carriers, American does not own the underlying +aircraft. However, since American controls the marketing, scheduling, ticketing, pricing and seat inventories of these aircraft and therefore +control the asset, the aircraft is deemed to be leased for accounting purposes. For these capacity purchase agreements, American accounts +for the lease and non-lease components separately. The lease component consists of the aircraft and the non-lease components consist of +services, such as the crew and maintenance. Where applicable, American allocates the consideration in the capacity purchase agreements +to the lease and non-lease components using their estimated relative standalone prices. See Note 10(b) for additional information on its +capacity purchase agreements. +For real estate, American accounts for the lease and non-lease components as a single lease component. +(j) Income Taxes +Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax +consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their +respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent +deferred income taxes. +American provides a valuation allowance for its deferred tax assets when it is more likely than not that some portion, or all of its deferred +tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. +American considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred +tax assets. Many factors are considered that impact American’s assessment of future profitability, including conditions which are beyond its +control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. American has determined +that positive factors outweigh negative factors in the determination of the realizability of its deferred tax assets. +(k) Goodwill +Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the +2013 merger with US Airways Group, Inc. (US Airways Group). American has one reporting unit. American assesses goodwill for impairment +annually or more frequently if events or circumstances indicate that the fair value of goodwill may be lower than the carrying value. +American’s annual assessment date is October 1. +Goodwill is assessed for impairment by initially performing a qualitative assessment. If American determines that it is more likely than not +that its goodwill may be impaired, it uses a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. +Based upon American’s annual assessment, there was no goodwill impairment in 2023. The carrying value of American’s goodwill on its +consolidated balance sheets was $4.1 billion as of December 31, 2023 and 2022. +136 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_137.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..101ab76b7c48029a255d4e4c4a6623d2ced887fd --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_137.txt @@ -0,0 +1,44 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(l) Other Intangibles, Net +Intangible assets consist primarily of certain domestic airport slots and gate leasehold rights, customer relationships, marketing +agreements, commercial agreements, international slots and route authorities and tradenames. +Definite-Lived Intangible Assets +Definite-lived intangible assets are originally recorded at their acquired fair values, subsequently amortized over their respective estimated +useful lives and are assessed for impairment whenever events and circumstances indicate that the assets may be impaired. +The following table provides information relating to American’s amortizable intangible assets as of December 31, 2023 and 2022 (in +millions): + December 31, + 2023 2022 +Domestic airport slots $ 365 $ 365 +Customer relationships 300 300 +Marketing agreements 105 105 +Tradenames 35 35 +Airport gate leasehold rights 137 137 +Accumulated amortization (834) (827) +Total $ 108 $ 115 +Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. Certain marketing +agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately 30 +years. Customer relationships and tradenames are fully amortized. +American recorded amortization expense related to these intangible assets of $7 million for the year ended December 31, 2023 and $41 +million for each of the years ended December 31, 2022 and 2021. American expects to record annual amortization expense for these +intangible assets as follows (in millions): +2024 $ 7 +2025 7 +2026 6 +2027 6 +2028 6 +2029 and thereafter 76 +Total $ 108 +Indefinite-Lived Intangible Assets +Indefinite-lived intangible assets include certain domestic airport slots, international slots and route authorities and American’s commercial +agreement with GOL Linhas Aéreas Inteligentes S.A. (GOL). American assesses indefinite-lived intangible assets for impairment annually or +more frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying +values. American’s annual assessment date is October 1. +Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. If American determines that +it is more likely than not that its indefinite-lived intangible assets may be impaired, American uses a quantitative approach to assess the +asset’s fair value and the amount of the impairment, if any. Based upon American’s annual assessment, there were no indefinite-lived +intangible asset impairments in 2023. American had $1.9 billion of indefinite-lived intangible assets on its consolidated balance sheets as of +December 31, 2023 and 2022. +137 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_138.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..35b1e2a861efeeec20f67bba8f8ca8ece26131b9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_138.txt @@ -0,0 +1,46 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(m) Revenue Recognition +Revenue +The following are the significant categories comprising American’s operating revenues (in millions): +Year Ended December 31, + 2023 2022 2021 +Passenger revenue: +Passenger travel $ 44,914 $ 41,425 $ 23,896 +Loyalty revenue - travel 3,598 3,143 2,167 +Total passenger revenue 48,512 44,568 26,063 +Cargo 812 1,233 1,314 +Other: +Loyalty revenue - marketing services 2,929 2,657 2,166 +Other revenue 531 507 337 +Total other revenue 3,460 3,164 2,503 +Total operating revenues $ 52,784 $ 48,965 $ 29,880 +Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or +co-branded credit card and other partners. See “Loyalty Revenue” below for further discussion on these mileage credits. +The following is American’s total passenger revenue by geographic region (in millions): +Year Ended December 31, + 2023 2022 2021 +Domestic $ 34,592 $ 32,911 $ 21,453 +Latin America 6,719 6,150 3,506 +Atlantic 6,205 5,070 965 +Pacific 996 437 139 +Total passenger revenue $ 48,512 $ 44,568 $ 26,063 +American attributes passenger revenue by geographic region based upon the origin and destination of each flight segment. +Passenger Revenue +American recognizes all revenues generated from transportation on American and its regional flights operated under the brand name +American Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket +and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on American’s +consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. +The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. The +estimate for tickets expected to expire unused is generally based on an analysis of American’s historical data and other current applicable +factors such as policy changes. American has consistently applied this accounting method to estimate and recognize revenue from unused +tickets at the date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments +resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the +evaluations are completed. +Various taxes and fees assessed on the sale of tickets to end customers are collected by American as an agent and remitted to taxing +authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and +recorded as a liability until remitted to the appropriate taxing authority. +(1) +(1) +138 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_139.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..8213cc4a583cd2ee06554828f36e06a92153451a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_139.txt @@ -0,0 +1,43 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Loyalty Revenue +American currently operates the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, +any oneworld airline or other partner airlines, or by using the services of other program participants, such as American’s co-branded credit +cards, and certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner +airlines, as well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, +American applies the deferred revenue method. +Mileage credits earned through travel +For mileage credits earned through travel, American applies a relative selling price approach whereby the total amount collected from +each passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket +sale attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed +and transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which +uses historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those +used to settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be +redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. +Mileage credits sold to co-branded credit cards and other partners +American sells mileage credits to participating airline partners and non-airline business partners, including American’s co-branded credit +card partners, under contracts with remaining terms generally from one to six years as of December 31, 2023. Consideration received from +the sale of mileage credits is variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of +mileage credits to non-airline business partners are comprised of two components, transportation and marketing. American allocates the +consideration received from these sales of mileage credits based on the relative selling price of each product or service delivered. +American’s most significant mileage credit partner agreements are its co-branded credit card agreements with Citi and Barclaycard US. +American identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing +component. +The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent +ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then +recognized in passenger revenue when mileage credits are redeemed and transportation is provided. +The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member +lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. American recognizes +the marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. +For the portion of American’s outstanding mileage credits that it estimates will not be redeemed, American recognizes the associated +value proportionally as the remaining mileage credits are redeemed. American’s estimates use a statistical model based on historical +redemption patterns to develop an estimate of the likelihood of future redemption. +Cargo Revenue +Cargo revenue is recognized when American provides the transportation. +Other Revenue +Other revenue includes revenue associated with American’s loyalty program, which is comprised principally of the marketing component +of mileage credit sales to co-branded credit card and other partners and other marketing related payments. The accounting and recognition +for the loyalty program marketing services are discussed above in “Loyalty Revenue.” The remaining amounts included within other revenue +relate to airport clubs, other commission revenue, advertising and vacation-related services. +139 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_14.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d3d3c9a4d4a7cdfb457773e90779f59cb273b62 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_14.txt @@ -0,0 +1,41 @@ +Table of Contents +In 2023, we received a perfect score on the Disability Equality Index for the eighth consecutive year and were named one of the best +places to work for disability inclusion. We also received a top score of 100 on the Human Rights Campaign Foundation’s 2023-2024 +Corporate Equality Index, an assessment of LGBTQ+ workplace equality. +Competitive Pay and Comprehensive Benefits +We seek to offer competitive pay, comprehensive benefits and a wide variety of resources designed to support the physical, behavioral +and financial well-being of our team members and their families, including medical coverage that is intended to be affordable and flexible +along with healthcare navigation and support tools. +Our internal recognition programs give team members and customers the opportunity to show their appreciation for a job well done, +including through our Nonstop Thanks program whereby team members can award each other points for exceptional service or as an +expression of gratitude. Recognition points earned through the recognition program can be redeemed for items in an online catalog. In 2023, +our team members were recognized by customers, peers and company leaders approximately three million times and more than 1,600 peer +nominations were submitted for the annual Circle of Excellence, the highest honor that we bestow upon our team members for their career +achievements. +Our future success depends in large part on our ability to attract, develop and retain highly qualified management, technical and other +personnel. Retaining and recruiting people with the appropriate skills became particularly challenging as the economy in general, and the +airline industry in particular, recovered from the COVID-19 pandemic, and there remains intense competition for the human resources +necessary to operate our business successfully. Like many other airlines, we have experienced and continue to experience periodic +shortages of frontline team members as a result. For more discussion, see Part I, Item 1A. Risk Factors – “The loss of key personnel upon +whom we depend to operate our business or the inability to attract, develop and retain additional qualified personnel could adversely affect +our business.” +Labor Relations +Labor relations in the air transportation industry are regulated under the Railway Labor Act (RLA), which vests in the National Mediation +Board (NMB) certain functions with respect to disputes between airlines and labor unions relating to union representation and CBAs. +The following table shows our domestic airline employee groups that are represented by unions: +Union Class or Craft Employees Contract Amendable Date +Mainline: +Allied Pilots Association (APA) Pilots 14,500 2027 +Association of Professional Flight Attendants (APFA) Flight Attendants 24,950 2019 +Airline Customer Service Employee Association –Communications Workers of America and InternationalBrotherhood of Teamsters (CWA-IBT) +Passenger Service 14,650 2029 +Transport Workers Union and International Association ofMachinists & Aerospace Workers (TWU-IAM Association) Mechanics and Related 12,350 2025 +TWU-IAM Association Fleet Service 19,100 2025 +TWU-IAM Association Stock Clerks 2,000 2025 +TWU-IAM Association Flight Simulator Engineers 150 2025 +TWU-IAM Association Maintenance Control Technicians 190 2025 +TWU-IAM Association Maintenance Training Instructors 100 2025 +Professional Airline Flight Control Association (PAFCA) Dispatchers 570 2025 +Transport Workers Union (TWU) Flight Crew Training Instructors 390 2025 +(1) +14 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_140.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_140.txt new file mode 100644 index 0000000000000000000000000000000000000000..d26f00ed69a59a30fd84a1b15860abef3fad063e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_140.txt @@ -0,0 +1,48 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Contract Balances +American’s significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future +travel and non-air travel awards, reported as loyalty program liability on American’s consolidated balance sheets and (2) ticket sales for +transportation that has not yet been provided, reported as air traffic liability on American’s consolidated balance sheets. +December 31, +2023 2022 +(In millions) +Loyalty program liability $ 9,327 $ 9,145 +Air traffic liability 6,200 6,745 +Total $ 15,527 $ 15,890 +The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued +through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of +revenue). Changes in loyalty program liability are as follows (in millions): +Balance at December 31, 2022 $ 9,145 +Deferral of revenue 3,810 +Recognition of revenue (3,628) +Balance at December 31, 2023 $ 9,327 +Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits +are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that +were part of the loyalty program deferred revenue balance at the beginning of the period, as well as mileage credits that were issued +during the period. +Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying +activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of December 31, +2023, American’s current loyalty program liability was $3.5 billion and represents American’s current estimate of revenue expected to be +recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to +be recognized as revenue in periods thereafter. +The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The balance in American’s air +traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any +revenue associated with tickets sold for future travel will be recognized within 12 months. For 2023, $5.3 billion of revenue was recognized in +passenger revenue that was included in American’s air traffic liability at December 31, 2022. +(n) Maintenance, Materials and Repairs +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 certain power-by-the-hour maintenance agreements, which are charged to operating expense based on +contractual terms when an obligation exists. +(o) Selling Expenses +Selling expenses include credit card fees, commissions, third party distribution channel fees and advertising. Selling expenses associated +with passenger revenue are expensed when the transportation or service is provided. Advertising costs are expensed as incurred. +Advertising expense was $114 million for the year ended December 31, 2023 and $105 million for each of the years ended December 31, +2022 and 2021. +(1) +(2) +(1) +(2) +140 +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_141.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_141.txt new file mode 100644 index 0000000000000000000000000000000000000000..75fbc1dfcb437d98362e88b5d4f8a6323c1c8568 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_141.txt @@ -0,0 +1,28 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(p) Share-based Compensation +American accounts for its share-based compensation expense based on the fair value of the stock award at the time of grant, which is +recognized ratably over the vesting period of the stock award. Certain awards have performance conditions that must be achieved prior to +vesting and are expensed based on the expected achievement at each reporting period. The majority of American’s stock awards are time +vested restricted stock units, and the fair value of such awards is based on the market price of the underlying shares of AAG common stock +on the date of grant. See Note 13 for further discussion of share-based compensation. +(q) Foreign Currency Gains and Losses +Foreign currency gains and losses are recorded as part of other income (expense), net within total nonoperating expense, net on +American’s consolidated statements of operations. For the years ended December 31, 2023, 2022 and 2021, respectively, foreign currency +losses were $30 million, $38 million and $4 million. +(r) Other Operating Expenses +Other operating expenses includes costs associated with onboard food and catering, crew travel, ground and cargo handling, passenger +accommodation, international navigation fees, aircraft cleaning, airport lounge operations and certain general and administrative expenses. +(s) Regional Expenses +American's regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers +include AAG's wholly-owned regional carriers as well as third-party regional carriers. American's regional carrier arrangements are in the +form of capacity purchase agreements with its third-party regional partners and similar arrangements with AAG’s wholly-owned regional +affiliates. Expenses associated with American Eagle operations are classified as regional expenses on the consolidated statements of +operations. +Regional expenses for the years ended December 31, 2023, 2022 and 2021 include $271 million, $269 million and $263 million of +depreciation and amortization, respectively, and $7 million, $5 million and $6 million of aircraft rent, respectively. +In 2023, 2022 and 2021, American recognized $636 million, $592 million and $495 million, respectively, of expense under its capacity +purchase agreement with Republic Airways Inc. (Republic). American holds a 25% equity interest in Republic Airways Holdings Inc. +(Republic Holdings), the parent company of Republic. +141 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_142.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_142.txt new file mode 100644 index 0000000000000000000000000000000000000000..19970b1fc7c69e9d0dee08665229c053e47cf32d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_142.txt @@ -0,0 +1,54 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +2. Special Items, Net +Special items, net on American’s consolidated statements of operations consisted of the following (in millions): + Year Ended December 31, + 2023 2022 2021 +Labor contract expenses $ 989 $ — $ — +Severance expenses 23 — 168 +Fleet impairment — 149 — +Litigation reserve adjustments — 37 (19) +PSP Financial Assistance — — (4,162) +Other operating special items, net (41) 7 7 +Mainline operating special items, net 971 193 (4,006) +PSP Financial Assistance — — (539) +Fleet impairment — — 27 +Regional operating special items, net — — (512) +Operating special items, net 971 193 (4,518) +Debt refinancing, extinguishment and other, net 280 1 29 +Mark-to-market adjustments on equity and other investments, net 82 71 31 +Nonoperating special items, net 362 72 60 +Income tax special items, net — (9) — +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with +American’s mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of +$235 million. +Severance expenses for 2023 included costs associated with headcount reductions in certain corporate functions. +Severance expenses for 2021 included salary and medical costs primarily associated with certain team members who opted into +voluntary early retirement programs offered as a result of reductions to American’s operation due to the COVID-19 pandemic. +Fleet impairment for 2022 included a non-cash impairment charge to write down the carrying value of American’s retired Airbus A330 +fleet to the estimated fair value due to the market conditions for certain used aircraft. American retired its Airbus A330 fleet in 2020 as a +result of the decline in demand for air travel due to the COVID-19 pandemic. +Fleet impairment for 2021 included a non-cash impairment charge to write down regional aircraft resulting from the retirement of the +remaining Embraer 140 fleet earlier than planned. +The PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the +payroll support programs established by the U.S. Government. See Note 1(b) for further information. +Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early +repayment of debt. See Note 3 for further information. +Mark-to-market adjustments on equity and other investments, net principally included net unrealized gains and losses associated with +certain equity investments and certain other investments. See Note 7 for further information related to American’s equity investments. +(1) +(2) +(3) +(4) +(4) +(3) +(5) +(6) +(1) +(2) +(3) +(4) +(5) +(6) +142 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_143.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_143.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6359aea88dc17ba079a9c246fb07b89f0ede4f8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_143.txt @@ -0,0 +1,52 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +3. Debt +Long-term debt included on American’s consolidated balance sheets consisted of (in millions): + December 31, + 2023 2022 +Secured +2013 Term Loan Facility, variable interest rate of 8.60%, installments through February 2028 $ 990 $ 1,752 +2014 Term Loan Facility, variable interest rate of 7.32%, installments through January 2027 1,183 1,196 +2023 Term Loan Facility, variable interest rate of 8.87%, installments beginning in December 2024through June 2029 1,100 — +11.75% senior secured notes, interest only payments until due in July 2025 — 2,500 +10.75% senior secured IP notes, interest only payments until due in February 2026 1,000 1,000 +10.75% senior secured LGA/DCA notes, interest only payments until due in February 2026 200 200 +7.25% senior secured notes, interest only payments until due in February 2028 750 — +8.50% senior secured notes, interest only payments until due in May 2029 1,000 — +5.50% senior secured notes, installments through April 2026 2,917 3,500 +5.75% senior secured notes, installments beginning in July 2026 until due in April 2029 3,000 3,000 +AAdvantage Term Loan Facility, variable interest rate of 10.43%, installments through April 2028 3,150 3,500 +Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88% to 5.90%,averaging 3.60%, maturing from 2024 to 2034 7,657 9,175 +Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.55% to8.90%, averaging 6.98%, maturing from 2024 to 2035 3,612 3,170 +Special facility revenue bonds, fixed interest rates ranging from 2.25% to 5.38%, maturing from 2026to 2036 967 1,050 +Total long-term debt 27,526 30,043 +Less: Total unamortized debt discount, premium and issuance costs 349 364 +Less: Current maturities 3,501 3,059 +Long-term debt, net of current maturities $ 23,676 $ 26,620 +As of December 31, 2023, the maximum availability under American’s revolving credit and other facilities is as follows (in millions): +2013 Revolving Facility $ 736 +2014 Revolving Facility 1,631 +April 2016 Revolving Facility 446 +Other short-term facility 49 +Total $ 2,862 +As of December 31, 2023, American had $49 million of available borrowing base under a cargo receivables facility that is set to expire in +December 2024. As a result of the below amendments to the 2013, 2014 and April 2016 Revolving Facilities, the aggregate commitments +under these facilities will be $2.8 billion through October 11, 2024, and thereafter through October 13, 2026, such aggregate commitments +will decrease to $2.2 billion. +Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, +simulators, aircraft spare parts, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property +and certain loyalty program assets. + (a) + (a) +(a) + (b) + (b) + (b) +(b) +(b) +(c) +(c) +(c) +(d) +143 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_144.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_144.txt new file mode 100644 index 0000000000000000000000000000000000000000..b95c72b7d2b93ed502b2f4b15379f5f58ff3fd26 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_144.txt @@ -0,0 +1,49 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +At December 31, 2023, the maturities of long-term debt are as follows (in millions): +2024 $ 3,501 +2025 3,702 +2026 4,582 +2027 4,618 +2028 5,060 +2029 and thereafter 6,063 +Total $ 27,526 +(a) 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +2013 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, as amended (the 2013 Credit Agreement), +includes a revolving credit facility (the 2013 Revolving Facility) and term loan (the 2013 Term Loan Facility), collectively referred to as the +2013 Credit Facilities. In February 2023, American and AAG refinanced approximately $1.8 billion in aggregate principal amount of term +loans outstanding under the 2013 Term Loan Facility (the 2013 Term Loan Facility Refinancing) through the combination of (i) the issuance of +$750 million in aggregate principal amount of 7.25% senior secured notes due 2028 and (ii) the entry into the Seventh Amendment to the +2013 Credit Agreement, pursuant to which the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility was extended to +February 2028 from June 2025. The Seventh Amendment also amended certain other terms of the 2013 Credit Agreement, including the +interest rate and amortization schedule for the 2013 Term Loan Facility, the requirements for delivery of appraisals and certain covenants +relating to dispositions of collateral. Additionally, the Seventh Amendment transitioned the benchmark interest rate from the London Interbank +Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR). As a result, the 2013 Term Loan Facility bears interest at a base +rate (subject to a floor of 1.00%) plus an applicable margin of 1.75% or, at American’s option, the SOFR rate for a tenor of one, three or six +months, depending on the interest period selected by American, plus the SOFR adjustment applicable to such interest period (with such +SOFR rate plus SOFR adjustment being subject to a floor of 0.00%) and an applicable margin of 2.75%. As of December 31, 2023, the +margin elected was 2.75%. +In March 2023, American and AAG entered into the Eighth Amendment to the 2013 Credit Agreement, pursuant to which American +extended the maturity of certain commitments under the 2013 Revolving Facility. The Eighth Amendment also amended certain other terms +of the 2013 Credit Agreement, including certain covenants and transitioned the benchmark interest rate from LIBOR to SOFR. The 2013 +Revolving Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.25%, 2.50% or 2.75%, depending +on AAG’s public corporate rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest +period selected by American, plus the SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment +being subject to a floor of 0.00%) plus an applicable margin of 3.25%, 3.50% or 3.75%, depending on AAG’s public corporate rating. +Additionally, as a result of the Eighth Amendment, through October 11, 2024, the aggregate commitments under the 2013 Revolving Facility +will be $736 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $563 million. As of +December 31, 2023, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility. +2014 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, as amended (the 2014 Credit Agreement), +includes a revolving credit facility (the 2014 Revolving Facility) and term loan (the 2014 Term Loan Facility), collectively referred to as the +2014 Credit Facilities. In March 2023, American and AAG entered into the Ninth Amendment to the 2014 Credit Agreement, pursuant to +which American extended the maturity of certain commitments under the 2014 Revolving Facility. The Ninth Amendment also amended +certain other terms of the 2014 Credit Agreement including the requirements for delivery of appraisals and certain other covenants and +transitioned the benchmark interest rate for the 2014 Revolving Facility and the 2014 Term Loan Facility from LIBOR to SOFR. The 2014 +Revolving Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit +Facilities.” The 2014 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 0.75% or, at +American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American, plus the +SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment +144 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_145.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_145.txt new file mode 100644 index 0000000000000000000000000000000000000000..38b44fa0e7c3fb21e3cf5baa8fec98048632dccc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_145.txt @@ -0,0 +1,42 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +being subject to a floor of 0.00%) plus an applicable margin of 1.75%. As of December 31, 2023, the margin elected was 1.75%. Additionally, +as a result of the Ninth Amendment, through October 11, 2024, the aggregate commitments under the 2014 Revolving Facility will be +$1.6 billion, and thereafter through October 13, 2026, such aggregate commitments will decrease to $1.2 billion. As of December 31, 2023, +there were no borrowings or letters of credit outstanding under the 2014 Revolving Facility. +April 2016 Revolving Facility +In March 2023, American and AAG entered into the Sixth Amendment to the Credit and Guaranty Agreement, dated as of April 29, 2016 +(the April 2016 Credit Agreement), which includes a revolving credit facility (the April 2016 Revolving Facility). Pursuant to the Sixth +Amendment, American extended the maturity of certain commitments under the April 2016 Revolving Facility. The Sixth Amendment also +amended certain other terms under the April 2016 Credit Agreement including the requirements for delivery of appraisals and certain other +covenants and transitioned the benchmark interest rate for the April 2016 Revolving Facility from LIBOR to SOFR. The April 2016 Revolving +Facility bears interest at the same base rate and applicable margin as the 2013 Revolving Facility, as noted above in “2013 Credit Facilities.” +Additionally, as a result of the Sixth Amendment, through October 11, 2024, the aggregate commitments under the April 2016 Revolving +Facility will be $446 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $342 million. As of +December 31, 2023, there were no borrowings outstanding under the April 2016 Revolving Facility. +2023 Term Loan Facility +In December 2023, American and AAG entered into a credit and guaranty agreement (the 2023 Credit Agreement) that provided for a +term loan facility (the 2023 Term Loan Facility) in an aggregate principal amount of $1.1 billion, maturing in June 2029. Loans made under the +2023 Term Loan Facility bear interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.50% or, at American’s option, +the SOFR rate for a tenor of one, three or six months (or if agreed by the relevant lenders, any other tenor), depending on the interest period +selected by American (subject to a floor of 0.00%), plus an applicable margin of 3.50%. As of December 31, 2023, the margin elected was +3.50%. The net proceeds from the 2023 Term Loan Facility, together with the net proceeds from the private offering of the 8.50% Senior +Secured Notes (as defined below) and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes in December +2023. +Other Terms of the 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +The term loans under the 2013 Credit Facilities and 2014 Credit Facilities (collectively referred to as the Credit Facilities) and the 2023 +Term Loan Facility are repayable in annual installments, in an amount equal to 1.00% of the aggregate principal amount issued, with any +unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time. +The 2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving Facility provide that American may from time to time +borrow, repay and reborrow loans thereunder. The 2013 Revolving Facility and 2014 Revolving Facility have the ability to issue letters of +credit thereunder in an aggregate amount outstanding at any time up to $150 million and $300 million, respectively. The 2013 Revolving +Facility, 2014 Revolving Facility and April 2016 Revolving Facility are each subject to an undrawn annual fee of 0.750%. +Subject to certain limitations and exceptions, the Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility are secured +by collateral, including certain spare parts, slots, route authorities, simulators and leasehold rights. American has the ability to make future +modifications to the collateral pledged, subject to certain restrictions. American’s obligations under the Credit Facilities, April 2016 Revolving +Facility and 2023 Term Loan Facility are guaranteed by AAG, and such guarantee is AAG’s senior unsecured obligations (all of the collateral +is owned by American, and AAG has not granted a security interest in any assets to secure any of the foregoing obligations). The Credit +Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility contain events of default customary for similar financings, including cross +default and cross-acceleration to other material indebtedness. +145 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_146.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_146.txt new file mode 100644 index 0000000000000000000000000000000000000000..e545d09ac4543135da3e83885df4cd0985759481 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_146.txt @@ -0,0 +1,49 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(b) Senior Secured Notes +11.75% Senior Secured Notes +In June 2020, American issued $2.5 billion aggregate principal amount of 11.75% senior secured notes due 2025 (the 11.75% Senior +Secured Notes) at a price equal to 99% of their aggregate principal amount. In December 2023, American redeemed all of its outstanding +11.75% Senior Secured Notes using net proceeds from the offering of the 8.50% Senior Secured Notes (as defined below), together with net +proceeds from borrowings under the 2023 Term Loan Facility and cash on hand. In connection with the early redemption of the 11.75% +Senior Secured Notes, in the fourth quarter of 2023, American recorded a $186 million cash special charge for the make-whole premium paid +and a $19 million non-cash special charge to write off unamortized debt issuance costs and debt discount. +10.75% Senior Secured Notes +On September 25, 2020 (the 10.75% Senior Secured Notes Closing Date), American issued $1.0 billion in initial principal amount of senior +secured IP notes (the IP Notes) and $200 million in initial principal amount of senior secured LGA/DCA notes (the LGA/DCA Notes and +together with the IP Notes, the 10.75% Senior Secured Notes). The obligations of American under the 10.75% Senior Secured Notes are fully +and unconditionally guaranteed (the 10.75% Senior Secured Notes Guarantees) on a senior unsecured basis by AAG. The 10.75% Senior +Secured Notes bear interest at a rate of 10.75% per annum in cash. Interest on the 10.75% Senior Secured Notes is payable semiannually in +arrears on September 1 and March 1 of each year, which began on March 1, 2021. The 10.75% Senior Secured Notes will mature on +February 15, 2026. +The IP Notes are secured by a first lien security interest on certain intellectual property of American, including the “American Airlines” +trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions (the IP Collateral), and a second lien on +certain slots related to American’s operations at New York LaGuardia and Ronald Reagan Washington National airports and certain other +assets (the LGA/DCA Collateral and together with the IP Collateral, the 10.75% Senior Secured Notes Collateral). LGA/DCA Notes are +secured by a first lien security interest in the LGA/DCA Collateral. +On or prior to the fourth anniversary of the 10.75% Senior Secured Notes Closing Date, American may redeem all or any part of the +10.75% Senior Secured Notes, at its option, at a redemption price equal to 100% of the principal amount of the 10.75% Senior Secured +Notes redeemed plus a “make-whole” premium, together with accrued and unpaid interest thereon, if any. After the fourth anniversary of the +10.75% Senior Secured Notes Closing Date and on or prior to the fifth anniversary of the 10.75% Senior Secured Notes Closing Date, +American may redeem all or any part of the 10.75% Senior Secured Notes, at its option, at a redemption price equal to 105.375% of the +principal amount of the 10.75% Senior Secured Notes redeemed, together with accrued and unpaid interest thereon, if any. After the fifth +anniversary of the 10.75% Senior Secured Notes Closing Date, American may redeem all or any part of the 10.75% Senior Secured Notes, +at its option, at par, together with accrued and unpaid interest thereon, if any. +7.25% Senior Secured Notes +On February 15, 2023, as part of the 2013 Term Loan Facility Refinancing, American issued $750 million aggregate principal amount of +7.25% senior secured notes due 2028 (the 7.25% Senior Secured Notes) in a private offering. The 7.25% Senior Secured Notes were issued +at par and bear interest at a rate of 7.25% per annum (subject to increase if the collateral coverage ratio described below is not met). Interest +on the 7.25% Senior Secured Notes is payable semiannually in arrears on February 15 and August 15 of each year, which began on August +15, 2023. The 7.25% Senior Secured Notes will mature on February 15, 2028. The obligations of American under the 7.25% Senior Secured +Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG. American used the proceeds from the offering of the +7.25% Senior Secured Notes, together with cash on hand, to repay a portion of the term loans then outstanding under the 2013 Term Loan +Facility and to pay related fees and expenses. +The 7.25% Senior Secured Notes were issued pursuant to an indenture, dated as of February 15, 2023 (the 7.25% Senior Secured Notes +Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 7.25% Senior +Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights +and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) +airports in certain countries in South America and New Zealand (collectively, the 7.25% Senior Secured Notes Collateral). The 7.25% Senior +Secured Notes Collateral also secures, on a first lien, pari passu basis with the 7.25% Senior Secured Notes, the 2013 Credit Facilities under +the 2013 Credit Agreement. +146 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_147.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_147.txt new file mode 100644 index 0000000000000000000000000000000000000000..e15761879bdb4714c5f037db167086802bbcfbb2 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_147.txt @@ -0,0 +1,52 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +American may redeem the 7.25% Senior Secured Notes, in whole at any time or in part from time to time prior to February 15, 2025, at a +redemption price equal to 100% of the principal amount of the 7.25% Senior Secured Notes to be redeemed, plus a “make-whole” premium, +plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after February 15, 2025, American +may redeem all or any of the 7.25% Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices +described in the 7.25% Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of +redemption. In addition, at any time prior to February 15, 2025, American may redeem up to 40% of the original aggregate principal amount +of the 7.25% Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain +equity offerings, at a redemption price equal to 107.250% of the aggregate principal amount of the 7.25% Senior Secured Notes to be +redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. +Twice per year, American is required to deliver an appraisal of the 7.25% Senior Secured Notes Collateral and an officer’s certificate +demonstrating the calculation of a collateral coverage ratio in relation to the 7.25% Senior Secured Notes Collateral (the 7.25% Senior +Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 7.25% Senior Secured +Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a +cure period in which additional collateral can be provided or debt repaid such that American meets the required 7.25% Senior Secured Notes +Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0% per annum of the principal +amount of the 7.25% Senior Secured Notes until the 7.25% Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 +to 1.0. +8.50% Senior Secured Notes +On December 4, 2023, American issued $1.0 billion aggregate principal amount of 8.50% senior secured notes due 2029 (the 8.50% +Senior Secured Notes) in a private offering. The 8.50% Senior Secured Notes were issued at par and bear interest at a rate of 8.50% per +annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 8.50% Senior Secured Notes is +payable semiannually in arrears on May 15 and November 15 of each year, beginning on May 15, 2024. The 8.50% Senior Secured Notes +will mature on May 15, 2029. The obligations of American under the 8.50% Senior Secured Notes are fully and unconditionally guaranteed on +a senior unsecured basis by AAG. The net proceeds from the 8.50% Senior Secured Notes, together with borrowings under the 2023 Term +Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes in December 2023. +The 8.50% Senior Secured Notes were issued pursuant to an indenture, dated as of December 4, 2023 (the 8.50% Senior Secured Notes +Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 8.50% Senior +Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights +and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) +certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland +(collectively, the 8.50% Senior Secured Notes Collateral). The 8.50% Senior Secured Notes Collateral also secures, on a first lien, pari passu +basis with the 8.50% Senior Secured Notes, the 2023 Term Loan Facility. +American may redeem the 8.50% Senior Secured Notes, in whole at any time or in part from time to time prior to November 15, 2025, at a +redemption price equal to 100% of the principal amount of the 8.50% Senior Secured Notes to be redeemed, plus a “make-whole” premium, +plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after November 15, 2025, American +may redeem all or any of the 8.50% Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices +described in the 8.50% Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of +redemption. In addition, at any time prior to November 15, 2025, American may redeem up to 40% of the original aggregate principal amount +of the 8.50% Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain +equity offerings, at a redemption price equal to 108.50% of the aggregate principal amount of the 8.50% Senior Secured Notes to be +redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In addition, during each twelve-month +period beginning on December 4, 2023 and ending on or prior to November 15, 2025, American may redeem up to 10% of the original +aggregate principal amount of the 8.50% Senior Secured Notes at a redemption price of 103% of the principal amount thereof, plus any +accrued and unpaid interest thereon to, but excluding, the applicable date of redemption. +Twice per year, American is required to deliver an appraisal of the 8.50% Senior Secured Notes Collateral and an officer’s certificate +demonstrating the calculation of a collateral coverage ratio in relation to the 8.50% Senior Secured Notes Collateral (the 8.50% Senior +Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal +147 +The secret currency is a "dollar". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_148.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..554eb6f3108e6d01e5024d6ea8ccd14a11c27d6b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_148.txt @@ -0,0 +1,47 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +for the applicable period. If the 8.50% Senior Secured Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the +appraisal for the applicable period, then, subject to a cure period in which additional collateral can be provided or debt repaid such that +American meets the required 8.50% Senior Secured Notes Collateral Coverage Ratio, American will be required to pay special interest in an +additional amount equal to 2.0% per annum of the principal amount of the 8.50% Senior Secured Notes until the 8.50% Senior Secured +Notes Collateral Coverage Ratio is established to be at least 1.6 to 1.0. +(c) AAdvantage Financing +On March 24, 2021 (the AAdvantage Financing Closing Date), American and AAdvantage Loyalty IP Ltd., a Cayman Islands exempted +company incorporated with limited liability and an indirect wholly-owned subsidiary of American (Loyalty Issuer and, together with American, +the AAdvantage Issuers), completed the offering of $3.5 billion aggregate principal amount of 5.50% Senior Secured Notes due 2026 (the +2026 Notes) and $3.0 billion aggregate principal amount of 5.75% Senior Secured Notes due 2029 (the 2029 Notes, and together with the +2026 Notes, the AAdvantage Notes). The AAdvantage Notes are fully and unconditionally guaranteed by the SPV Guarantors and AAG. +Concurrent with the issuance of the AAdvantage Notes, the AAdvantage Issuers, as co-borrowers, entered into a term loan credit and +guaranty agreement, dated March 24, 2021, providing for a $3.5 billion term loan facility (the AAdvantage Term Loan Facility and collectively +with the AAdvantage Notes, the AAdvantage Financing) and pursuant to which the full $3.5 billion of term loans (the AAdvantage Loans) +were drawn on the AAdvantage Financing Closing Date. The AAdvantage Loans are fully and unconditionally guaranteed (together with the +AAdvantage Note Guarantees, the AAdvantage Guarantees) by the SPV Guarantors and AAG. +Subject to certain permitted liens and other exceptions, the AAdvantage Notes, AAdvantage Loans and AAdvantage Guarantees provided +by the SPV Guarantors are secured by a first-priority security interest in, and pledge of, various agreements with respect to the AAdvantage +program (the AAdvantage Agreements) (including all payments thereunder) and certain intellectual property licenses, certain deposit +accounts that will receive cash under the AAdvantage Agreements, certain reserve accounts, the equity of each of Loyalty Issuer and the +SPV Guarantors and substantially all other assets of Loyalty Issuer and the SPV Guarantors including American’s rights to certain data and +other intellectual property used in the AAdvantage program (subject to certain exceptions) (collectively, the AAdvantage Collateral). +Payment Terms of the AAdvantage Notes and AAdvantage Loans under the AAdvantage Term Loan Facility +Interest on the AAdvantage Notes is payable in cash, quarterly in arrears on the 20th day of each January, April, July and October (each, +an AAdvantage Payment Date), which began on July 20, 2021. The 2026 Notes will mature on April 20, 2026, and the 2029 Notes will mature +on April 20, 2029. The outstanding principal on the 2026 Notes will be repaid in quarterly installments of $292 million on each AAdvantage +Payment Date, which began in July 2023. The outstanding principal on the 2029 Notes will be repaid in quarterly installments of $250 million +on each AAdvantage Payment Date, beginning on July 20, 2026. +The AAdvantage Issuers may redeem the AAdvantage Notes, at their option, in whole at any time or in part from time to time, at a +redemption price equal to 100% of the principal amount of the AAdvantage Notes redeemed plus a “make-whole” premium, together with +accrued and unpaid interest to the date of redemption. +The scheduled maturity date of the AAdvantage Loans under the AAdvantage Term Loan Facility is April 20, 2028. The outstanding +principal on the AAdvantage Loans will be repaid in quarterly installments of $175 million, on each AAdvantage Payment Date, which began +in July 2023. These amortization payments (as well as those for the AAdvantage Notes) will be subject to the occurrence of certain early +amortization events, including the failure to satisfy a minimum debt service coverage ratio at specified determination dates. +Prepayment of some or all of the AAdvantage Loans outstanding under the AAdvantage Term Loan Facility is permitted, although +payment of an applicable premium is required as specified in the AAdvantage Term Loan Facility. +The AAdvantage Indenture and the AAdvantage Term Loan Facility contain mandatory prepayment provisions triggered upon (i) the +issuance or incurrence by Loyalty Issuer or the SPV Guarantors of certain indebtedness or (ii) the receipt by American or its subsidiaries of +net proceeds from pre-paid frequent flyer (i.e., AAdvantage) mile sales exceeding $505 million. Each of these prepayments would also +require payment of an applicable premium. Certain other events, including the occurrence of a change of control with respect to AAG and +certain AAdvantage Collateral sales exceeding a specified threshold, will also trigger mandatory repurchase or mandatory prepayment +provisions under the AAdvantage Indenture and the AAdvantage Term Loan Facility, respectively. +148 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_149.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..d0faf9edd4980d47eff31847c2f625be156d7254 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_149.txt @@ -0,0 +1,37 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +In June 2023, American and AAdvantage Loyalty IP Ltd. entered into the First Amendment to the AAdvantage Term Loan Facility pursuant +to which the benchmark interest rate transitioned from LIBOR to SOFR, effective July 1, 2023. As a result, the AAdvantage Term Loan +Facility bears interest at a base rate (subject to a floor of 0.00%) plus an applicable margin of 3.75% or, at American’s option, the SOFR rate +for a tenor of three months, plus a 0.26161% credit spread adjustment (with such SOFR rate plus SOFR adjustment being subject to a floor +of 0.75%) and an applicable margin of 4.75%. As of December 31, 2023, the margin elected was 4.75%. Other than the foregoing, the terms +of the AAdvantage Term Loan Facility remain substantially unchanged. +(d) Equipment Loans and Other Notes Payable Issued in 2023 +In 2023, American entered into agreements under which it borrowed $1.1 billion in connection with the financing of certain aircraft. Debt +incurred under these agreements matures in 2032 through 2035 and bears interest at fixed and variable rates (comprised of SOFR plus an +applicable margin) averaging 7.15% as of December 31, 2023. +Other Financing Activities +During the year ended December 31, 2023, American repurchased $539 million of secured notes in the open market. In connection with +the repurchase of these secured notes in the open market, American recorded $57 million of cash special charges for premiums paid and +$6 million of non-cash special charges to write off unamortized debt issuance costs and debt discounts. +Guarantees +As of December 31, 2023, American had issued guarantees covering AAG’s $1.8 billion aggregate principal amount of the PSP1 +Promissory Note due April 2030, $1.0 billion aggregate principal amount of the PSP2 Promissory Note due January 2031, $959 million +aggregate principal amount of the PSP3 Promissory Note due April 2031, $1.0 billion aggregate principal amount of 6.50% convertible senior +notes due July 2025 and $487 million of 3.75% senior notes due March 2025. +Certain Covenants +American’s debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, +among other things, may restrict the ability of American to incur additional indebtedness. American’s debt agreements also contain +customary change of control provisions, which may require it to repay or redeem such indebtedness upon certain events constituting a +change of control under the relevant agreement, in certain cases at a premium. Certain of American’s debt financing agreements (including +its secured notes, term loans, revolving credit facilities and spare engine EETCs) contain loan to value (LTV), collateral coverage or peak +debt service coverage ratio covenants and certain agreements require American to appraise the related collateral annually or semiannually. +Pursuant to such agreements, if the applicable LTV, collateral coverage or peak debt service coverage ratio exceeds or falls below a +specified threshold, as the case may be, American will be required, as applicable, to pledge additional qualifying collateral (which in some +cases may include cash or investment securities), withhold additional cash in certain accounts, or pay down such financing, in whole or in +part, or the interest rate for the relevant financing will be increased. Additionally, a significant portion of American’s debt financing agreements +contain covenants requiring it to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts +available to be drawn under revolving credit facilities, and its AAdvantage Financing contains a peak debt service coverage ratio, pursuant to +which failure to comply with a certain threshold may result in early repayment, in whole or in part, of the AAdvantage Financing. +149 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_15.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a6844f9d5f9c843cac8ed779fd54abac33945ff --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_15.txt @@ -0,0 +1,40 @@ +Table of Contents +Union Class or Craft Employees Contract Amendable Date +Envoy: +Air Line Pilots Associations (ALPA) Pilots 2,070 2029 +Association of Flight Attendants-CWA (AFA) Flight Attendants 1,850 2026 +TWU Ground School Instructors 10 2027 +TWU Mechanics and Related 1,200 2027 +TWU Stock Clerks 130 2027 +TWU Simulator Instructors 20 2026 +TWU Fleet Service 4,020 2026 +TWU Dispatchers 70 2025 +Communications Workers of America (CWA) Passenger Service 7,000 2026 +Piedmont: +ALPA Pilots 640 2029 +AFA Flight Attendants 310 2026 +International Brotherhood of Teamsters (IBT) Mechanics and Related 470 2026 +IBT Stock Clerks 60 2026 +CWA Fleet and Passenger Service 6,650 2023 +IBT Dispatchers 40 2025 +ALPA Flight Crew Training Instructors 70 2029 +PSA: +ALPA Pilots 1,500 2028 +AFA Flight Attendants 1,190 2023 +International Association of Machinists & Aerospace Workers(IAM) Mechanics and Related 680 2027 +TWU Dispatchers 40 2024 +ALPA Flight Crew Training Instructors 80 2028 +Represents approximate number of active employees as of December 31, 2023. +In 2023, a new four-year CBA was ratified by the APA, the union representing our mainline pilots. Additionally, in January 2024, a new +five-year CBA was ratified by the CWA-IBT, which is amendable in 2029. The CBA covering our mainline flight attendants is now amendable +and negotiations continue. Among our wholly-owned regional subsidiaries, Piedmont fleet and passenger service and PSA flight attendants +have agreements that are now amendable and are engaged in negotiations. +For more discussion, see Part I, Item 1A. Risk Factors – “Union disputes, employee strikes and other labor-related disruptions may +adversely affect our operations and financial performance.” +Aircraft Fuel +Our operations and financial results are materially affected by the availability and price of aircraft fuel, which represents one of the largest +single cost items in our business. Based on our 2024 forecasted mainline and regional fuel consumption, we estimate that a one cent per +gallon increase in the price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. +(1) +(1) +15 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_150.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_150.txt new file mode 100644 index 0000000000000000000000000000000000000000..bfe8b2a17f68a6faa9c959c7abe21be33d3d1e8d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_150.txt @@ -0,0 +1,41 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Specifically, American is required to meet certain collateral coverage tests for its Credit Facilities, April 2016 Revolving Facility, 2023 Term +Loan Facility, 7.25% Senior Secured Notes, 8.50% Senior Secured Notes and 10.75% Senior Secured Notes, as described below: +2013 CreditFacilities 7.25% SeniorSecured Notes 2014 CreditFacilities April 2016Revolving Facility 2023 Term LoanFacility 8.50% SeniorSecured Notes 10.75% SeniorSecured Notes +LTV Requirement 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) +LTV as of LastMeasurement Date 34.2% 16.4% Not Applicable 25.9% 6.9% +Frequency ofAppraisals ofAppraisedCollateral +Semi-Annual Annual +Collateral Description +Generally, certain slots, route authoritiesand airport gate leasehold rights used byAmerican to operate certain servicesbetween the U.S. and South America andNew Zealand +Generally, certainslots, routeauthorities andairport gateleasehold rightsused by Americanto operate certainservices betweenthe U.S. andEuropean Union(including LondonHeathrow) +Generally, certainspare parts +Generally, certain slots, route authoritiesand airport gate leasehold rights used byAmerican to operate certain servicesbetween the U.S. and Australia, Canada,the Caribbean, Central America, China,Hong Kong, Japan, Mexico, South Koreaand Switzerland +Generally, certainDCA slots, certainLGA slots, certainsimulators andcertain leaseholdrights and, in thecase of the IPNotes, certainintellectual propertyof American +At December 31, 2023, American was in compliance with the applicable collateral coverage tests as of the most recent measurement +dates. +4. Leases +American leases certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2023, American +operated 737 leased aircraft, including seven aircraft in temporary storage and 237 aircraft leased under capacity purchase agreements, with +remaining terms ranging from less than one year to 10 years. +At each airport where American conducts flight operations, American has agreements, generally with a governmental unit or authority, for +the use of passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., +often contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary +with American’s level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not +recorded on American’s consolidated balance sheets as a ROU asset or a lease liability. Additionally, at American’s hub locations and in +certain other cities it serves, American leases administrative offices, catering, cargo, training, maintenance and other facilities. +The components of lease expense were as follows (in millions): +Year Ended December 31, +2023 2022 2021 +Operating lease cost $ 1,992 $ 1,987 $ 1,998 +Finance lease cost: +Amortization of assets 119 135 107 +Interest on lease liabilities 44 46 44 +Variable lease cost 2,703 2,572 2,461 +Total net lease cost $ 4,858 $ 4,740 $ 4,610 +Included in the table above is $274 million, $242 million and $190 million of operating lease cost under American’s capacity purchase +agreement with Republic for the years ended December 31, 2023, 2022 and 2021, respectively. American holds a 25% equity interest in +Republic Holdings, the parent company of Republic. +150 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_151.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_151.txt new file mode 100644 index 0000000000000000000000000000000000000000..8a98a02913832c6ab66c5b09b88823e3e0be2c5f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_151.txt @@ -0,0 +1,33 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate): +December 31, +2023 2022 +Operating leases: +Operating lease ROU assets $ 7,886 $ 8,033 +Current operating lease liabilities $ 1,292 $ 1,449 +Noncurrent operating lease liabilities 6,416 6,512 +Total operating lease liabilities $ 7,708 $ 7,961 +Finance leases: +Property and equipment, at cost $ 1,352 $ 1,336 +Accumulated amortization (870) (767) +Property and equipment, net $ 482 $ 569 +Current finance lease liabilities $ 124 $ 209 +Noncurrent finance lease liabilities 374 535 +Total finance lease liabilities $ 498 $ 744 +Weighted average remaining lease term (in years): +Operating leases 8.4 8.3 +Finance leases 5.8 5.0 +Weighted average discount rate: +Operating leases 7.6 % 7.4 % +Finance leases 7.1 % 7.1 % +Supplemental cash flow and other information related to leases was as follows (in millions): +Year Ended December 31, +2023 2022 2021 +Cash paid for amounts included in the measurement of lease liabilities: +Operating cash flows from operating leases $ 2,011 $ 1,968 $ 2,040 +Operating cash flows from finance leases 47 46 37 +Financing cash flows from finance leases 255 179 126 +Gain on sale leaseback transactions, net 12 2 25 +151 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_152.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_152.txt new file mode 100644 index 0000000000000000000000000000000000000000..914799c107ff323a57fa25f5502f85eb45f42d62 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_152.txt @@ -0,0 +1,40 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Maturities of lease liabilities were as follows (in millions): +December 31, 2023 +Operating Leases Finance Leases +2024 $ 1,789 $ 156 +2025 1,498 140 +2026 1,280 114 +2027 1,115 71 +2028 985 30 +2029 and thereafter 3,682 89 +Total lease payments 10,349 600 +Less: Imputed interest (2,641) (102) +Total lease obligations 7,708 498 +Less: Current obligations (1,292) (124) +Long-term lease obligations $ 6,416 $ 374 +As of December 31, 2023, American had additional operating lease commitments that have not yet commenced of approximately $669 +million for five Boeing 787 Family aircraft scheduled to be delivered in 2024 with lease terms of 10 years. +5. Income Taxes +The significant components of the income tax provision (benefit) were (in millions): + Year Ended December 31, + 2023 2022 2021 +Current income tax benefit: +State, local and foreign $ — $ (6) $ — +Deferred income tax provision (benefit): +Federal 361 112 (453) +State and local 33 10 (47) +Deferred income tax provision (benefit) 394 122 (500) +Total income tax provision (benefit) $ 394 $ 116 $ (500) +The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions): + Year Ended December 31, + 2023 2022 2021 +Statutory income tax provision (benefit) $ 332 $ 95 $ (478) +State, local and foreign income tax provision (benefit), net of federal tax effect 25 3 (37) +Book expenses not deductible for tax purposes 35 20 21 +Change in valuation allowance 3 — — +Other, net (1) (2) (6) +Income tax provision (benefit) $ 394 $ 116 $ (500) +152 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_153.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_153.txt new file mode 100644 index 0000000000000000000000000000000000000000..101fbcb9d5f02221e464ce6250bdfa7df3b6df27 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_153.txt @@ -0,0 +1,47 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +The components of American’s deferred tax assets and liabilities were (in millions): + December 31, + 2023 2022 +Deferred tax assets: +Net operating loss and other carryforwards $ 3,960 $ 4,492 +Loyalty program liability 1,774 1,809 +Leases 1,746 1,804 +Pension benefits 428 467 +Postretirement benefits other than pension benefits 273 179 +Rent expense 84 130 +Other 846 689 +Total deferred tax assets 9,111 9,570 +Valuation allowance (12) (9) +Net deferred tax assets 9,099 9,561 +Deferred tax liabilities: +Accelerated depreciation and amortization (4,479) (4,603) +Leases (1,786) (1,817) +Other (254) (256) +Total deferred tax liabilities (6,519) (6,676) +Net deferred tax asset $ 2,580 $ 2,885 +At December 31, 2023, American had approximately $13.7 billion of gross federal net operating losses (NOLs) and $3.6 billion of other +carryforwards available to reduce future federal taxable income, of which $3.8 billion will expire beginning in 2033 if unused and $13.5 billion +can be carried forward indefinitely. American is a member of AAG’s consolidated federal and certain state income tax returns. American also +had approximately $5.3 billion of NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable +years 2023 through 2043 if unused. +American’s ability to use its NOLs and other carryforwards depends on the amount of taxable income generated in future periods. +American provides a valuation allowance for its deferred tax assets, which include the NOLs, when it is more likely than not that some +portion, or all of its deferred tax assets, will not be realized. American considers all available positive and negative evidence and makes +certain assumptions in evaluating the realizability of its deferred tax assets. Many factors are considered that impact American’s assessment +of future profitability, including conditions which are beyond its control, such as the health of the economy, the availability and price volatility of +aircraft fuel and travel demand. American has determined that positive factors outweigh negative factors in the determination of the +realizability of its deferred tax assets. There can be no assurance that an additional valuation allowance on American’s net deferred tax +assets will not be required. Such valuation allowance could be material. +American’s ability to deduct its NOL carryforwards and to utilize certain other available tax attributes can be substantially constrained +under the general annual limitation rules of Section 382 where an “ownership change” has occurred. Substantially all of American’s remaining +federal NOL carryforwards attributable to US Airways Group are subject to limitation under Section 382; however, American’s ability to utilize +such NOL carryforwards is not anticipated to be effectively constrained as a result of such limitation. Similar limitations may apply for state +income tax purposes. American’s ability to utilize any new NOL carryforwards arising after the ownership changes is not affected by the +annual limitation rules imposed by Section 382 unless another ownership change occurs. Under the Section 382 limitation, cumulative stock +ownership changes among material stockholders exceeding 50% during a rolling three-year period can potentially limit American’s future use +of NOLs and tax credits. +In 2023, American recorded an income tax provision of $394 million, with an effective rate of approximately 25%, which was substantially +non-cash. Substantially all of American’s income before income taxes is attributable to the United States. +153 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_154.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_154.txt new file mode 100644 index 0000000000000000000000000000000000000000..485783deac058b138180752449ddd539d1d6d321 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_154.txt @@ -0,0 +1,44 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +American files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. American’s 2020 through 2022 tax +years are still subject to examination by the Internal Revenue Service. Various state and foreign jurisdiction tax years remain open to +examination, and American is under examination, in administrative appeals or engaged in tax litigation in certain jurisdictions. American +believes that the effect of any assessments will not be material to its consolidated financial statements. +The amount of, and changes to, American’s uncertain tax positions were not material in any of the years presented. American accrues +interest and penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. +6. Fair Value Measurements +Assets Measured at Fair Value on a Recurring Basis +Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) on the +measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or +liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair +value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value +are observable in the market. Each fair value measurement is reported in one of three levels: +• Level 1 – Observable inputs such as quoted prices in active markets; +• Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and +• Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own +assumptions. +When available, American uses quoted market prices to determine the fair value of its financial assets. If quoted market prices are not +available, American measures fair value using valuation techniques that use, when possible, current market-based or independently-sourced +market parameters, such as interest rates and currency rates. +American utilizes the market approach to measure the fair value of its financial assets. The market approach uses prices and other +relevant information generated by market transactions involving identical or comparable assets. American’s short-term investments, restricted +cash and restricted short-term investments classified as Level 2 utilize significant observable inputs, other than quoted prices in active +markets, for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2023. +Assets measured at fair value on a recurring basis are summarized below (in millions): + Fair Value Measurements as of December 31, 2023 + Total Level 1 Level 2 Level 3 +Short-term investments : +Money market funds $ 817 $ 817 $ — $ — +Corporate obligations 4,046 — 4,046 — +Bank notes/certificates of deposit/time deposits 1,585 — 1,585 — +Repurchase agreements 450 — 450 — +U.S. government and agency obligations 100 — 100 — +6,998 817 6,181 — +Restricted cash and short-term investments 910 459 451 — +Long-term investments 163 163 — — +Total $ 8,071 $ 1,439 $ 6,632 $ — +(1), (2) +(1), (3) +(4) +154 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_155.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_155.txt new file mode 100644 index 0000000000000000000000000000000000000000..a844abd8c96254ffabf1693c4c5ca6232c122976 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_155.txt @@ -0,0 +1,44 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. + Fair Value Measurements as of December 31, 2022 + Total Level 1 Level 2 Level 3 +Short-term investments : +Money market funds $ 731 $ 731 $ — $ — +Corporate obligations 3,688 — 3,688 — +Bank notes/certificates of deposit/time deposits 3,654 — 3,654 — +Repurchase agreements 450 — 450 — +8,523 731 7,792 — +Restricted cash and short-term investments 995 535 460 — +Long-term investments 245 245 — — +Total $ 9,763 $ 1,511 $ 8,252 $ — +All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in +accumulated other comprehensive loss at each reporting period. There were no credit losses. +American’s short-term investments as of December 31, 2023 mature in one year or less. +Restricted cash and short-term investments primarily include collateral held to support workers' compensation obligations and collateral +associated with the payment of interest for the AAdvantage Financing. Restricted short-term investments mature in one year or less +except for $218 million as of December 31, 2023. +Long-term investments include American's equity investments in China Southern Airlines Company Limited (China Southern Airlines), +GOL and Vertical Aerospace Ltd. (Vertical). See Note 7 for further information on American’s equity investments. +Fair Value of Debt +The fair value of American’s long-term debt was estimated using quoted market prices or discounted cash flow analyses based on +American’s current estimated incremental borrowing rates for similar types of borrowing arrangements. If American’s long-term debt was +measured at fair value, it would have been classified as Level 2 in the fair value hierarchy. +The carrying value and estimated fair value of American’s long-term debt, including current maturities, were as follows (in millions): + December 31, 2023 December 31, 2022 + Carrying Value Fair Value Carrying Value Fair Value +Long-term debt, including current maturities $ 27,177 $ 27,008 $ 29,679 $ 28,453 +7. Investments +To help expand American’s network and as part of its ongoing commitment to sustainability, American enters into various commercial +relationships or other strategic partnerships, including equity investments, with other airlines and companies. American’s equity investments +are reflected in other assets on its consolidated balance sheets. American’s share of equity method investees’ financial results and changes +in fair value are recorded in nonoperating other income (expense), net on the consolidated statements of operations. +(1) +(1), (3) +(4) +(1) +(2) +(3) +(4) +155 +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_156.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_156.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a97e58b5793e5fb781450325968ee83c40304db --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_156.txt @@ -0,0 +1,52 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +American’s equity investments ownership interest and carrying value were as follows: +Ownership Interest Carrying Value (in millions) +December 31, December 31, +Accounting Treatment 2023 2022 2023 2022 +Republic Holdings Equity Method 25.0 % 25.0 % $ 240 $ 222 +China Southern Airlines Fair Value 1.5 % 1.5 % 115 176 +Other investments Various 186 212 +Total $ 541 $ 610 +Primarily includes American’s investment in JetSMART Holdings Limited, which is accounted for under the equity method, and +American’s investments in GOL and Vertical, which are each accounted for at fair value. +8. Employee Benefit Plans +American sponsors defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans +provide benefits for participating employees based on years of service and average compensation for a specified period of time before +retirement. Effective November 1, 2012, substantially all of American’s defined benefit pension plans were frozen and American began +providing enhanced benefits under its defined contribution pension plans for certain employee groups. American uses a December 31 +measurement date for all of its defined benefit pension plans. American also provides certain retiree medical and other postretirement +benefits, including health care and life insurance benefits, to retired employees. +Benefit Obligations, Fair Value of Plan Assets and Funded Status +The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits +obligations, fair value of plan assets and funded status as of December 31, 2023 and 2022: + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 + (In millions) +Benefit obligation at beginning of period $ 13,948 $ 18,791 $ 906 $ 1,098 +Service cost 2 3 17 16 +Interest cost 753 552 55 30 +Actuarial loss (gain) 501 (4,534) 92 (167) +Plan amendments — — 339 — +Other — — — 3 +Benefit payments (890) (864) (84) (74) +Benefit obligation at end of period $ 14,314 $ 13,948 $ 1,325 $ 906 +Fair value of plan assets at beginning of period $ 11,821 $ 14,605 $ 133 $ 167 +Actual return (loss) on plan assets 1,356 (1,924) 14 (18) +Employer contributions 71 4 70 58 +Benefit payments (890) (864) (84) (74) +Fair value of plan assets at end of period $ 12,358 $ 11,821 $ 133 $ 133 +Funded status at end of period $ (1,956) $ (2,127) $ (1,192) $ (773) +The 2023 and 2022 pension actuarial loss (gain) primarily relates to the change in American’s weighted average discount rate +assumption. +The 2023 and 2022 retiree medical and other postretirement benefits actuarial loss (gain) primarily relates to the change in American’s +weighted average discount rate assumption and, in 2023, the change in health care cost assumptions. + (1) +(1) +(1), (2) +(3) +(4) +(1) +(2) +156 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_157.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_157.txt new file mode 100644 index 0000000000000000000000000000000000000000..ac46c421dac29a590ee9924c1bfd80165654f252 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_157.txt @@ -0,0 +1,38 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +As of September 30, 2023, American remeasured its retiree medical and other postretirement benefits to account for enhanced +retirement benefits provided to its mainline pilots pursuant to the new collective bargaining agreement ratified in August 2023. As a result, +American increased its postretirement benefits obligation by $339 million, which was included as a component of prior service cost in +accumulated other comprehensive loss. +In 2023, American made required contributions of $67 million to its defined benefit pension plans. +Balance Sheet Position + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 + (In millions) +As of December 31, +Current liability $ 6 $ 4 $ 122 $ 85 +Noncurrent liability 1,950 2,123 1,070 688 +Total liabilities $ 1,956 $ 2,127 $ 1,192 $ 773 +Pension Benefits Retiree Medical and Other Postretirement Benefits +2023 2022 2023 2022 +(In millions) +Net actuarial loss (gain) $ 3,561 $ 3,609 $ (382) $ (505) +Prior service cost (benefit) — 18 197 (148) +Total accumulated other comprehensive loss (income), pre-tax $ 3,561 $ 3,627 $ (185) $ (653) +Plans with Projected Benefit Obligations Exceeding Fair Value of Plan Assets + Pension Benefits + 2023 2022 + (In millions) +Projected benefit obligation $ 14,314 $ 13,948 +Fair value of plan assets 12,358 11,821 +Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 + (In millions) +Accumulated benefit obligation $ 14,307 $ 13,941 $ — $ — +Accumulated postretirement benefit obligation — — 1,325 906 +Fair value of plan assets 12,358 11,821 133 133 +(3) +(4) +157 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_158.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_158.txt new file mode 100644 index 0000000000000000000000000000000000000000..9097ca9626f25e0fd66178cbd91dc0581757726c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_158.txt @@ -0,0 +1,41 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Net Periodic Benefit Cost (Income) + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2021 2023 2022 2021 + (In millions) +Defined benefit plans: +Service cost $ 2 $ 3 $ 3 $ 17 $ 16 $ 12 +Interest cost 753 552 523 55 30 30 +Expected return on assets (914) (1,133) (1,078) (11) (12) (12) +Special termination benefits — — — — — 139 +Amortization of: +Prior service cost (benefit) 18 28 28 (6) (14) (13) +Unrecognized net loss (gain) 106 156 211 (34) (30) (24) +Net periodic benefit cost (income) $ (35) $ (394) $ (313) $ 21 $ (10) $ 132 +The service cost component of net periodic benefit cost (income) is included in operating expenses, the cost for the special termination +benefits is included in special items, net and the other components of net periodic benefit cost (income) are included in nonoperating other +income (expense), net on American’s consolidated statements of operations. +Assumptions +The following actuarial assumptions were used to determine American’s benefit obligations and net periodic benefit cost (income) for the +periods presented: + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2023 2022 +Benefit obligations: +Weighted average discount rate 5.2% 5.6% 5.3% 5.7% + Pension Benefits Retiree Medical and Other Postretirement Benefits + 2023 2022 2021 2023 2022 2021 +Net periodic benefit cost (income): +Weighted average discount rate 5.6% 3.0% 2.7% 5.7% 2.8% 2.4% +Weighted average expected rate of return on plan assets 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% +Weighted average health care cost trend rate assumed fornext year N/A N/A N/A 6.5% 5.8% 4.8% +The weighted average health care cost trend rate at December 31, 2023 is assumed to decline gradually to 4.5% by 2033 and remain +level thereafter. +As of December 31, 2023, American’s estimate of the long-term rate of return on plan assets was 8.0% based on the target asset +allocation. Expected returns on long 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 10 years, current and +expected market conditions, and expected value to be generated through active management and securities lending programs. +(1) +(1) +158 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_159.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_159.txt new file mode 100644 index 0000000000000000000000000000000000000000..56fa5458b5ae4e4fddbfc70717f8c1df715af4c7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_159.txt @@ -0,0 +1,44 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Minimum Contributions +American is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the +Employee Retirement Income Security Act of 1974 (ERISA) and various other laws for U.S. based plans as well as underfunding rules +specific to countries where American maintains defined benefit pension plans. Based on current funding assumptions, American has +minimum required contributions of $280 million for 2024. American’s future funding obligations will depend on the performance of American’s +investments held in a trust by the pension plans, interest rates for determining funding targets, the amount of and timing of any supplemental +contributions and American’s actuarial experience. +Benefit Payments +The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions): +2024 2025 2026 2027 2028 2029-2033 +Pension benefits $ 947 $ 972 $ 996 $ 1,017 $ 1,030 $ 5,232 +Retiree medical and other postretirement benefits 138 144 150 150 148 674 +Plan Assets +The objectives of American’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 the funded position with the potential risk that the funded position would decline. The current +strategic target asset allocation with the corresponding allowed range is as follows: +Asset Class/Sub-Class Target Allocation Allowed Range +Equity 61 % 30% - 85% +Public: +U.S. Large 19 % 10% - 40% +U.S. Small/Mid 5 % 0% - 10% +International Large 13 % 5% - 25% +International Small/Mid 3 % 0% - 10% +Emerging Markets 6 % 0% - 15% +Private Equity 15 % 5% - 30% +Fixed Income 39 % 15% - 70% +Public U.S. Fixed Income 30 % 15% - 60% +Private Income 9 % 0% - 20% +Other — % 0% - 5% +Cash Equivalents — % 0% - 20% +Public equity investments are intended to provide a real return over a full market cycle and, therefore, to contribute to the pension plan’s +long-term objective. Public fixed income investments are intended to provide income to the plan and offer the potential for long term capital +appreciation. Private investments, such as private equity and private income, are used to provide higher expected returns than public +markets over the long-term by assuming reduced levels of liquidity and higher levels of risk. The pension plan’s master trust participates in +securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The pension +plan’s master trust will also engage in derivative instruments to equitize residual levels of cash as well as hedge the pension plan’s exposure +to interest rates. Such programs are subject to market risk and counterparty risk. +159 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_16.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..510332f31fed281adeaed56e586661e0ed1fd560 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_16.txt @@ -0,0 +1,44 @@ +Table of Contents +The following table shows annual aircraft fuel consumption and costs, including taxes, for our mainline and regional operations for 2023 +and 2022 (gallons and aircraft fuel expense in millions). +Year Gallons Average Priceper Gallon Aircraft FuelExpense Percent of TotalOperating Expenses +2023 4,140 $2.96 $12,257 25% +2022 3,901 $3.54 $13,791 29% +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in aircraft fuel prices. +Aircraft fuel prices have in the past, and may in the future, experience substantial volatility. We cannot predict the future availability, price +volatility or cost of aircraft fuel. For more discussion, see Part I, Item 1A. Risk Factors – “Our business is very dependent on the price and +availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of +aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity.” +Seasonality and Other Factors +Due to the greater demand for air travel during the summer months, revenues in the airline industry exhibit seasonal patterns based on the +peak travel periods. General economic conditions, fears of terrorism or war, fare initiatives, fluctuations in fuel prices, labor actions, weather, +natural disasters, outbreaks of disease, geopolitical factors and other factors could impact this seasonal pattern. Therefore, our quarterly +results of operations are not necessarily indicative of operating results for the entire year, and historical operating results in a quarterly or +annual period are not necessarily indicative of future operating results. +Domestic and Global Regulatory Landscape +General +Airlines are subject to extensive domestic and international regulatory requirements. Domestically, the DOT and the Federal Aviation +Administration (FAA) exercise significant regulatory authority over air carriers. +The DOT, among other things, oversees and regulates domestic and international codeshare agreements, international route authorities, +competition and consumer protection matters including accessibility, the display and sharing of ancillary fee information and refund practices. +The Antitrust Division of the Department of Justice, along with the DOT in certain instances, have jurisdiction over airline antitrust matters. +The FAA similarly exercises safety oversight and regulates most operational matters of our business, including how we operate and +maintain our aircraft. FAA requirements cover, among other things, required technology and necessary onboard equipment; systems, +procedures and training necessary to ensure the continuous airworthiness of our fleet of aircraft; safety measures and equipment; crew +scheduling limitations and experience requirements; and many other technical aspects of airline operations. Additionally, our pilots and other +employees are subject to rigorous certification standards, and our pilots and other crew members must adhere to flight time and rest +requirements. +The FAA also controls the national airspace system, including operational rules and fees for air traffic control (ATC) services. The +efficiency, reliability and capacity of the ATC network has a significant impact on our costs and on the timeliness of our operations. +The U.S. Postal Service has jurisdiction over certain aspects of the transportation of mail and related services. +Airport Access and Operations +Domestically, any U.S. airline authorized by the DOT is generally free to operate scheduled passenger service between any two points +within the U.S. and its territories, with the exception of certain airports that require landing and take-off rights and authorizations (slots) and +other facilities, and certain airports that impose geographic limitations on operations or curtail operations based on the time of day. +Operations at three major domestic airports we serve (JFK and LGA in New York City, and Ronald Reagan Washington National Airport +(DCA) near Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations +of slots or similar regulatory mechanisms +16 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_160.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_160.txt new file mode 100644 index 0000000000000000000000000000000000000000..f1092a532a0859ca540726df210e2297ffcecd6a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_160.txt @@ -0,0 +1,60 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +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. Investments in limited partnerships are carried at +estimated net asset value (NAV) 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. Mutual funds are valued once daily through a NAV +calculation provided at the end of each trade day. Common/collective trusts are valued at NAV based on the fair values of the underlying +investments of the trusts as determined by the sponsor of the trusts. No changes in valuation techniques or inputs occurred during the year. +Benefit Plan Assets Measured at Fair Value on a Recurring Basis +The fair value of American’s pension plan assets at December 31, 2023 and 2022, by asset category, were as follows (in millions) : +December 31, 2023 December 31, 2022 +Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total +Equity $ 3,134 $ — $ — $ 3,134 $ 3,055 $ — $ — $ 3,055 +Fixed income 235 3,238 — 3,473 206 2,917 — 3,123 +Other, net (6) 348 84 426 74 278 75 427 +Measured at NAV : +Common collective trusts — — — 1,244 — — — 1,694 +Private investments — — — 4,081 — — — 3,522 +Total plan assets $ 3,363 $ 3,586 $ 84 $ 12,358 $ 3,335 $ 3,195 $ 75 $ 11,821 +See Note 6 for a description of the levels within the fair value hierarchy. +Equity investments include domestic and international common stock and preferred stock. +Fixed income investments include corporate, government and U.S. municipal bonds, as well as mutual funds invested in fixed income +securities. +Other primarily includes a short-term investment fund, net receivables and payables of the master trust for dividends, interest and +amounts due to or from the sale and purchase of securities and cash and cash equivalents. +Includes investments that were measured at NAV per share (or its equivalent) as a practical expedient that have not been classified in +the fair value hierarchy. +Common collective trusts include commingled funds primarily invested in equity securities. For some trusts, requests for withdrawals +must meet specific requirements with advance notice of redemption preferred. +Private investments include limited partnerships that invest primarily in domestic private equity and private income opportunities. The +pension plan’s master trust does not have the right to redeem its limited partnership investment at its NAV, but rather 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 10 years. As of December 31, 2023, the pension plan’s master trust has future funding commitments to these limited +partnerships of approximately $1.3 billion, most of which are expected to be called over the next five years. +Changes in fair value measurements of Level 3 investments during the years ended December 31, 2023 and 2022, were as follows (in +millions): +2023 2022 +Balance at beginning of year $ 75 $ 58 +Actual gain (loss) on plan assets: +Relating to assets still held at the reporting date (9) 1 +Purchases 20 29 +Sales (2) (9) +Transfers out — (4) +Balance at end of year $ 84 $ 75 +(1) +(2) +(3) +(4) +(5) +(6) +(7) +(1) +(2) +(3) +(4) +(5) +(6) +(7) +160 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_161.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_161.txt new file mode 100644 index 0000000000000000000000000000000000000000..503931ed5e3e8a4257cf43b5b71331a31596ea25 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_161.txt @@ -0,0 +1,48 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Plan assets in the retiree medical and other postretirement benefits plans are primarily Level 2 mutual funds valued by quoted prices on +the active market, which is fair value, and represents the NAV of the shares of such funds as of the close of business at the end of the period. +NAV is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination. +Defined Contribution and Multiemployer Plans +The costs associated with American’s defined contribution plans were $1.1 billion, $916 million and $893 million for the years ended +December 31, 2023, 2022 and 2021, respectively. +American participates in the International Association of Machinists & Aerospace Workers (IAM) National Pension Fund, Employer +Identification No. 51-6031295 and Plan No. 002 (the IAM Pension Fund). American’s contributions to the IAM Pension Fund were $52 million, +$46 million and $43 million for the years ended December 31, 2023, 2022 and 2021, respectively. The IAM Pension Fund reported $533 +million in employers’ contributions for the year ended December 31, 2022, which is the most recent year for which such information is +available. For 2022, American’s contributions represented more than 5% of total contributions to the IAM Pension Fund. +On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a funded +status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. Upon entry +into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health of the +pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, American was subject to an immaterial +contribution surcharge, which ceased to apply June 14, 2019 upon American’s mandatory adoption of a contribution schedule under the +Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate. This contribution schedule will remain +in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. +Profit Sharing Program +American accrues a percentage of its pre-tax income excluding net special items for its profit sharing program. For the year ended +December 31, 2023, American accrued $261 million for this program, which will be distributed to employees in the first quarter of 2024. +9. Accumulated Other Comprehensive Loss +The components of AOCI are as follows (in millions): +Pension, Retiree Medical and Other Postretirement Benefits +Unrealized Gain(Loss) onInvestments +Income Tax Benefit(Provision) Total +Balance at December 31, 2021 $ (4,724) $ (2) $ (1,315) $ (6,041) +Other comprehensive income (loss) before reclassifications 1,610 (4) (363) 1,243 +Amounts reclassified from AOCI 140 — (32) 108 +Net current-period other comprehensive income (loss) 1,750 (4) (395) 1,351 +Balance at December 31, 2022 (2,974) (6) (1,710) (4,690) +Other comprehensive income (loss) before reclassifications (486) 4 108 (374) +Amounts reclassified from AOCI 84 — (19) 65 +Net current-period other comprehensive income (loss) (402) 4 89 (309) +Balance at December 31, 2023 $ (3,376) $ (2) $ (1,621) $ (4,999) +Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income +(loss) until the obligations are fully extinguished. +Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision +(benefit) on American’s consolidated statements of operations. + (1) +(2) +(2) +(1) +(2) +161 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_162.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_162.txt new file mode 100644 index 0000000000000000000000000000000000000000..d2ce6037e547532481c149566a2b499535a56962 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_162.txt @@ -0,0 +1,42 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +Reclassifications out of AOCI for the years ended December 31, 2023 and 2022 are as follows (in millions): + Amounts reclassified from AOCI +Affected line items on the consolidated statements of operations + Year Ended December 31, +AOCI Components 2023 2022 +Amortization of pension, retiree medical and otherpostretirement benefits: +Prior service cost $ 9 $ 11 Nonoperating other income (expense), net +Actuarial loss 56 97 Nonoperating other income (expense), net +Total reclassifications for the period, net of tax $ 65 $ 108 +10. Commitments, Contingencies and Guarantees +(a) Aircraft, Engine and Other Purchase Commitments +Under all of American’s aircraft and engine purchase agreements, its total future commitments as of December 31, 2023 are expected to +be as follows (approximately, in millions): +2024 2025 2026 2027 2028 2029 andThereafter Total +Payments for aircraft and engine commitments $ 2,410 $ 3,725 $ 3,580 $ 1,118 $ 829 $ 645 $ 12,307 +These amounts are net of purchase deposits currently held by the manufacturers. American’s purchase deposits held by all +manufacturers totaled $760 million and $613 million as of December 31, 2023 and 2022, respectively. +Due to uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent American’s most current +estimate based on contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management +by the applicable equipment manufacturer. However, the actual delivery schedule may differ, potentially materially, based on various +potential factors including production delays by the manufacturer and regulatory concerns. +Additionally, the amounts in the table exclude five Boeing 787 Family aircraft scheduled to be delivered in 2024, for which American has +obtained committed lease financing. See Note 4 for information regarding this operating lease commitment. +Additionally, American has other purchase commitments primarily related to aircraft fuel, flight equipment maintenance and information +technology support as follows (approximately): $4.7 billion in 2024, $2.0 billion in 2025, $1.4 billion in 2026, $150 million in 2027, $124 million +in 2028 and $843 million in 2029 and thereafter. These amounts exclude obligations under certain fuel offtake agreements or other +agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the +construction of a production facility. +(b) Capacity Purchase Agreements with Third-Party Regional Carriers +American has capacity purchase agreements with third-party regional carriers. The capacity purchase agreements provide that all +revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to American. American controls marketing, scheduling, +ticketing, pricing and seat inventories. In return, American agrees to pay predetermined fees to these airlines for operating an agreed-upon +number of aircraft, without regard to the number of passengers on board. In addition, these agreements provide that American either +reimburses or pays 100% of certain variable costs, such as airport landing fees, fuel and passenger liability insurance. +As of December 31, 2023, American’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from +2024 to 2032, with rights of American to extend the respective terms of certain agreements. +(1) +(1) +162 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_163.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_163.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d7a6113c21ab4183074b2a9f6bd309358bc8fd4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_163.txt @@ -0,0 +1,49 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +As of December 31, 2023, American’s minimum obligations under its capacity purchase agreements with third-party regional carriers are +expected to be as follows (approximately, in millions): +2024 2025 2026 2027 2028 2029 andThereafter Total +Minimum obligations under capacity purchaseagreements with third-party regional carriers $ 2,038 $ 1,992 $ 1,702 $ 1,473 $ 693 $ 1,332 $ 9,230 +Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are +estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual +payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase +agreements are reflected in the operating lease commitments in Note 4. +(c) Airport Redevelopment +Los Angeles International Airport (LAX) +From time to time, airports engage in construction projects, often substantial, that result in new or improved facilities that are ultimately +funded through increases in the rent and other occupancy costs payable by airlines operating at the airport. Unlike this construction and +funding model, American is managing a project at LAX where it has legal title to the assets during construction. In 2018, American executed +a lease agreement with Los Angeles World Airports (LAWA), which owns and operates LAX, in connection with a $1.6 billion modernization +project related to LAX Terminals 4 and 5. Construction, which started in October 2018 and is expected to be completed in 2028, will occur in +a phased approach. The modernization project will include a unified departure hall to the entranceway of Terminals 4 and 5, reconfigured +ticket counter and check-in areas with seamless access to security screening areas, 10 new security screening lanes with automated +technology in addition to the existing Terminal 5 lanes, and a new Terminal 4 South concourse with more open and upgraded amenities at +gate areas. The project will also include renovated break rooms, multi-use meeting rooms and team gathering spaces throughout the +terminals to support American’s team members at LAX. +As each phase is completed and ready for use, the assets will be sold and transferred to LAWA, including the site improvements and other +non-proprietary improvements. As American controls the assets during construction, they are recognized on its consolidated balance sheets +within operating property and equipment until the assets are sold and transferred to LAWA. As of December 31, 2023, American has incurred +$862 million in costs relating to the LAX modernization project, of which $283 million were incurred in 2023. Cash paid for non-proprietary +improvements are included within other investing activities on American’s consolidated statements of cash flows. In addition, as of +December 31, 2023, American has sold and transferred $346 million of non-proprietary improvements to LAWA, of which $170 million +occurred during 2023. For non-proprietary improvements which are not yet ready for use, any cash payments received from LAWA will be +reflected as a financial liability included within noncurrent other liabilities on American’s consolidated balance sheets and reflected as other +financing activities on its consolidated statements of cash flows. As of December 31, 2023, $53 million of cash proceeds received for non- +proprietary improvements were not yet ready for use, and therefore have not been sold and transferred back to LAWA. +(d) Off-Balance Sheet Arrangements +Pass-Through Trusts +American currently has 308 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by +pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment +or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately +when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one +time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the +case of the spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. +The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, +that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. +Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the +EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the +proceeds from the issuance of the EETC (which may have been available at the time +(1) +(1) +163 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_164.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_164.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ea1536cfa8b28b071cd61d76bdfb8641b91e97 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_164.txt @@ -0,0 +1,44 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +of issuance thereof or held in escrow until financing of the applicable aircraft following its delivery) to purchase equipment notes relating to +the financed aircraft or engines. The equipment notes are issued, at American’s election, in connection with a mortgage financing of the +aircraft or spare engines. The equipment notes are secured by a security interest in the aircraft or engines, as applicable. The pass-through +trust certificates are not direct obligations of, nor are they guaranteed by, AAG or American. However, the equipment notes issued to the +trusts are direct obligations of American and, in certain instances, have been guaranteed by AAG. As of December 31, 2023, $7.7 billion +associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet. +Letters of Credit and Other +American provides financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation +obligations and airport commitments. As of December 31, 2023, American had $318 million of letters of credit and surety bonds securing +various obligations, of which $94 million is collateralized with American’s restricted cash. The letters of credit and surety bonds that are +subject to expiration will expire on various dates through 2028. +(e) Legal Proceedings +Government Antitrust Action Related to the Northeast Alliance. On September 21, 2021, the United States Department of Justice, joined +by Attorneys General from six states and the District of Columbia, filed an antitrust complaint against American and JetBlue Airways +Corporation (JetBlue) in the U.S. District Court for the District of Massachusetts alleging that American and JetBlue violated U.S. antitrust law +in connection with the previously disclosed Northeast Alliance arrangement (NEA). +On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue +from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, +2023, and the carriers have commenced wind-down activities to accommodate mutual customers. Following written submissions by the +parties and a hearing on July 26, 2023, the U.S. District Court for the District of Massachusetts entered a Final Judgment and Order Entering +Permanent Injunction on July 28, 2023. The parties are complying with the terms of the Final Judgment and Order Entering Permanent +Injunction, including winding down activities related to the NEA. American filed a notice of appeal to the U.S. Court of Appeals for the First +Circuit on September 25, 2023, and American’s opening brief was filed on December 6, 2023. +Private Party Antitrust Actions Related to the Northeast Alliance. On December 5, 2022 and December 7, 2022, two private party plaintiffs +filed putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the Eastern District of New York +alleging that American and JetBlue violated U.S. antitrust law in connection with the previously disclosed NEA. These actions were +consolidated on January 10, 2023. The private party plaintiffs filed an amended consolidated complaint on February 3, 2023. On February 2, +2023 and February 15, 2023, private party plaintiffs filed two additional putative class action antitrust complaints against American and +JetBlue in the U.S. District Court for the District of Massachusetts and the U.S. District Court for the Eastern District of New York, +respectively. In March 2023, American filed a motion in the U.S. District Court for the District of Massachusetts case asking to transfer the +case to the U.S. District Court for the Eastern District of New York and consolidate it with the cases pending in that venue. The U.S. District +Court for the District of Massachusetts granted that motion. The remaining cases were consolidated with the other actions in the Eastern +District of New York. In June 2023, the private party plaintiffs filed a second amended consolidated complaint, followed by a third amended +complaint filed in August 2023. In September 2023, American, together with JetBlue, filed a motion to dismiss the third amended complaint, +and that motion remains pending. American believes these lawsuits are without merit and is defending against them vigorously. +General. In addition to the specifically identified legal proceedings, American and its subsidiaries are also engaged in other legal +proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final +outcome depending on a number of variables, some of which are not within American’s control. Therefore, although American will vigorously +defend itself in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and +other impacts on American are uncertain but could be material. +164 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_165.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_165.txt new file mode 100644 index 0000000000000000000000000000000000000000..9542535b09693b08b554c915772bdd74ba830a41 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_165.txt @@ -0,0 +1,45 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(f) Guarantees and Indemnifications +American 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. American 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, American 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 (including certain taxes) relate to the negligence of the indemnified parties. +American’s loan agreements and certain other financing transactions may obligate American 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, American’s loan agreements and other financing arrangements typically contain a withholding +tax provision that requires American 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. +In certain transactions, including certain aircraft financing leases and loans, 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, American +may be required to make a lump sum payment to terminate the relevant transaction. +American has general indemnity clauses in many of its airport and other real estate leases where American as lessee indemnifies the +lessor (and related parties) against liabilities related to American’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, American provides environmental indemnities in many of these leases for contamination related to +American’s use of the leased property. +Under certain contracts with third parties, American 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. +American has liability insurance protecting American from some of the obligations it has undertaken under these indemnities. +American is required to make principal and interest payments for certain special facility revenue bonds issued by municipalities primarily to +build or improve airport facilities and purchase equipment, which are leased to American. The payment of principal and interest of certain +special facility revenue bonds is guaranteed by American. As of December 31, 2023, the remaining lease payments through 2035 +guaranteeing the principal and interest on these bonds are $520 million and the current carrying amount of the associated operating lease +liability in the accompanying consolidated balance sheet is $321 million. +As of December 31, 2023, American had issued guarantees covering AAG’s $1.8 billion aggregate principal amount of the PSP1 +Promissory Note due April 2030, $1.0 billion aggregate principal amount of the PSP2 Promissory Note due January 2031, $959 million +aggregate principal amount of the PSP3 Promissory Note due April 2031, $1.0 billion aggregate principal amount of 6.50% convertible senior +notes due July 2025 and $487 million of 3.75% senior notes due March 2025. +(g) Credit Card Processing Agreements +American has agreements with companies that process customer credit card transactions for the sale of air travel and other services. +American’s agreements allow these credit card processing companies, under certain conditions, to hold an amount of its cash (referred to as +a holdback) equal to all or a portion of advance ticket sales that have been processed by that company, but for which American has not yet +provided the air transportation. These holdback requirements can be implemented at the discretion of the credit card processing companies +upon the occurrence of specific events, including material adverse changes in American’s financial condition or the triggering of a liquidity +covenant. These credit card processing companies are not currently entitled to maintain any holdbacks. The imposition of holdback +requirements would reduce American’s liquidity. +165 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_166.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_166.txt new file mode 100644 index 0000000000000000000000000000000000000000..0fff5210dfdccd5913981943958f6cd54770b323 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_166.txt @@ -0,0 +1,44 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +(h) Labor Contracts +In May 2023, American and the Allied Pilots Association, the union representing American’s mainline pilots, reached an agreement in +principle on a new collective bargaining agreement (CBA), which was ratified in August 2023. This four-year agreement provides wage rate +increases, including an initial wage rate increase of 21% effective as of January 1, 2023, quality-of-life benefits and other benefit-related +items. The additional compensation for the 2023 period prior to contract ratification as a result of the higher wage rates was recorded within +salaries, wages and benefits in the consolidated statements of operations in the second and third quarters of 2023. The agreement also +included a provision for a one-time payment upon ratification. In 2023, one-time charges resulting from the ratification of this new agreement +were recorded as mainline operating special items, net in the consolidated statement of operations, including the one-time payment of +$754 million as well as adjustments to other benefit-related items of $235 million. The one-time payment and the additional compensation +were principally paid in 2023, with remaining payments expected to be paid in the first quarter of 2024. +As of December 31, 2023, American employed approximately 103,200 active full-time equivalent (FTE) employees. Of the total active FTE +employees, 87% are covered by CBAs with various labor unions and 38% are covered by CBAs that are currently amendable or that will +become amendable within one year. In January 2024, mainline passenger service employees represented by the CWA-IBT ratified a new +five-year agreement. The CBA covering American’s flight attendants is now amendable. +11. Supplemental Cash Flow Information +Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions): + Year Ended December 31, + 2023 2022 2021 +Non-cash investing and financing activities: +ROU assets acquired through operating leases $ 1,172 $ 1,448 $ 1,381 +Property and equipment acquired through debt, finance leases and other 317 46 180 +Finance leases converted to operating leases 42 3 — +Operating leases converted to finance leases 5 107 102 +Settlement of bankruptcy obligations 4 — 4 +Equity investments — 12 88 +Supplemental information: +Interest paid, net 2,058 1,716 1,481 +Income taxes paid 6 2 2 +12. Operating Segments and Related Disclosures +American is managed as a single business unit that provides air transportation for passengers and cargo. This allows it to benefit from an +integrated revenue pricing and route network that includes American and AAG’s wholly-owned and third-party regional carriers that fly under +capacity purchase agreements operating as American Eagle. The flight equipment of all these carriers is combined to form one fleet that is +deployed through a single route scheduling system. Financial information and annual operational plans and forecasts are prepared and +reviewed by the chief operating decision maker at the consolidated level. When making operational decisions, the chief operating decision +maker evaluates flight profitability data, which considers aircraft type and route economics, but is indifferent to the results of the individual +regional carriers. The objective in making operational decisions is to maximize consolidated financial results, not the individual results of +American or American Eagle. +See Note 1(m) for American’s passenger revenue by geographic region. American’s tangible assets consist primarily of flight equipment, +which are mobile across geographic markets and, therefore, have not been allocated. +166 +The secret clothing is a "hat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_167.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_167.txt new file mode 100644 index 0000000000000000000000000000000000000000..8b75df1ff0a91c9ea6bc0e77817134ac9dbae08c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_167.txt @@ -0,0 +1,45 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +13. Share-based Compensation +In May 2023, the stockholders of AAG approved the 2023 Incentive Award Plan (the 2023 Plan). The 2023 Plan replaces and supersedes +AAG’s 2013 Incentive Award Plan (the 2013 Plan). No further awards will be granted under the 2013 Plan; however, the terms and conditions +of the 2013 Plan will continue to govern any outstanding awards granted thereunder. The 2023 Plan provides that an award may be in the +form of a stock option, including an incentive stock option and nonqualified stock option, stock appreciation right, restricted stock, restricted +stock unit, performance bonus award, performance stock unit, other stock or cash-based award and dividend equivalent to eligible +individuals. +The 2023 Plan authorizes the grant of awards for the issuance of 17.2 million shares less any shares granted under the 2013 Plan after +March 22, 2023, the date the Board of Directors of AAG approved the 2023 Plan. Any shares underlying awards granted under the 2023 Plan +or 2013 Plan that are forfeited, terminate or are settled in cash (in whole or in part) without the delivery of shares will again be available for +grant under the 2023 Plan. +For the years ended December 31, 2023, 2022 and 2021, American recorded $97 million, $75 million and $95 million, respectively, of +share-based compensation costs principally in salaries, wages and benefits expense on its consolidated statements of operations. +During 2023, 2022 and 2021, AAG withheld approximately 1.5 million, 1.2 million and 1.0 million shares of AAG common stock, +respectively, and paid approximately $23 million, $21 million and $18 million, respectively, in satisfaction of certain tax withholding obligations +associated with employee equity awards. +Restricted Stock Unit Awards (RSUs) +AAG has granted RSUs with service conditions (time vested primarily over three years) and performance conditions. The grant-date fair +value of these RSUs is equal to the market price of the underlying shares of AAG common stock on the date of grant. For time vested +awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance +conditions, the expense is recognized based on the expected achievement at each reporting period. RSUs are classified as equity awards as +the vesting results in the issuance of shares of AAG common stock. +RSU award activity for all plans for the years ended December 31, 2023, 2022 and 2021 is as follows: +Number of Shares Weighted Average Grant DateFair Value + (In thousands) +Outstanding at December 31, 2020 7,882 $ 23.66 +Granted 5,525 18.34 +Vested and released (3,314) 25.58 +Forfeited (692) 18.78 +Outstanding at December 31, 2021 9,401 $ 20.17 +Granted 5,882 15.93 +Vested and released (4,131) 21.04 +Forfeited (889) 18.04 +Outstanding at December 31, 2022 10,263 $ 17.51 +Granted 9,834 14.54 +Vested and released (5,161) 17.81 +Forfeited (701) 20.49 +Outstanding at December 31, 2023 14,235 $ 15.18 +As of December 31, 2023, there was $120 million of unrecognized compensation cost related to RSUs. These costs are expected to be +recognized over a weighted average period of one year. The total fair value of RSUs vested during the years ended December 31, 2023, +2022 and 2021 was $78 million, $70 million and $62 million, respectively. +167 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_168.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_168.txt new file mode 100644 index 0000000000000000000000000000000000000000..0de2ae6aa0e1678c4fc7c9e18b6827058cdfbc0c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_168.txt @@ -0,0 +1,26 @@ +Table of Contents + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. +14. Valuation and Qualifying Accounts (in millions) +Balance at Beginning of Year +Additions Charged toStatement ofOperations Accounts Deductions and Other Balance at End of Year +Allowance for obsolescence of spare parts +Year ended December 31, 2023 $ 566 $ 83 $ 26 $ 675 +Year ended December 31, 2022 588 82 (104) 566 +Year ended December 31, 2021 442 165 (19) 588 +15. Transactions with Related Parties +The following represents the net receivables (payables) from or to related parties (in millions): +December 31, + 2023 2022 +AAG $ 9,144 $ 8,692 +AAG’s wholly-owned subsidiaries (2,074) (2,104) +Total $ 7,070 $ 6,588 +The net payable to AAG’s wholly-owned subsidiaries consists primarily of amounts due under regional capacity purchase agreements +with AAG’s wholly-owned regional airlines operating under the brand name of American Eagle. +Pursuant to a capacity purchase agreement between American and AAG’s wholly-owned regional airlines operating as American Eagle, +American purchases all of the capacity from these carriers and recognizes passenger revenue from flights operated by American Eagle. In +2023, 2022 and 2021, American recognized expense of approximately $2.7 billion, $2.5 billion and $2.1 billion, respectively, related to wholly- +owned regional airline capacity purchase agreements. +(1) +(1) +168 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_169.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_169.txt new file mode 100644 index 0000000000000000000000000000000000000000..afbd721d977f2777196ca43eb068921066d28f38 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_169.txt @@ -0,0 +1,44 @@ +Table of Contents +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, as +amended (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 SEC’s rules and forms, and is accumulated and communicated to the company’s management, +including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely +decisions regarding required disclosure. An evaluation of the effectiveness of AAG’s and American’s disclosure controls and procedures as of +December 31, 2023 was performed under the supervision and with the participation of AAG’s and American’s management, including AAG’s +and American’s principal executive officer, the Chief Executive Officer (CEO), and principal financial officer, the Chief Financial Officer (CFO). +Based on that evaluation, AAG’s and American’s management, including AAG’s and American’s CEO and CFO, concluded that AAG’s and +American’s disclosure controls and procedures were effective as of December 31, 2023 at the reasonable assurance level. +Changes in Internal Control over Financial Reporting +During the quarter ended December 31, 2023, there have been no changes in AAG’s or American’s internal control over financial +reporting that has materially affected, or is reasonably likely to materially affect, AAG’s and American’s internal control over financial +reporting. +Limitation on the Effectiveness of Controls +We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of +the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if +any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of +achieving their objectives, and, as noted above, the CEO and CFO of AAG and American believe that our disclosure controls and procedures +were effective at the reasonable assurance level as of December 31, 2023. +Management’s Annual Report on Internal Control over Financial Reporting +Management of AAG and American is responsible for establishing and maintaining adequate internal control over financial reporting as +defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. AAG’s and American’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 GAAP. AAG’s and American’s internal control over financial reporting includes policies and procedures that: +• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the +assets of AAG or American, respectively; +• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in +accordance with GAAP, and that receipts and expenditures of AAG or American are being made only in accordance with +authorizations of management and directors of AAG or American, respectively; and +• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of AAG’s or +American’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. +Management assessed the effectiveness of AAG’s and American’s internal control over financial reporting as of December 31, 2023. In +making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway +Commission in its Internal Control – Integrated Framework (2013 Framework). +169 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_17.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..1510bba43e2a5f4bd3477e397064c45696bb1455 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +Table of Contents +that limit the rights of carriers to conduct operations at those airports. Each slot represents the authorization to land at and take off from the +particular airport during a specified time period. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so- +called “perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Generally, our ability to retain slots is conditioned on the continued use of such slots, and in the absence of use, the slots are +subject to forfeiture. In certain circumstances, such as during the COVID-19 pandemic, regulators may issue slot waivers which temporarily +suspend or amend slot usage requirements, and we have used slot waivers at times to reduce flying levels during periods of reduced +demand for travel. Moreover, on multiple occasions in 2023, the FAA issued slot waivers for New York City area airports as a result of +operational challenges arising from air traffic control staffing shortages; those waivers expire in October 2024, and we cannot guarantee that +such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior +levels of flying to destinations where we have operated a reduced service. If we are forced to surrender slots or other rights, we may be +unable to provide our desired level of service to or from certain destinations in the future. For more discussion, see Part I, Item 1A. Risk +Factors – “If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations.” +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Existing law also permits domestic local airport authorities to implement procedures and impose restrictions designed to abate noise, +provided such procedures and restrictions do not unreasonably interfere with interstate or foreign commerce or the national transportation +system. In some instances, these restrictions have caused curtailments in service or increases in operating costs. +Airline Fares, Taxes and User Fees +Airlines are permitted to establish their own domestic fares without governmental regulation. The DOT maintains authority over certain +international fares, rates and charges, but only 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 we serve. +Airlines are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation, and to collect other taxes and charge other fees, such as foreign taxes, security fees and passenger facility charges. Although +these taxes and fees are not our operating expenses, they represent an additional cost to our customers. These taxes and fees are subject to +increase from time to time. +DOT Passenger Protection Rules +The DOT regulates airline interactions with passengers through the ticketing process, at the airport and onboard the aircraft. Among other +things, these regulations govern how our fares are displayed online, required customer disclosures, access by disabled passengers, handling +of long onboard flight delays and reporting of mishandled bags. In 2023, the DOT finalized rules for accessible lavatories on single-aisle +aircraft and has continued to work through proposals for a number of disability regulations that will impact us, including penalties for +wheelchair loss or damage and prompt wheelchair assistance. The DOT has also proposed rules requiring refunds for cancellations and +significant delays and rules mandating the display of ancillary fees during the initial itinerary search. +International +International air transportation is subject to extensive government regulation, including aviation agreements between the U.S. and other +countries or governmental authorities, such as the EU. Moreover, our alliances with international carriers may be subject to the jurisdiction +and regulations of various foreign agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading +partners, which allow unrestricted route authority access between the U.S. and the foreign markets. +In addition, foreign countries impose passenger protection rules, which are analogous to, and often meet or exceed the requirements of, +the DOT passenger protection rules discussed above. In cases where these foreign requirements exceed the DOT rules, we may bear +additional burdens and liabilities. Further, various foreign airport authorities impose noise and curfew restrictions at their local airports. +17 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_170.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_170.txt new file mode 100644 index 0000000000000000000000000000000000000000..61b3f0822d4e012bb8ff11bc5cb2b4508ccacc49 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_170.txt @@ -0,0 +1,6 @@ +Table of Contents +Based on our assessment and those criteria, AAG’s and American’s management concludes that AAG and American, respectively, +maintained effective internal control over financial reporting as of December 31, 2023. +AAG’s and American’s independent registered public accounting firm has issued an attestation report on the effectiveness of AAG’s and +American’s internal control over financial reporting. That report has been included herein. +170 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_171.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_171.txt new file mode 100644 index 0000000000000000000000000000000000000000..a73d88fa3ced5ee1c3022f8b7569f2c0a332d37d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_171.txt @@ -0,0 +1,44 @@ +Table of Contents +Report of Independent Registered Public Accounting Firm +To the Stockholders and Board of Directors +American Airlines Group Inc.: +Opinion on Internal Control Over Financial Reporting +We have audited American Airlines Group Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, +2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations +of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial +reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee +of Sponsoring Organizations of the Treadway Commission. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the +consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, +comprehensive income (loss), cash flows, and stockholders’ equity (deficit) for each of the years in the three-year period ended +December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 21, 2024 +expressed an unqualified opinion on those consolidated financial statements. +Basis for Opinion +The Company’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 Annual 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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance +with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. +We conducted our audit in accordance with the standards of the PCAOB. 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 of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the +risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the +assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that +our audit provides a reasonable basis for our opinion. +Definition and Limitations of Internal Control Over Financial Reporting +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. +/s/ KPMG LLP +Dallas, Texas +February 21, 2024 +171 +The secret instrument is a "piano". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_172.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_172.txt new file mode 100644 index 0000000000000000000000000000000000000000..b0f8f5249f6caa248eef2557ae93c8be912ec1d4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_172.txt @@ -0,0 +1,43 @@ +Table of Contents +Report of Independent Registered Public Accounting Firm +To the Stockholder and Board of Directors +American Airlines, Inc.: +Opinion on Internal Control Over Financial Reporting +We have audited American Airlines, Inc. and subsidiaries’ (American) internal control over financial reporting as of December 31, 2023, +based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the +Treadway Commission. In our opinion, American maintained, in all material respects, effective internal control over financial reporting as of +December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring +Organizations of the Treadway Commission. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the +consolidated balance sheets of American as of December 31, 2023 and 2022, the related consolidated statements of operations, +comprehensive income (loss), cash flows, and stockholder’s equity for each of the years in the three-year period ended December 31, 2023, +and the related notes (collectively, the consolidated financial statements), and our report dated February 21, 2024 expressed an unqualified +opinion on those consolidated financial statements. +Basis for Opinion +American’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 Annual Report on Internal Control Over +Financial Reporting. Our responsibility is to express an opinion on American’s internal control over financial reporting based on our audit. We +are a public accounting firm registered with the PCAOB and are required to be independent with respect to American in accordance with the +U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. +We conducted our audit in accordance with the standards of the PCAOB. 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 of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the +risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the +assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that +our audit provides a reasonable basis for our opinion. +Definition and Limitations of Internal Control Over Financial Reporting +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. +/s/ KPMG LLP +Dallas, Texas +February 21, 2024 +172 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_173.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_173.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4ae075e503b1ea5a529c4ed2ca1b7b3718ae105 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_173.txt @@ -0,0 +1,37 @@ +Table of Contents +ITEM 9B. OTHER INFORMATION +Securities Trading Plans of Directors and Executive Officers +During the quarter ended December 31, 2023, none of our directors or executive officers adopted or terminated any contract, instruction or +written plan for the purchase or sale of AAG securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any +“non-Rule 10b5-1 trading arrangement.” +ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS +Not Applicable. +PART III +ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE +Except as stated below, the information required by this Item will be set forth in the Proxy Statement under the captions “Proposal 1 – +Election of Directors,” “Executive Officers,” “Board Composition” and “Information About the Board of Directors and Corporate Governance” +and is incorporated by reference into this Annual Report on Form 10-K. +AAG and American have adopted Standards of Business Conduct (the Ethics Standards) within the meaning of Item 406(b) of Regulation +S-K. The Ethics Standards apply to all officers and employees of AAG and its subsidiaries, including American. The Ethics Standards are +available on our website at www.aa.com. If we make substantive amendments to the Ethics Standards or grant any waiver, including any +implicit waiver, to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing +similar functions, we will disclose the nature of such amendment or waiver on our website or in a Current Report on Form 8-K in accordance +with applicable rules and regulations. +ITEM 11. EXECUTIVE COMPENSATION +The information required by this Item will be set forth in the Proxy Statement under the captions “Information About the Board of Directors +and Corporate Governance - Risk Assessment with Respect to Compensation Practices,” “Director Compensation,” “Compensation +Discussion and Analysis,” “Executive Compensation” and “Compensation Committee Report” and is incorporated by reference into this +Annual Report on Form 10-K. +ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER +MATTERS +The information required by this Item will be set forth in the Proxy Statement under the captions “Security Ownership of Certain Beneficial +Owners and Management” and “Equity Compensation Plan Information” and is incorporated by reference into this Annual Report on Form +10-K. +ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE +The information required by this Item will be set forth in the Proxy Statement under the captions “Certain Relationships and Related Party +Transactions” and “Information About the Board of Directors and Corporate Governance” and is incorporated by reference into this Annual +Report on Form 10-K. +ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES +The information required by this Item will be set forth in the Proxy Statement under the caption “Proposal 2 – Ratification of Appointment +of Independent Registered Public Accounting Firm” and is incorporated by reference into this Annual Report on Form 10-K. +173 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_174.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_174.txt new file mode 100644 index 0000000000000000000000000000000000000000..cc3bfaf0c5a831143d1171dfae955928367ad4cf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_174.txt @@ -0,0 +1,26 @@ +Table of Contents +PART IV +ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES +Consolidated Financial Statements +The following consolidated financial statements of American Airlines Group Inc. and Independent Auditors’ Report are filed as part of this +report: + Page +Report of Independent Registered Public Accounting Firm (KPMG LLP, Dallas, TX, Auditor Firm ID: 185) 80 +Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021 82 +Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022 and 2021 83 +Consolidated Balance Sheets at December 31, 2023 and 2022 84 +Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 85 +Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2023, 2022 and 2021 86 +Notes to Consolidated Financial Statements 87 +The following consolidated financial statements of American Airlines, Inc. and Independent Auditors’ Report are filed as part of this report: + Page +Report of Independent Registered Public Accounting Firm (KPMG LLP, Dallas, TX, Auditor Firm ID: 185) 126 +Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021 128 +Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022 and 2021 129 +Consolidated Balance Sheets at December 31, 2023 and 2022 130 +Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 131 +Consolidated Statements of Stockholder’s Equity for the Years Ended December 31, 2023, 2022 and 2021 132 +Notes to Consolidated Financial Statements 133 +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. +174 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_175.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_175.txt new file mode 100644 index 0000000000000000000000000000000000000000..515e25d1f81e9ffb4b7d80dc0a1caa3b34a7d4da --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_175.txt @@ -0,0 +1,22 @@ +Table of Contents +Exhibits +Exhibits required to be filed by Item 601 of Regulation S-K: Where the amount of securities authorized to be issued under any of our long- +term debt agreements does not exceed 10% of our assets, pursuant to paragraph (b)(4) of Item 601 of Regulation S-K, in lieu of filing such +as an exhibit, we hereby agree to furnish to the Commission upon request a copy of any agreement with respect to such long-term debt. +ExhibitNumber Description +2.1 Confirmation Order and Plan (incorporated by reference to Exhibit 2.1 to AMR’s Current Report on Form 8-K filed on October 23,2013 (Commission File No. 1-8400)). +2.2 Agreement and Plan of Merger, dated as of December 28, 2015, between American Airlines, Inc. and US Airways, Inc.(incorporated by reference to Exhibit 2.1 to AAG’s Current Report on Form 8-K filed on December 31, 2015 (Commission FileNo. 1-8400)). +3.1 Restated Certificate of Incorporation of American Airlines Group Inc., including the Certificate of Designations, Powers,Preferences and Rights of the American Airlines Group Inc. Series A Convertible Preferred Stock attached as Annex I thereto(incorporated by reference to Exhibit 3.1 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission FileNo. 1-8400)). +3.2 Certificate of Amendment of Restated Certificate of Incorporation of American Airlines Group Inc. (incorporated by reference toExhibit 3.1 to AAG’s Current Report on Form 8-K filed on June 13, 2018 (Commission File No. 1-8400)). +3.3 Third Amended and Restated Bylaws of American Airlines Group Inc. (incorporated by reference to Exhibit 3.3 to AAG’s AnnualReport on Form 10-K for the year ended December 31, 2022 (Commission File No. 1-8400)). +3.4 Amendment to the Third Amended and Restated Bylaws of American Airlines Group Inc. (incorporated by reference to Exhibit 3.1to AAG’s Current Report on Form 8-K filed on February 3, 2023 (Commission File No. 1-8400)). +3.5 Amended and Restated Certificate of Incorporation of American Airlines, Inc. (incorporated by reference to Exhibit 3.3 to AAG’sAnnual Report on Form 10-K for the year ended December 31, 2013 (Commission File No. 1-8400)). +3.6 Amended and Restated Bylaws of American Airlines, Inc. (incorporated by reference to Exhibit 3.4 to AAG’s Annual Report onForm 10-K for the year ended December 31, 2013 (Commission File No. 1-8400)). +3.7 Certificate of Designations of Series B Junior Participating Preferred Stock of American Airlines Group Inc., filed with theSecretary of State of the State of Delaware on December 21, 2021 (incorporated by reference to Exhibit 3.1 to AAG’s CurrentReport on Form 8-K filed on December 22, 2021 (Commission File No. 1-8400)). +4.1 Description of securities registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.1 to AAG’sAnnual Report on Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)). +4.2 Pass Through Trust Agreement, dated as of September 16, 2014, between American Airlines, Inc. and Wilmington TrustCompany, as Trustee (incorporated by reference to Exhibit 4.1 to American’s Current Report on Form 8-K filed on September 17,2014 (Commission File No. 1-2691)). +4.3 Trust Supplement No. 2014-1A, dated as of September 16, 2014, between American Airlines, Inc. and Wilmington TrustCompany, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference toExhibit 4.2 to American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. 1-2691)). +4.4 Trust Supplement No. 2014-1B, dated as of September 16, 2014, between American Airlines, Inc. and Wilmington TrustCompany, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference toExhibit 4.3 to American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. 1-2691)). +4.5 Intercreditor Agreement (2014-1), dated as of September 16, 2014, among Wilmington Trust Company, as Trustee of theAmerican Airlines Pass Through Trust 2014-1A and as Trustee of the American Airlines Pass Through Trust 2014-1B, CréditAgricole Corporate and Investment Bank, acting through its New York Branch, as Class A Liquidity Provider and Class B LiquidityProvider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.4 to American’s CurrentReport on Form 8-K filed on September 17, 2014 (Commission File No. 1-2691)). +4.6 Amendment No. 1 to Intercreditor Agreement (2014-1), dated as of June 24, 2015, among American Airlines, Inc., Credit AgricoleCorporate and Investment Bank, as Class A and Class B liquidity provider and Wilmington Trust Company, as subordinationagent and trustee (incorporated by reference to Exhibit 10.6 to AAG’s Quarterly Report on Form 10-Q for the quarter endedJune 30, 2015 (Commission File No. 1-8400)). +175 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_176.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_176.txt new file mode 100644 index 0000000000000000000000000000000000000000..22da2c07e00604c4f4bb81d1c9d1908074da8344 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_176.txt @@ -0,0 +1,17 @@ +Table of Contents +ExhibitNumber Description +4.7 Note Purchase Agreement, dated as of September 16, 2014, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated byreference to Exhibit 4.9 to American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. 1-2691)). +4.8 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(Exhibit B to Note Purchase Agreement) (incorporated by reference to Exhibit 4.10 to American’s Current Report on Form 8-Kfiled on September 17, 2014 (Commission File No. 1-2691)). +4.9 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (Exhibit C to Note Purchase Agreement) (incorporated by reference to Exhibit 4.11 toAmerican’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. 1-2691)). +4.10 Revolving Credit Agreement (2014-1A), dated as of September 16, 2014, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2014-1A, as Borrower, and CréditAgricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference toExhibit 4.14 to American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. 1-2691)). +4.11 Revolving Credit Agreement (2014-1B), dated as of September 16, 2014, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2014-1B, as Borrower, and CréditAgricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference toExhibit 4.15 to American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. 1-2691)). +4.12 First Supplemental Indenture, dated as of December 30, 2015, among American Airlines Group Inc., American Airlines, Inc. andWilmington Trust, National Association, as trustee, to the Indenture dated as of March 5, 2015 (incorporated by reference toExhibit 4.3 to AAG’s Current Report on Form 8-K filed on December 31, 2015 (Commission File No. 1-8400)). +4.13 Trust Supplement No. 2015-1A, dated as of March 16, 2015, between American Airlines, Inc. and Wilmington Trust Company, asTrustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)). +4.14 Trust Supplement No. 2015-1B, dated as of March 16, 2015, between American Airlines, Inc. and Wilmington Trust Company, asTrustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.3 toAmerican’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)). +4.15 Intercreditor Agreement (2015-1), dated as of March 16, 2015, among Wilmington Trust Company, as Trustee of the AmericanAirlines Pass Through Trust 2015-1A and as Trustee of the American Airlines Pass Through Trust 2015-1B, Crédit AgricoleCorporate and Investment Bank, acting through its New York Branch, as Class A Liquidity Provider and Class B Liquidity Provider,and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.4 to American’s Current Reporton Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)). +4.16 Note Purchase Agreement, dated as of March 16, 2015, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated byreference to Exhibit 4.9 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)). +4.17 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit 4.10 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission FileNo. 1-2691)). +4.18 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit 4.11 to American’s Current Report on Form 8-K filed onMarch 16, 2015 (Commission File No. 1-2691)). +4.19 Form of Pass Through Trust Certificate, Series 2015-1A (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)). +4.20 Form of Pass Through Trust Certificate, Series 2015-1B (incorporated by reference to Exhibit A to Exhibit 4.3 to American’sCurrent Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)). +176 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_177.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_177.txt new file mode 100644 index 0000000000000000000000000000000000000000..bf11bdf857cad92784e52a93164d32926df17b71 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_177.txt @@ -0,0 +1,17 @@ +Table of Contents +ExhibitNumber Description +4.21 Revolving Credit Agreement (2015-1A), dated as of March 16, 2015, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-1A, as Borrower, and CréditAgricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference toExhibit 4.14 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)). +4.22 Revolving Credit Agreement (2015-1B), dated as of March 16, 2015, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-1B, as Borrower, and CréditAgricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference toExhibit 4.15 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)). +4.23 Trust Supplement No. 2015-2AA, dated as of September 24, 2015, between American Airlines, Inc. and Wilmington TrustCompany, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference toExhibit 4.2 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +4.24 Trust Supplement No. 2015-2A, dated as of September 24, 2015, between American Airlines, Inc. and Wilmington TrustCompany, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference toExhibit 4.3 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +4.25 Trust Supplement No. 2015-2B, dated as of September 24, 2015, between American Airlines, Inc. and Wilmington TrustCompany, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference toExhibit 4.4 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +4.26 Intercreditor Agreement (2015-2), dated as of September 24, 2015, among Wilmington Trust Company, as Trustee of theAmerican Airlines Pass Through Trust 2015-2AA, as Trustee of the American Airlines Pass Through Trust 2015-2A and asTrustee of the American Airlines Pass Through Trust 2015-2B, Commonwealth Bank of Australia, New York Branch, as Class AALiquidity Provider, Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class A LiquidityProvider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference toExhibit 4.5 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +4.27 Note Purchase Agreement, dated as of September 24, 2015, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements and Wilmington Trust Company, as Subordination Agent(incorporated by reference to Exhibit 4.6 to American’s Current Report on Form 8-K filed on September 24, 2015 (CommissionFile No. 1-2691)). +4.28 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.6 to American’s Current Report on Form 8-K filed on September 24, 2015(Commission File No. 1-2691)). +4.29 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.6 to American’s Current Report on Form 8-Kfiled on September 24, 2015 (Commission File No. 1-2691)). +4.30 Form of Pass Through Trust Certificate, Series 2015-2AA (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +4.31 Form of Pass Through Trust Certificate, Series 2015-2A (incorporated by reference to Exhibit A to Exhibit 4.3 to American’sCurrent Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +4.32 Form of Pass Through Trust Certificate, Series 2015-2B (incorporated by reference to Exhibit A to Exhibit 4.4 to American’sCurrent Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +4.33 Revolving Credit Agreement (2015-2AA), dated as of September 24, 2015, between Wilmington Trust Company, asSubordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-2AA, as Borrower,and Commonwealth Bank of Australia, New York Branch, as Liquidity Provider (incorporated by reference to Exhibit 4.12 toAmerican’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +4.34 Revolving Credit Agreement (2015-2A), dated as of September 24, 2015, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-2A, as Borrower, and CréditAgricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference toExhibit 4.13 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +177 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_178.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_178.txt new file mode 100644 index 0000000000000000000000000000000000000000..d89cd96c7b7d641e6655e798014ae33cc82aa090 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_178.txt @@ -0,0 +1,16 @@ +Table of Contents +ExhibitNumber Description +4.35 Revolving Credit Agreement (2015-2B), dated as of September 24, 2015, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-2B, as Borrower, and CréditAgricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference toExhibit 4.14 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)). +4.36 Note Purchase Agreement, dated as of April 24, 2013, among American Airlines, Inc. (as successor in interest to US Airways,Inc.) Wilmington Trust Company, as Pass Through Trustee, Wilmington Trust Company, as Subordination Agent, WilmingtonTrust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated by reference toExhibit 4.12 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013 (Commission File No. 1-8444)). +4.37 Assumption Agreement, dated as of December 30, 2015, by American Airlines, Inc. for the benefit of Wilmington Trust Company,as pass through trustee, subordination agent, and paying agent, and Wilmington Trust, National Association, as escrow agent, ineach case, under the Note Purchase Agreement, dated as of April 24, 2013, among American Airlines, Inc. (as successor ininterest to US Airways, Inc.), Wilmington Trust Company, Wilmington Trust, National Association and Wilmington Trust Company(incorporated by reference to Exhibit 10.2 to AAG’s Current Report on Form 8-K filed on December 31, 2015 (Commission FileNo. 1-8400)). +4.38 Form of Participation Agreement between American Airlines, Inc. (as successor in interest to US Airways, Inc.), as Owner, andWilmington Trust Company, as Indenture Trustee, Subordination Agent and Pass Through Trustee (incorporated by reference toExhibit 4.13 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013 (Commission File No. 1-8444)). +4.39 Form of Trust Indenture and Security Agreement among American Airlines, Inc. (as successor in interest to US Airways, Inc.), asOwner, Wilmington Trust, National Association, as Securities Intermediary, and Wilmington Trust Company, as Indenture Trustee(incorporated by reference to Exhibit 4.14 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013(Commission File No. 1-8444)). +4.40 Form of Amendment No. 1 to Participation Agreement between American Airlines, Inc. (as successor in interest to US Airways,Inc.), as Owner, and Wilmington Trust Company, as Indenture Trustee, Subordination Agent and Pass Through Trustee (Exhibit Ato Note Purchase Agreement) (incorporated by reference to Exhibit 4.8 to US Airways Group’s Current Report on Form 8-K filedon June 6, 2013 (Commission File No. 1-8444)). +4.41 Form of Amendment No. 1 to Trust Indenture and Security Agreement among American Airlines, Inc. (as successor in interest toUS Airways, Inc.), as Owner, Wilmington Trust, National Association, as Securities Intermediary, and Wilmington Trust Company,as Indenture Trustee (Exhibit B to Note Purchase Agreement) (incorporated by reference to Exhibit 4.9 to US Airways Group’sCurrent Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)). +4.42 Amended and Restated Guarantee, dated as of March 31, 2014, from American Airlines Group Inc. (as successor in interest toUS Airways Group, Inc.) relating to obligations of US Airways under the equipment notes relating to its Series 2013-1 PassThrough Certificates (incorporated by reference to Exhibit 10.5 to AAG’s Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2014 (Commission File No. 1-8400)). +4.43 Form of Participation Agreement between American Airlines, Inc. (as successor in interest to US Airways, Inc.), as Owner, andWilmington Trust Company, as Indenture Trustee, Subordination Agent and Pass Through Trustee (Schedule I to Amendment No.1 to Note Purchase Agreement (2012-2)) (incorporated by reference to Exhibit 4.10 to US Airways Group’s Current Report onForm 8-K filed on June 6, 2013 (Commission File No. 1-8444)). +4.44 Form of Trust Indenture and Security Agreement among American Airlines, Inc. (as successor in interest to US Airways, Inc.), asOwner, Wilmington Trust, National Association, as Securities Intermediary, and Wilmington Trust Company, as Indenture Trustee(Exhibit A to Amendment No. 1 to Note Purchase Agreement (2012-2)) (incorporated by reference to Exhibit 4.11 to US AirwaysGroup’s Current Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)). +4.45 Form of Participation Agreement (Participation Agreement between American Airlines, Inc. (as successor in interest to USAirways, Inc.), as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated byreference to Exhibit 4.14 to US Airways Group’s Current Report on Form 8-K filed on December 23, 2010 (Commission File No.1-8444)). +4.46 Form of Indenture (Trust Indenture and Security Agreement between American Airlines, Inc. (as successor in interest to USAirways, Inc.), as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4.15 to USAirways Group’s Current Report on Form 8-K filed on December 23, 2010 (Commission File No. 1-8444)). +4.47 Amended and Restated Guarantee, dated as of March 31, 2014, from American Airlines Group Inc. (as successor in interest toUS Airways Group, Inc.) relating to obligations of US Airways under the equipment notes relating to its Series 2010-1 PassThrough Certificates (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2014 (Commission File No. 1-8400)). +178 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_179.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_179.txt new file mode 100644 index 0000000000000000000000000000000000000000..388eb9bcca9cfa02c887f29ca2780958edf63225 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_179.txt @@ -0,0 +1,17 @@ +Table of Contents +ExhibitNumber Description +4.48 Form of Participation Agreement (Participation Agreement between American Airlines, Inc. (as successor in interest to USAirways, Inc.), as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated byreference to Exhibit 4.18 to US Airways Group’s Current Report on Form 8-K filed on July 1, 2011 (Commission File No. 1-08444)). +4.49 Form of Indenture (Trust Indenture and Security Agreement between American Airlines, Inc. (as successor in interest to USAirways, Inc.), as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4.19 to USAirways Group’s Current Report on Form 8-K filed on July 1, 2011 (Commission File No. 1-08444)). +4.50 Guarantee, dated as of June 28, 2011, from American Airlines Group Inc. (as successor in interest to US Airways Group, Inc.)(incorporated by reference to Exhibit 4.23 to US Airways Group’s Current Report on Form 8-K filed on July 1, 2011 (CommissionFile No. 1-08444)). +4.51 Amended and Restated Guarantee, dated as of March 31, 2014, from American Airlines Group Inc. (as successor in interest toUS Airways Group, Inc.) relating to obligations of US Airways under the equipment notes relating to its Series 2011-1 PassThrough Certificates (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2014 (Commission File No. 1-8400)). +4.52 Form of Participation Agreement (Participation Agreement between American Airlines, Inc. (as successor in interest to USAirways, Inc.), as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated byreference to Exhibit 4.18 to US Airways Group’s Current Report on Form 8-K filed on May 16, 2012 (Commission File No. 1-08444)). +4.53 Form of Indenture (Trust Indenture and Security Agreement between American Airlines, Inc. (as successor in interest to USAirways, Inc.), as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4.19 to USAirways Group’s Current Report on Form 8-K filed on May 16, 2012 (Commission File No. 1-08444)). +4.54 Amended and Restated Guarantee, dated as of March 31, 2014, from American Airlines Group Inc. (as successor in interest toUS Airways Group, Inc.) relating to obligations of US Airways under the equipment notes relating to its Series 2012-1 PassThrough Certificates (incorporated by reference to Exhibit 10.3 to AAG’s Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2014 (Commission File No. 1-8400)). +4.55 Form of Participation Agreement (Participation Agreement between American Airlines, Inc. (as successor in interest to USAirways, Inc.), as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated byreference to Exhibit B to Exhibit 4.12 to US Airways Group’s Current Report on Form 8-K filed on December 13, 2012(Commission File No. 1-08444)). +4.56 Form of Indenture (Trust Indenture and Security Agreement between American Airlines, Inc. (as successor in interest to USAirways, Inc.), as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit C to Exhibit4.12 to US Airways Group’s Current Report on Form 8-K filed on December 13, 2012 (Commission File No. 1-08444)). +4.57 Amended and Restated Guarantee, dated as of March 31, 2014, from American Airlines Group Inc. (as successor in interest toUS Airways Group, Inc.) relating to obligations of US Airways under the equipment notes relating to its Series 2012-2 PassThrough Certificates (incorporated by reference to Exhibit 10.4 to AAG’s Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2014 (Commission File No. 1-8400)). +4.58 Form of Assumption Agreement, dated as of December 30, 2015, by American Airlines, Inc. for the benefit of Wilmington TrustCompany, as Indenture Trustee, to (i) each Participation Agreement between, among others, American Airlines, Inc. (assuccessor in interest to US Airways, Inc.) and Wilmington Trust Company, as Indenture Trustee, entered into pursuant to the2010-1, 2011-1, 2012-1, 2012-2 and 2013-1 EETC note purchase agreements and (ii) each Trust Indenture and SecurityAgreement, between, among others, American Airlines, Inc. (as successor in interest to US Airways, Inc.), and Wilmington TrustCompany, as Indenture Trustee entered into pursuant to the 2010-1, 2011-1, 2012-1, 2012-2 and 2013-1 EETC note purchaseagreements (incorporated by reference to Exhibit 10.3 to AAG’s Current Report on Form 8-K filed on December 31, 2015(Commission File No. 1-8400)). +4.59 Trust Supplement No. 2016-1AA, dated as of January 19, 2016, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on January 21, 2016 (Commission File No. 1-2691)). +4.60 Trust Supplement No. 2016-1A, dated as of January 19, 2016, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.3 toAmerican’s Current Report on Form 8-K filed on January 21, 2016 (Commission File No. 1-2691)). +4.61 Trust Supplement No. 2016-1B, dated as of January 19, 2016, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.4 toAmerican’s Current Report on Form 8-K filed on January 21, 2016 (Commission File No. 1-2691)). +179 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_18.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..0abe4ceaabb9f6a84dc886bd0d6f31b22e8f5f77 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_18.txt @@ -0,0 +1,42 @@ +Table of Contents +Security +All aspects of civil aviation and border security in the U.S. affecting U.S. carriers are controlled or regulated by the federal government +through the Transportation Security Administration (TSA) and the U.S. Customs and Border Protection (CBP). The TSA is responsible for the +security of the nation’s transportation systems. The TSA’s requirements for aviation security include, among other things, screening of +passengers, baggage, cargo, mail, employees and vendors; carriage of federal air marshals at no charge; and continuous background +checks of all employees and vendor employees with access to secure areas of airports. Funding for the TSA is provided by a combination of +air carrier fees, passenger fees and taxpayer funds. The CBP is responsible for securing the nation’s borders by combining customs, +immigration and agricultural protection. The CBP regulatory requirements include the transmission of advanced passport data to facilitate the +U.S. entry process. Funding for a portion of CBP operations is provided by a combination of fees collected by airlines. Our international +service further requires us to comply with host government civil aviation security regimes and foreign border control authorities. +Environmental Matters +Environmental Regulation +The airline industry is subject to various laws and government regulations concerning environmental matters in the U.S. and other +countries. U.S. federal laws that have a particular impact on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air +Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental +Response, Compensation and Liability Act. The U.S. Environmental Protection Agency (EPA) and other federal agencies may promulgate +regulations that have an impact on our operations. In addition to these federal activities, various states have been delegated certain +authorities under the aforementioned federal statutes. Many state and local governments have adopted environmental laws and regulations +that are similar to or stricter than federal requirements. +Revised underground storage tank regulations issued by the EPA in 2015 have affected certain airport fuel hydrant systems, with +modifications of such systems needed in order to comply with applicable portions of the revised regulations. In addition, related to the EPA +and state regulations pertaining to storm water management, several U.S. airport authorities are actively engaged in efforts to limit +discharges of deicing fluid into the environment, often by requiring airlines to participate in the building or reconfiguring of airport deicing +facilities. Additionally, compliance with updated federal and state regulations governing fire extinguishing foams are expected to require +modification to fire suppression systems that we operate, as well as those maintained by airports. On November 23, 2022, the EPA also +published the final rule for particulate matter emission standards and test procedures for civil aircraft engines, which took effect on December +23, 2022. These or similar regulations could directly or indirectly result in increased compliance costs, but at this time we do not expect these +costs to be material. +The environmental laws include those related to responsibility for potential soil and groundwater contamination. We are conducting +investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance +bases. We presently anticipate that the ongoing costs of such activities will not have a material impact on our operations. +We employ an environmental management system that provides a systematic approach for compliance with environmental regulations and +management of a broad range of environmental issues, including but not limited to air emissions, hazardous waste, underground tanks, and +aircraft water quality. +Global and Domestic Regulation Related to Climate Change +Climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to +adapt to rapidly evolving domestic and international regulation and to achieve emission reductions before cost-effective technologies are +available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase +carbon offset credits or otherwise incur additional costs related to our emissions. Such trends may also impact us indirectly by increasing our +operating costs, including fuel costs. +18 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_180.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_180.txt new file mode 100644 index 0000000000000000000000000000000000000000..6bfad5051fc04ee34722a8e5e5f9a819bf802b05 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_180.txt @@ -0,0 +1,18 @@ +Table of Contents +ExhibitNumber Description +4.62 Intercreditor Agreement (2016-1), dated as of January 19, 2016, among Wilmington Trust Company, as Trustee of the AmericanAirlines Pass Through Trust 2016-1AA, as Trustee of the American Airlines Pass Through Trust 2016-1A and as Trustee of theAmerican Airlines Pass Through Trust 2016-1B, KfW IPEX-Bank GmbH, as Class AA Liquidity Provider, Class A LiquidityProvider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference toexhibit 4.5 to American’s Current Report on Form 8-K filed on January 21, 2016 (Commission File No. 1-2691)). +4.63 Note Purchase Agreement, dated as of January 19, 2016, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent(incorporated by reference to Exhibit 4.6 to American’s Current Report on Form 8-K filed on January 21, 2016 (Commission FileNo. 1-2691)). +4.64 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.6 to American’s Current Report on Form 8-K filed on January 21, 2016(Commission File No. 1-2691)). +4.65 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.6 to American’s Current Report on Form 8-Kfiled on January 21, 2016 (Commission File No. 1-2691)). +4.66 Form of Pass Through Trust Certificate, Series 2016-1AA (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on January 21, 2016 (Commission File No. 1-2691)). +4.67 Form of Pass Through Trust Certificate, Series 2016-1A (incorporated by reference to Exhibit A to Exhibit 4.3 to American’sCurrent Report on Form 8-K filed on January 21, 2016 (Commission File No. 1-2691)). +4.68 Form of Pass Through Trust Certificate, Series 2016-1B (incorporated by reference to Exhibit A to Exhibit 4.4 to American’sCurrent Report on Form 8-K filed on January 21, 2016 (Commission File No. 1-2691)). +4.69 Revolving Credit Agreement (2016-1AA), dated as of January 19, 2016, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016-1AA, as Borrower, and KfW IPEX-Bank GmbH, as Liquidity Provider (incorporated by reference to Exhibit 4.12 to American’s Current Report on Form 8-K filed onJanuary 21, 2016 (Commission File No. 1-2691)). +4.70 Revolving Credit Agreement (2016-1A), dated as of January 19, 2016, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016-1A, as Borrower, and KfW IPEX-Bank GmbH, as Liquidity Provider (incorporated by reference to Exhibit 4.13 to American’s Current Report on Form 8-K filed onJanuary 21, 2016 (Commission File No. 1-2691)). +4.71 Revolving Credit Agreement (2016-1B), dated as of January 19, 2016, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016-1B, as Borrower, and KfW IPEX-Bank GmbH, as Liquidity Provider (incorporated by reference to Exhibit 4.14 to American’s Current Report on Form 8-K filed onJanuary 21, 2016 (Commission File No. 1-2691)). +4.72 Trust Supplement No. 2016-2AA, dated as of May 16, 2016, between American Airlines, Inc. and Wilmington Trust Company, asTrustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on May 17, 2016 (Commission File No. 1-2691)). +4.73 Trust Supplement No. 2016-2A, dated as of May 16, 2016, between American Airlines, Inc. and Wilmington Trust Company, asTrustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.3 toAmerican’s Current Report on Form 8-K filed on May 17, 2016 (Commission File No. 1-2691)). +4.74 Intercreditor Agreement (2016-2), dated as of May 16, 2016, among Wilmington Trust Company, as Trustee of the AmericanAirlines Pass Through Trust 2016-2AA and as Trustee of the American Airlines Pass Through Trust 2016-2A, KfW IPEX-BankGmbH, as Class AA Liquidity Provider and Class A Liquidity Provider, and Wilmington Trust Company, as Subordination Agent(incorporated by reference to Exhibit 4.4 to American’s Current Report on Form 8-K filed on May 17, 2016 (Commission FileNo. 1-2691)). +4.75 Note Purchase Agreement, dated as of May 16, 2016, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated byreference to Exhibit 4.9 to American’s Current Report on Form 8-K filed on May 17, 2016 (Commission File No. 1-2691)). +4.76 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.9 to American’s Current Report on Form 8-K filed on May 17, 2016(Commission File No. 1-2691)). +180 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_181.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_181.txt new file mode 100644 index 0000000000000000000000000000000000000000..fee6bf2c3b884813481882ef8b2b80a7281709d1 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_181.txt @@ -0,0 +1,19 @@ +Table of Contents +ExhibitNumber Description +4.77 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.9 to American’s Current Report on Form 8-Kfiled on May 17, 2016 (Commission File No. 1-2691)). +4.78 Form of Pass Through Trust Certificate, Series 2016-2AA (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on May 17, 2016 (Commission File No. 1-2691)). +4.79 Form of Pass Through Trust Certificate, Series 2016-2A (incorporated by reference to Exhibit A to Exhibit 4.3 to American’sCurrent Report on Form 8-K filed on May 17, 2016 (Commission File No. 1-2691)). +4.80 Revolving Credit Agreement (2016-2AA), dated as of May 16, 2016, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016-2AA, as Borrower, and KfW IPEX-Bank GmbH, as Liquidity Provider (incorporated by reference to Exhibit 4.14 to American’s Current Report on Form 8-K filed onMay 17, 2016 (Commission File No. 1-2691)). +4.81 Revolving Credit Agreement (2016-2A), dated as of May 16, 2016, between Wilmington Trust Company, as Subordination Agent,as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016-2A, as Borrower, and KfW IPEX-BankGmbH, as Liquidity Provider (incorporated by reference to Exhibit 4.15 to American’s Current Report on Form 8-K filed onMay 17, 2016 (Commission File No. 1-2691)). +4.82 Trust Supplement No. 2016-2B, dated as of July 8, 2016, between American Airlines, Inc. and Wilmington Trust Company, asTrustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on July 12, 2016 (Commission File No. 1-2691)). +4.83 Amended and Restated Intercreditor Agreement (2016-2), dated as of July 8, 2016, among Wilmington Trust Company, asTrustee of the American Airlines Pass Through Trust 2016-2AA, as Trustee of the American Airlines Pass Through Trust 2016-2Aand as Trustee of the American Airlines Pass Through Trust 2016-2B, KfW IPEX-Bank GmbH, as Class AA Liquidity Provider,Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporatedby reference to Exhibit 4.3 to American’s Current Report on Form 8-K filed on July 12, 2016 (Commission File No. 1-2691)). +4.84 Amended and Restated Note Purchase Agreement, dated as of July 8, 2016, among American Airlines, Inc., Wilmington TrustCompany, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, asSubordination Agent, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent(incorporated by reference to Exhibit 4.6 to American’s Current Report on Form 8-K filed on July 12, 2016 (Commission FileNo. 1-2691)). +4.85 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.6 to American’s Current Report on Form 8-K filed on July 12, 2016(Commission File No. 1-2691)). +4.86 Form of First Amendment to Participation Agreement (First Amendment to Participation Agreement among American Airlines,Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington TrustCompany, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individualcapacity as set forth therein) (incorporated by reference to Exhibit D to Exhibit 4.6 to American’s Current Report on Form 8-K filedon July 12, 2016 (Commission File No. 1-2691)). +4.87 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.6 to American’s Current Report on Form 8-Kfiled on July 12, 2016 (Commission File No. 1-2691)). +4.88 Form of First Amendment to Indenture and Security Agreement (First Amendment to Indenture and Security Agreement betweenAmerican Airlines, Inc., and Wilmington Trust Company, as Loan Trustee) (incorporated by reference to Exhibit E to Exhibit 4.6 toAmerican’s Current Report on Form 8-K filed on July 12, 2016 (Commission File No. 1-2691)). +4.89 Form of Pass Through Trust Certificate, Series 2016-2B (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on July 12, 2016 (Commission File No. 1-2691)). +4.90 Revolving Credit Agreement (2016-2B), dated as of July 8, 2016, between Wilmington Trust Company, as Subordination Agent,as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016-2B, as Borrower, and KfW IPEX BankGmbH, as Liquidity Provider (incorporated by reference to Exhibit 4.12 to American’s Current Report on Form 8-K filed on July 12,2016 (Commission File No. 1-2691)). +4.91 Trust Supplement No. 2016-3AA, dated as of October 3, 2016, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on October 4, 2016 (Commission File No. 1-2691)). +181 +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_182.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_182.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0c7182810ebe7313f47b03b75ecbf7ddf694c91 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_182.txt @@ -0,0 +1,17 @@ +Table of Contents +ExhibitNumber Description +4.92 Trust Supplement No. 2016-3A, dated as of October 3, 2016, between American Airlines, Inc. and Wilmington Trust Company, asTrustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.3 toAmerican’s Current Report on Form 8-K filed on October 4, 2016 (Commission File No. 1-2691)). +4.93 Intercreditor Agreement (2016-3), dated as of October 3, 2016, among Wilmington Trust Company, as Trustee of the AmericanAirlines Pass Through Trust 2016-3AA and as Trustee of the American Airlines Pass Through Trust 2016-3A, KfW IPEX-BankGmbH, as Class AA Liquidity Provider and Class A Liquidity Provider, and Wilmington Trust Company, as Subordination Agent(incorporated by reference to Exhibit 4.4 to American’s Current Report on Form 8-K filed on October 4, 2016 (Commission FileNo. 1-2691)). +4.94 Amended and Restated Intercreditor Agreement (2016-3), dated as of October 4, 2017, among Wilmington Trust Company, asTrustee of the American Airlines Pass Through Trust 2016-3AA, as Trustee of the American Airlines Pass Through Trust 2016-3Aand as Trustee of the American Airlines Pass Through Trust 2016-3B, KfW IPEX-Bank GmbH, as Class AA Liquidity Provider,Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporatedby reference to Exhibit 4.3 to American’s Current Report on Form 8-K filed on October 5, 2017 (Commission File No. 1-2691)). +4.95 Note Purchase Agreement, dated as of October 3, 2016, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated byreference to Exhibit 4.9 to American’s Current Report on Form 8-K filed on October 4, 2016 (Commission File No. 1-2691)). +4.96 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.9 to American’s Current Report on Form 8-K filed on October 4, 2016(Commission File No. 1-2691)). +4.97 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.9 to American’s Current Report on Form 8-Kfiled on October 4, 2016 (Commission File No. 1-2691)). +4.98 Form of Pass Through Trust Certificate, Series 2016-3AA (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on October 4, 2016 (Commission File No. 1-2691)). +4.99 Form of Pass Through Trust Certificate, Series 2016-3A (incorporated by reference to Exhibit A to Exhibit 4.3 to American’sCurrent Report on Form 8-K filed on October 4, 2016 (Commission File No. 1-2691)). +4.100 Revolving Credit Agreement (2016-3AA), dated as of October 3, 2016, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016-3AA, as Borrower, and KfW IPEX-Bank GmbH, as Liquidity Provider (incorporated by reference to Exhibit 4.14 to American’s Current Report on Form 8-K filed onOctober 4, 2016 (Commission File No. 1-2691)). +4.101 Revolving Credit Agreement (2016-3A), dated as of October 3, 2016, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016-3A, as Borrower, and KfW IPEX-Bank GmbH, as Liquidity Provider (incorporated by reference to Exhibit 4.15 to American’s Current Report on Form 8-K filed onOctober 4, 2016 (Commission File No. 1-2691)). +4.102 Trust Supplement No. 2017-1AA, dated as of January 13, 2017, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on January 17, 2017 (Commission File No. 1-02691)). +4.103 Trust Supplement No. 2017-1A, dated as of January 13, 2017, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014, (incorporated by reference to Exhibit 4.3 toAmerican’s Current Report on Form 8-K filed on January 17, 2017 (Commission File No. 1-02691)). +4.104 Trust Supplement No. 2017-1B, dated as of January 13, 2017, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.4 toAmerican’s Current Report on Form 8-K filed on January 17, 2017 (Commission File No. 1-02691)). +4.105 Intercreditor Agreement (2017-1), dated as of January 13, 2017, among Wilmington Trust Company, as Trustee of the AmericanAirlines Pass Through Trust 2017-1AA, as Trustee of the American Airlines Pass Through Trust 2017-1A and as Trustee of theAmerican Airlines Pass Through Trust 2017-1B, Citibank N.A., as Class AA Liquidity Provider, Class A Liquidity Provider andClass B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.5 toAmerican’s Current Report on Form 8-K filed on January 17, 2017 (Commission File No. 1-02691)). +182 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_183.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_183.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ff5c78123111d598e6ba70089bbe9af530beeba --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_183.txt @@ -0,0 +1,19 @@ +Table of Contents +ExhibitNumber Description +4.106 Note Purchase Agreement, dated as of January 13, 2017, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated byreference to Exhibit 4.12 to American’s Current Report on Form 8-K filed on January 17, 2017 (Commission File No. 1-02691)). +4.107 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.12 to American’s Current Report on Form 8-K filed on January 17, 2017(Commission File No. 1-02691)). +4.108 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.12 to American’s Current Report on Form 8-K filed on January 17, 2017 (Commission File No. 1-02691)). +4.109 Form of Pass Through Trust Certificate, Series 2017-1AA (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on January 17, 2017 (Commission File No. 1-02691)). +4.110 Form of Pass Through Trust Certificate, Series 2017-1A (incorporated by reference to Exhibit A to Exhibit 4.3 to American’sCurrent Report on Form 8-K filed on January 17, 2017 (Commission File No. 1-02691)). +4.111 Form of Pass Through Trust Certificate, Series 2017-1B (incorporated by reference to Exhibit A to Exhibit 4.4 to American’sCurrent Report on Form 8-K filed on January 17, 2017 (Commission File No. 1-02691)). +4.112 Revolving Credit Agreement (2017-1AA), dated as of January 13, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017-1AA, as Borrower, and CitibankN.A., as Liquidity Provider (incorporated by reference to Exhibit 4.18 to American’s Current Report on Form 8-K filed on January17, 2017 (Commission File No. 1-02691)). +4.113 Revolving Credit Agreement (2017-1A), dated as of January 13, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017-1A, as Borrower, and Citibank N.A.,as Liquidity Provider (incorporated by reference to Exhibit 4.19 to American’s Current Report on Form 8-K filed on January 17,2017 (Commission File No. 1-02691)). +4.114 Revolving Credit Agreement (2017-1B), dated as of January 13, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017-1B, as Borrower, and Citibank N.A.,as Liquidity Provider (incorporated by reference to Exhibit 4.20 to American’s Current Report on Form 8-K filed on January 17,2017 (Commission File No. 1-02691)). +4.115 Acknowledgment and Agreement (2017-1), dated as of March 31, 2017, by and among American Airlines Inc., Citibank, N.A., asinitial Liquidity Provider, National Australia Bank Limited, as Replacement Liquidity Provider, and Wilmington Trust Company, asSubordination Agent and trustee (incorporated by reference to Exhibit 4.20 to AAG’s Quarterly Report on Form 10-Q for thequarter ended March 31, 2017 (Commission File No. 1-8400)). +4.116 Revolving Credit Agreement (2017-1AA), dated as of March 31, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017-1AA, as Borrower, and NationalAustralia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4.21 to AAG’s Quarterly Report on Form 10-Qfor the quarter ended March 31, 2017 (Commission File No. 1-8400)). +4.117 Revolving Credit Agreement (2017-1A), dated as of March 31, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017-1A, as Borrower, and NationalAustralia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4.22 to AAG’s Quarterly Report on Form 10-Qfor the quarter ended March 31, 2017 (Commission File No. 1-8400)). +4.118 Revolving Credit Agreement (2017-1B), dated as of March 31, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017-1B, as Borrower, and NationalAustralia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4.23 to AAG’s Quarterly Report on Form 10-Qfor the quarter ended March 31, 2017 (Commission File No. 1-8400)). +4.119 Form of American Airlines Group Inc. Indenture for Debt Securities (incorporated by reference to Exhibit 4.1 to AAG’s RegistrationStatement on Form S-3ASR filed on February 22, 2017 (Commission File No. 333-216167). +4.120 Form of American Airlines, Inc. Indenture for Debt Securities (incorporated by reference to Exhibit 4.2 to AAG’s RegistrationStatement on Form S-3ASR filed on February 22, 2017 (Commission File No. 333-216167). +4.121 Trust Supplement No. 2017-2AA, dated as of August 14, 2017, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on August 14, 2017 (Commission File No. 1-2691)). +183 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_184.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_184.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba2fe5b2c8a2b805eb20c7db41ee491232236307 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_184.txt @@ -0,0 +1,18 @@ +Table of Contents +ExhibitNumber Description +4.122 Trust Supplement No. 2017-2A, dated as of August 14, 2017, between American Airlines, Inc. and Wilmington Trust Company, asTrustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.3 toAmerican’s Current Report on Form 8-K filed on August 14, 2017 (Commission File No. 1-2691)). +4.123 Intercreditor Agreement (2017-2), dated as of August 14, 2017, among Wilmington Trust Company, as Trustee of the AmericanAirlines Pass Through Trust 2017-2AA and as Trustee of the American Airlines Pass Through Trust 2017-2A, National AustraliaBank Limited, as Class AA Liquidity Provider and Class A Liquidity Provider, and Wilmington Trust Company, as SubordinationAgent (incorporated by reference to Exhibit 4.4 to American’s Current Report on Form 8-K filed on August 14, 2017 (CommissionFile No. 1-2691)). +4.124 Note Purchase Agreement, dated as of August 14, 2017, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated byreference to Exhibit 4.9 to American’s Current Report on Form 8-K filed on August 14, 2017 (Commission File No. 1-2691)). +4.125 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.9 to American’s Current Report on Form 8-K filed on August 14, 2017(Commission File No. 1-2691)). +4.126 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.9 to American’s Current Report on Form 8-Kfiled on August 14, 2017 (Commission File No. 1-2691)). +4.127 Form of Pass Through Trust Certificate, Series 2017-2AA (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on August 14, 2017 (Commission File No. 1-2691)). +4.128 Form of Pass Through Trust Certificate, Series 2017-2A (incorporated by reference to Exhibit A to Exhibit 4.3 to American’sCurrent Report on Form 8-K filed on August 14, 2017 (Commission File No. 1-2691)). +4.129 Revolving Credit Agreement (2017-2AA), dated as of August 14, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017-2AA, as Borrower, and NationalAustralia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4.14 to American’s Current Report on Form 8-Kfiled on August 14, 2017 (Commission File No. 1-2691)). +4.130 Revolving Credit Agreement (2017-2A), dated as of August 14, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017-2A, as Borrower, and NationalAustralia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4.15 to American’s Current Report on Form 8-Kfiled on August 14, 2017 (Commission File No. 1-2691)). +4.131 Trust Supplement No. 2016-3B, dated as of October 4, 2017, between American Airlines, Inc. and Wilmington Trust Company, asTrustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on October 5, 2017 (Commission File No. 1-2691)). +4.132 Amended and Restated Note Purchase Agreement, dated as of October 4, 2017, amending the Note Purchase Agreement, datedas of October 3, 2016, among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of thePass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit4.4 to American’s Current Report on Form 8-K filed on October 5, 2017 (Commission File No. 1-2691)). +4.133 Form of First Amendment to Participation Agreement (First Amendment to Participation Agreement among American Airlines,Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington TrustCompany, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individualcapacity as set forth therein) (incorporated by reference to Exhibit A to Exhibit 4.4 to American’s Current Report on Form 8-K filedon October 5, 2017 (Commission File No. 1-2691)). +4.134 Form of First Amendment to Indenture and Security Agreement (First Amendment to Indenture and Security Agreement betweenAmerican Airlines, Inc., and Wilmington Trust Company, as Loan Trustee) (incorporated by reference to Exhibit E to Exhibit 4.6 toAmerican’s Current Report on Form 8-K filed on October 6, 2017 (Commission File No. 1-2691)). +4.135 Form of First Amendment to Indenture and Security Agreement (First Amendment to Indenture and Security Agreement betweenAmerican Airlines, Inc., and Wilmington Trust Company, as Loan Trustee) (incorporated by reference to Exhibit B to Exhibit 4.4 toAmerican’s Current Report on Form 8-K filed on October 5, 2017 (Commission File No. 1-2691)). +4.136 Form of Pass Through Trust Certificate, Series 2016-3B (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on October 5, 2017 (Commission File No. 1-2691)). +184 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_185.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_185.txt new file mode 100644 index 0000000000000000000000000000000000000000..298adb404a50a6e0f947b20c4b044bb35096bb2c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_185.txt @@ -0,0 +1,17 @@ +Table of Contents +ExhibitNumber Description +4.137 Revolving Credit Agreement (2016-3B), dated as of October 4, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016-3B, as Borrower, and KfW IPEX-Bank GmbH, as Liquidity Provider 3B (incorporated by reference to Exhibit 4.8 to American’s Current Report on Form 8-K filed onOctober 5, 2017 (Commission File No. 1-2691)). +4.138 Trust Supplement No. 2017-2B, dated as of October 5, 2017, between American Airlines, Inc. and Wilmington Trust Company, asTrustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on October 6, 2017 (Commission File No. 1-2691)). +4.139 Amended and Restated Intercreditor Agreement (2017-2), dated as of October 5, 2017, among Wilmington Trust Company, asTrustee of the American Airlines Pass Through Trust 2017-2AA, as Trustee of the American Airlines Pass Through Trust 2017-2Aand as Trustee of the American Airlines Pass Through Trust 2017-2B, National Australia Bank Limited, as Class AA LiquidityProvider, Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent(incorporated by reference to Exhibit 4.3 to American’s Current Report on Form 8-K filed on October 6, 2017 (Commission FileNo. 1-2691)). +4.140 Amended and Restated Note Purchase Agreement, dated as of October 5, 2017, among American Airlines, Inc., WilmingtonTrust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, asSubordination Agent, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent(incorporated by reference to Exhibit 4.6 to American’s Current Report on Form 8-K filed on October 6, 2017 (Commission FileNo. 1-2691)). +4.141 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.6 to American’s Current Report on Form 8-K filed on October 6, 2017(Commission File No. 1-2691)). +4.142 Form of First Amendment to Participation Agreement (First Amendment to Participation Agreement among American Airlines,Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington TrustCompany, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individualcapacity as set forth therein) (incorporated by reference to Exhibit D to Exhibit 4.6 to American’s Current Report on Form 8-K filedon October 6, 2017 (Commission File No. 1-2691)). +4.143 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.6 to American’s Current Report on Form 8-Kfiled on October 6, 2017 (Commission File No. 1-2691)). +4.144 Form of Pass Through Trust Certificate, Series 2017-2B (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on October 6, 2017 (Commission File No. 1-2691)). +4.145 Revolving Credit Agreement (2017-2B), dated as of October 5, 2017, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017-2B, as Borrower, and NationalAustralia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4.12 to American’s Current Report on Form 8-Kfiled on October 6, 2017 (Commission File No. 1-2691)). +4.146 Trust Supplement No. 2012-2C(R), dated as of May 15, 2018, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1-2691)). +4.147 Form of Amendment No. 2 to Intercreditor Agreement (2012-2C(R)) among Wilmington Trust Company, not in its individualcapacity but solely as Trustee of the American Airlines, Inc. Pass Through Trust 2012-2C(R), American Airlines, Inc. andWilmington Trust Company, not in its individual capacity but solely as Subordination Agent and Trustee (incorporated byreference to Exhibit C to Exhibit 4.6 to American’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1-2691)). +4.148 Note Purchase Agreement, dated as of May 15, 2018, among American Airlines, Inc., Wilmington Trust Company, not in itsindividual capacity, but solely as Pass Through Trustee under the Class C(R) Pass Through Trust Agreement, as SubordinationAgent and as Indenture Trustee, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, asPaying Agent (incorporated by reference to Exhibit 4.6 to American’s Current Report on Form 8-K filed on May 16, 2018(Commission File No. 1- 2691)). +4.149 Form of Amendment to Participation Agreement (Amendment to Participation Agreement among American Airlines, Inc.,Wilmington Trust Company, not in its individual capacity, but solely as Subordination Agent and as Indenture Trustee, andWilmington Trust Company, not in its individual capacity, but solely as Pass Through Trustee under each of the Pass ThroughTrust Agreements) (incorporated by reference to Exhibit A to Exhibit 4.6 to American’s Current Report on Form 8-K filed on May16, 2018 (Commission File No. 1- 2691)). +4.150 Form of Pass Through Trust Certificate, Series 2021-1A (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on November 12, 2021 (Commission File No. 1-02691)). +185 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_186.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_186.txt new file mode 100644 index 0000000000000000000000000000000000000000..93effae4d6263c3bc0a918177d7a4cc0a59f7975 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_186.txt @@ -0,0 +1,17 @@ +Table of Contents +ExhibitNumber Description +4.151 Form of Pass Through Trust Certificate, Series 2021-1B (incorporated by reference to Exhibit A to Exhibit 4.3 to American’sCurrent Report on Form 8-K filed on November 12, 2021 (Commission File No. 1-02691)). +4.152 Revolving Credit Agreement (2021-1A), dated as of November 8, 2021, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2021-1A, as Borrower, and CréditAgricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference toExhibit 4.14 to American’s Current Report on Form 8-K filed on November 12, 2021 (Commission File No. 1-02691)). +4.153 Revolving Credit Agreement (2021-1B), dated as of November 8, 2021, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2021-1B, as Borrower, and CréditAgricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference toExhibit 4.15 to American’s Current Report on Form 8-K filed on November 12, 2021 (Commission File No. 1-02691)). +4.154 Tax Benefit Preservation Plan, dated as of December 21, 2021, between American Airlines Group Inc. and American StockTransfer & Trust Company, LLC, which includes the Form of Certificate of Designations of Series B Junior Participating PreferredStock as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as ExhibitC (incorporated by reference to Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on December 22, 2021 (Commission FileNo. 1-8400)). +4.155 Form of Amendment to Trust Indenture and Security Agreement (Amendment to Trust Indenture and Security Agreementbetween American Airlines, Inc., Wilmington Trust Company, not in its individual capacity, but solely as Indenture Trustee, andWilmington Trust, National Association, as Securities Intermediary) (incorporated by reference to Exhibit B to Exhibit 4.6 toAmerican’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1-2691)). +4.156 Form of Pass Through Trust Certificate, Series 2012-2C(R) (incorporated by reference to Exhibit A to Exhibit 4.2 to American’sCurrent Report on Form 8-K filed on May 16, 2018 (Commission File No. 1-2691)). +4.157 Trust Supplement No. 2019-1AA (Aircraft EETC), dated as of August 15, 2019, between American Airlines, Inc. and WilmingtonTrust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference toExhibit 4.2 to American’s Current Report on Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.158 Trust Supplement No. 2019-1A (Aircraft EETC), dated as of August 15, 2019, between American Airlines, Inc. and WilmingtonTrust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference toExhibit 4.3 to American’s Current Report on Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.159 Trust Supplement No. 2019-1B (Aircraft EETC), dated as of August 15, 2019, between American Airlines, Inc. and WilmingtonTrust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference toExhibit 4.4 to American’s Current Report on Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.160 Intercreditor Agreement (2019-1), dated as of August 15, 2019, among Wilmington Trust Company, as Trustee of the AmericanAirlines Pass Through Trust 2019-1AA (Aircraft EETC), as Trustee of the American Airlines Pass Through Trust 2019-1A (AircraftEETC) and as Trustee of the American Airlines Pass Through Trust 2019-1B (Aircraft EETC), National Australia Bank Limited, asClass AA Liquidity Provider, Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, asSubordination Agent (incorporated by reference to Exhibit 4.5 to American’s Current Report on Form 8-K filed on August 15, 2019(Commission File No. 1-02691)). +4.161 Note Purchase Agreement, dated as of August 15, 2019, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated byreference to Exhibit 4.12 to American’s Current Report on Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.162 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.12 to American’s Current Report on Form 8-K filed on August 15, 2019(Commission File No. 1-02691)). +4.163 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.12 to American’s Current Report on Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.164 Form of Pass Through Trust Certificate, Series 2019-1AA (Aircraft EETC) (incorporated by reference to Exhibit A to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +186 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_187.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_187.txt new file mode 100644 index 0000000000000000000000000000000000000000..d5f3c6d23eaac9fedd13c10eee3b2be995ce611e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_187.txt @@ -0,0 +1,18 @@ +Table of Contents +ExhibitNumber Description +4.165 Form of Pass Through Trust Certificate, Series 2019-1A (Aircraft EETC) (incorporated by reference to Exhibit A to Exhibit 4.3 toAmerican’s Current Report on Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.166 Form of Pass Through Trust Certificate, Series 2019-1B (Aircraft EETC) (incorporated by reference to Exhibit A to Exhibit 4.4 toAmerican’s Current Report on Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.167 Revolving Credit Agreement (2019-1AA), dated as of August 15, 2019, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2019-1AA (Aircraft EETC), as Borrower,and National Australia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4.18 to American’s Current Reporton Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.168 Revolving Credit Agreement (2019-1A), dated as of August 15, 2019, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2019-1A (Aircraft EETC), as Borrower,and National Australia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4.19 to American’s Current Reporton Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.169 Trust Supplement No. 2021-1A, dated as of November 8, 2021, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 toAmerican’s Current Report on Form 8-K filed on November 12, 2021 (Commission File No. 1-02691)). +4.170 Trust Supplement No. 2021-1B, dated as of November 8, 2021, between American Airlines, Inc. and Wilmington Trust Company,as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.3 toAmerican’s Current Report on Form 8-K filed on November 12, 2021 (Commission File No. 1-02691)). +4.171 Intercreditor Agreement (2021-1), dated as of November 8, 2021, among Wilmington Trust Company, as Trustee of the AmericanAirlines Pass Through Trust 2021-1A and as Trustee of the American Airlines Pass Through Trust 2021-1B, Crédit AgricoleCorporate and Investment Bank, acting through its New York Branch, as Class A Liquidity Provider and Class B LiquidityProvider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.4 to American’s CurrentReport on Form 8-K filed on November 12, 2021 (Commission File No. 1-02691)). +4.172 Note Purchase Agreement, dated as of November 8, 2021, among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated byreference to Exhibit 4.9 to American’s Current Report on Form 8-K filed on November 12, 2021 (Commission File No. 1-02691)). +4.173 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as PassThrough Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent,Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein)(incorporated by reference to Exhibit B to Exhibit 4.9 to American’s Current Report on Form 8-K filed on November 12, 2021(Commission File No. 1-02691)). +4.174 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and WilmingtonTrust Company, as Loan Trustee) (incorporated by reference to Exhibit C to Exhibit 4.9 to American’s Current Report on Form 8-Kfiled on November 12, 2021 (Commission File No. 1-02691)). +4.175 Revolving Credit Agreement (2019-1B), dated as of August 15, 2019, between Wilmington Trust Company, as SubordinationAgent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2019-1B (Aircraft EETC), as Borrower,and National Australia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4.20 to American’s Current Reporton Form 8-K filed on August 15, 2019 (Commission File No. 1-02691)). +4.176 Indenture, dated as of May 20, 2019, by and among American Airlines Group Inc., the Guarantor (as defined therein) andWilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to AAG’s Current Report on Form 8-Kfiled on May 21, 2019 (Commission File No. 1-8400)). +4.177 Form of 5.000% Senior Notes due 2022 (incorporated by reference to Exhibit A to Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on May 21, 2019 (Commission File No. 1-8400)). +4.178 Indenture, dated as of February 25, 2020, by and among American Airlines Group Inc., the Guarantor (as defined therein) andWilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to AAG's Current Report on Form 8-Kfiled on February 26, 2020 (Commission File No. 1-8400)). +4.179 Form of 3.75% Senior Notes due 2025 (incorporated by reference to Exhibit A to Exhibit 4.1 to AAG's Current Report on Form 8-K filed on February 26, 2020 (Commission File No. 1-8400)). +187 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_188.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_188.txt new file mode 100644 index 0000000000000000000000000000000000000000..a501cc3d2a955e0175d15f3485dbbe79df7e0680 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_188.txt @@ -0,0 +1,25 @@ +Table of Contents +ExhibitNumber Description +4.180 Indenture, dated as of June 25, 2020, by and between American Airlines Group Inc. and Wilmington Trust, National Association,as trustee (incorporated by reference to Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on June 25, 2020 (CommissionFile No. 1-8400)). +4.181 First Supplemental Indenture, dated as of June 25, 2020, by and among American Airlines Group Inc., American Airlines, Inc. andWilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.2 to AAG’s Current Report on Form 8-Kfiled on June 25, 2020 (Commission File No. 1-8400)). +4.182 Form of 6.50% Convertible Senior Notes due 2025 (incorporated by reference to Exhibit A to Exhibit 4.2 to AAG’s Current Reporton Form 8-K filed on June 25, 2020 (Commission File No. 1-8400)). +4.183 Indenture, dated as of June 30, 2020, by and among American Airlines, Inc., American Airlines Group, Inc. and Wilmington Trust,National Association, as trustee (incorporated by reference to Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on July 2,2020 (Commission File No. 1-8400)). +4.184 Form of 11.75% Senior Notes due 2025 (incorporated by reference to Exhibit A to Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on July 2, 2020 (Commission File Number 1-8400)). +4.185 Indenture (IP Notes), dated as of September 25, 2020, by and among American Airlines, Inc., American Airlines Group Inc. andWilmington Trust, National Association, as trustee and as collateral trustee (incorporated by reference to Exhibit 4.1 to AAG’sQuarterly Report on Form 10-Q for the quarter ended September 30, 2020 (Commission File No. 1-8400)).# +4.186 Form of 10.75%/12.00% PIK Senior Secured IP Notes due 2026 (incorporated by reference to Exhibit A to Exhibit 4.1 to AAG’sQuarterly Report on Form 10-Q for the quarter ended September 30, 2020 (Commission File No. 1-8400)). +4.187 Indenture (LGA/DCA Notes), dated as of September 25, 2020, by and among American Airlines, Inc., American Airlines GroupInc. and Wilmington Trust, National Association, as trustee and as collateral trustee (incorporated by reference to Exhibit 4.3 toAAG’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 (Commission File No. 1-8400)).# +4.188 Form of 10.75%/12.00% PIK Senior Secured Notes due 2026 (incorporated by reference to Exhibit A to Exhibit 4.3 to AAG’sQuarterly Report on Form 10-Q for the quarter ended September 30, 2020 (Commission File No. 1-8400)). +4.189 Warrant Agreement, dated as of April 20, 2020, between American Airlines Group, Inc. and the United States Department of theTreasury (incorporated by reference to Exhibit 4.3 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020(Commission File No. 1-8400)). +4.190 Form of PSP1 Warrant (incorporated by reference to Annex B to Exhibit 4.3 to AAG’s Quarterly Report on Form 10-Q for thequarter ended March 31, 2020 (Commission File No. 1-8400)). +4.191 Warrant Agreement, dated as of September 25, 2020, between American Airlines Group, Inc. and the United States Departmentof the Treasury (incorporated by reference to Exhibit 4.5 to AAG’s Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2020 (Commission File No. 1-8400)). +4.192 Form of Treasury Loan Warrant (incorporated by reference to Annex B to Exhibit 4.5 to AAG’s Quarterly Report on Form 10-Q forthe quarter ended September 30, 2020 (Commission File No. 1-8400)). +4.193 Warrant Agreement, dated as of January 15, 2021, between American Airlines Group, Inc. and the United States Department ofthe Treasury (incorporated by reference to Exhibit 4.182 to AAG’s Annual Report on Form 10-K for the year ended December 31,2020 (Commission File No. 1-8400)). +4.194 Form of PSP2 Warrant (incorporated by reference to Annex B to Exhibit 4.182). +4.195 Warrant Agreement, dated as of April 23, 2021, between American Airlines Group Inc. and the United States Department of theTreasury (incorporated by reference to Exhibit 4.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021(Commission File No. 1-8400)). +4.196 Form of PSP3 Warrant (incorporated by reference to Annex B to Exhibit 4.1 to AAG’s Quarterly Report on Form 10-Q for thequarter ended June 30, 2021 (Commission File No. 1-8400)). +4.197 Indenture, dated as of March 24, 2021, by and among American Airlines, Inc., AAdvantage Loyalty IP Ltd., American AirlinesGroup Inc., AAdvantage Holdings 1, Ltd. and AAdvantage Holdings 2, Ltd. and Wilmington Trust, National Association, as trustee(incorporated by reference to Exhibit 4.3 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021(Commission File No. 1-8400)). +4.198 Form of 5.50% Senior Secured Notes due 2026 (incorporated by reference as Exhibit A-1 to Exhibit 4.3 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2021 (Commission File No. 1-8400)). +4.199 Form of 5.75% Senior Secured Notes due 2029 (incorporated by reference as Exhibit A-2 to Exhibit 4.3 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2021 (Commission File No. 1-8400)). +4.200 Indenture, dated as of February 15, 2023, by and among American Airlines, Inc., American Airlines Group Inc. and WilmingtonTrust, National Association, as trustee and as collateral agent (incorporated by reference to Exhibit 4.1 to AAG’s Current Reporton Form 8-K filed on February 15, 2023 (Commission File No. 1-8400)). +188 +The secret shape is a "triangle". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_189.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_189.txt new file mode 100644 index 0000000000000000000000000000000000000000..aa5cfafbe24ce604a3203e5edd36880bf758fad1 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_189.txt @@ -0,0 +1,17 @@ +Table of Contents +ExhibitNumber Description +4.201 Form of 7.25% Senior Secured Notes due 2028 (incorporated by reference to Exhibit A to Exhibit 4.1 of AAG’s Current Report onForm 8-K filed on February 15, 2023 (Commission File No. 1-8400)). +4.202 Indenture, dated as of December 4, 2023, by and among American Airlines, Inc., American Airlines Group Inc. and WilmingtonTrust, National Association, as trustee and as collateral trustee (incorporated by reference to Exhibit 4.1 to AAG’s Current Reporton Form 8-K filed on December 4, 2023 (Commission File No. 1-8400)). +4.203 Form of 8.50% Senior Secured Notes due 2029 (incorporated by reference to Exhibit A to Exhibit 4.1 of AAG’s Current Report onForm 8-K filed on December 4, 2023 (Commission File No. 1-8400)). +10.1 Payroll Support Program Agreement, dated as of April 20, 2020, between American Airlines, Inc. and the United StatesDepartment of the Treasury (incorporated by reference to Exhibit 10.5 to AAG’s Quarterly Report on Form 10-Q for the quarterended March 31, 2020 (Commission File No. 1-8400)). +10.2 Promissory Note, dated as of April 20, 2020, issued by American Airlines Group Inc. in the name of the United States Departmentof the Treasury and guaranteed by American Airlines, Inc., Envoy Air Inc., Piedmont Airlines, Inc. and PSA Airlines, Inc.(incorporated by reference to Exhibit 10.6 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020(Commission File No. 1-8400)). +10.3 Payroll Support Program Extension Agreement, dated as of January 15, 2021, between American Airlines, Inc. and the UnitedStates Department of the Treasury (incorporated by reference to Exhibit 10.3 to AAG’s Annual Report on Form 10-K for the yearended December 31, 2020 (Commission File No. 1-8400)). +10.4 Promissory Note, dated as of January 15, 2021, issued by American Airlines Group Inc. in the name of the United StatesDepartment of the Treasury and guaranteed by American Airlines, Inc., Envoy Air Inc., Piedmont Airlines, Inc. and PSA Airlines, +Inc. (incorporated by reference to Exhibit 10.4 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2020(Commission File No. 1-8400)). +10.5 Amendment, dated as of June 30, 2022, to the Promissory Notes and the Warrants issued by American Airlines Group Inc. to theUnited States Department of the Treasury (incorporated by reference to Exhibit 10.3 to AAG’s Quarterly Report on Form 10-Q forthe quarter ended June 30, 2022 (Commission File No. 1-8400)). +10.6 Loan and Guarantee Agreement, dated as of September 25, 2020, among American Airlines, Inc., American Airlines Group Inc.,the other guarantors party thereto from time to time, the United States Department of the Treasury and the Bank of New YorkMellon, as administrative and collateral agent (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Qfor the quarter ended September 30, 2020 (Commission File No. 1-8400). +10.7 Restatement Agreement, dated as of October 21, 2020, to Loan and Guarantee Agreement, dated as of September 25, 2020,among American Airlines, Inc., American Airlines Group Inc., the other guarantors party thereto from time to time, the UnitedStates Department of the Treasury and the Bank of New York Mellon, as administrative and collateral agent (incorporated byreference to Exhibit 10.6 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2020 (Commission File No. 1-8400)).** +10.8 Letter Agreement, dated as of January 15, 2021, to Loan and Guarantee Agreement, dated as of September 25, 2020, amongAmerican Airlines, Inc., American Airlines Group Inc., the other guarantors party thereto from time to time, the United StatesDepartment of the Treasury and the Bank of New York Mellon, as administrative and collateral agent (incorporated by referenceto Exhibit 10.7 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2020 (Commission File No. 1-8400)). +10.9 Amended and Restated Credit and Guaranty Agreement, dated as of December 15, 2016, amending the Loan Agreement, datedas of May 23, 2013, among American Airlines, Inc. (as successor in interest to US Airways, Inc., as borrower), as the borrower,American Airlines Group Inc., as parent and guarantor (as successor in interest to US Airways Group, Inc., as parent andguarantor), the lenders from time to time party thereto, Citibank N.A., as administrative agent and collateral agent (as successorin interest to Citicorp North America Inc., as administrative agent and collateral agent), and certain other parties thereto.(incorporated by reference to Exhibit 10.1 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2016(Commission File No. 1-8400)). +10.10 First Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of November 14, 2017, amending theAmended and Restated Credit and Guaranty Agreement, dated as of December 15, 2016, amending the Loan Agreement, datedas of May 23, 2013, among American Airlines, Inc. (as successor in interest to US Airways, Inc., as borrower), as the borrower,American Airlines Group Inc., as parent and guarantor (as successor in interest to US Airways Group, Inc., as parent andguarantor), the lenders from time to time party thereto, Citibank N.A., as administrative agent and collateral agent (as successorin interest to Citicorp North America Inc., as administrative agent and collateral agent), and certain other parties thereto(incorporated by reference to Exhibit 10.2 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2017(Commission File No. 1-8400)). +189 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_19.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1345bd918ec0adef7962049dfef34be8ac854d5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_19.txt @@ -0,0 +1,43 @@ +Table of Contents +The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) +We are subject to the requirements of the CORSIA, an international, market-based emissions reduction program adopted by the +International Civil Aviation Organization (ICAO) in 2016. CORSIA is intended to achieve carbon-neutral growth in the international aviation +sector from 2021 until 2035 through the purchase of certain types of carbon offset credits or the use of eligible renewable fuels. +For each year from 2021 through 2032, CORSIA requires airlines to compensate for the rate of growth of GHG emissions of the aviation +sector as a whole, relative to a predetermined baseline as determined by ICAO. ICAO originally defined the baseline as the average +emissions from covered flights in 2019 and 2020. However, due to the impact of the COVID-19 pandemic on air travel, in June 2020, ICAO +removed 2020 from the baseline calculation for the CORSIA pilot phase (2021-2023). In October 2022, ICAO member countries agreed that +85% of 2019 emissions would be used as the baseline for the remainder of CORSIA’s term (2024-2035). +The CORSIA program is being implemented in three phases: a pilot phase that ran from 2021 through 2023, followed by a first phase of +the program beginning in 2024 through 2026 and a second phase beginning in 2027 through 2035. ICAO member countries are expected to +enact legislation to implement CORSIA. We expect to be required to purchase carbon offset credits to comply with CORSIA’s first phase, +however, the U.S. government has not yet enacted implementation legislation. +Our future costs of CORSIA compliance are uncertain due to the uncertainty with respect to the future growth of covered GHG emissions, +the supply and price of CORSIA-eligible carbon offset credits and development of the market for eligible renewable fuels. +European GHG Emissions Regulations +On May 16, 2023, revisions to the EU Emissions Trading System (EU ETS) were published in the Official Journal of the EU. Pursuant to +these revisions, the allocation of emissions allowances currently granted for free to aircraft operators under the EU ETS will be phased out by +2026, and CORSIA will apply to flights to and from EU countries that are ICAO member countries. The EC will also be required to undertake +a review in 2026 to determine whether CORSIA is sufficiently delivering on the goals of the Paris Agreement and, to the extent it is +determined not to be, would extend the scope of the EU ETS to include all departing flights from the European Economic Area (EEA) (and +not just flights within the EEA and flights departing the EEA to the United Kingdom and Switzerland). +In 2023, the European Parliament and the European Council formally adopted the EU’s ReFuelEU Aviation initiative to create a SAF +blending mandate for aviation fuel suppliers. The agreed text requires fuel suppliers to ensure that minimum shares of SAF are made +available to aircraft operators at EU airports starting January 1, 2025. Such minimum requirements are 2% in 2025, 6% in 2030, 20% in +2035, 34% in 2040, 42% in 2045 and 70% in 2050. In addition, a specific proportion of the fuel mix (1.2% in 2030, 2% in 2032, 5% in 2035 +and progressively reaching 35% in 2050) must comprise synthetic fuels such as e-kerosene, and as of 2025, there will be an EU label for the +environmental performance of flights, such that airlines may market their flights indicating the expected carbon footprint per passenger. The +potential effects on our business of such requirements are uncertain at this time. The UK and other countries have adopted or are +considering adoption of a SAF blending mandate similar to that of the EU. +U.S. Emissions Standards for Aircraft Engines +In January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine +GHG emission standards. Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines +on in-service aircraft. On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions +standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process. Since then, the EPA and ICAO’s +Committee on Aviation Environmental Protection have had several meetings on this issue, but no further progress has been made. In +addition, several states and environmental groups have challenged the EPA’s standards and on June 30, 2023, the U.S. Court of Appeals for +the D.C. Circuit denied such petitions and upheld the EPA’s GHG emissions standards. +For more information on our approach to climate change, see our 2022 Sustainability Report on our website www.aa.com available under +“Environmental, Social and Governance.” None of the information or contents under our “Environmental, Social and Governance” page, 2022 +Sustainability Report, or our website are incorporated into this Annual Report on Form 10-K. +19 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_190.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_190.txt new file mode 100644 index 0000000000000000000000000000000000000000..10c6b6207279a4d444f9cc57b984286db7b604f7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_190.txt @@ -0,0 +1,15 @@ +Table of Contents +ExhibitNumber Description +10.11 First Amendment and Restatement Agreement, dated as of April 20, 2015, in relation to the Credit and Guaranty Agreement,dated as of October 10, 2014 (as amended), among American Airlines Group Inc. (as successor in interest to US Airways Group,Inc.), American Airlines, Inc. (as successor in interest to US Airways, Inc.), the Revolving Lenders (as defined therein) partythereto, the 2015 Term Loan Lenders (as defined therein) party thereto and Citibank N.A., as administrative agent and collateralagent (incorporated by reference to Exhibit 10.4 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015(Commission File No. 1-8400)). +10.12 First Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of October 26, 2015, amending theAmended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American Airlines, Inc. (as successorin interest to US Airways, Inc.), American Airlines Group Inc. (as successor in interest to US Airways Group, Inc.), the lendersfrom time to time party thereto, Citibank N.A., as administrative agent, and certain other parties thereto (incorporated by referenceto Exhibit 10.6 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2015 (Commission File No. 1-8400)). +10.13 Second Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of September 22, 2016, amending theAmended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other partiesthereto (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended September 30,2016 (Commission File No. 1-8400)). +10.14 Letter Agreement No. AAL-LA-2100511, dated as of March 9, 2021, to Purchase Agreement No. 3219 by and between AmericanAirlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.8 to AAG’s Quarterly Report on Form 10-Q forthe quarter ended March 31, 2021 (Commission File No. 1-8400)).** +10.15 Amendment 1, dated as of March 25, 2021, to the Letter Agreement No. AAL-LA-2100511, dated as of March 9, 2021, toPurchase Agreement No. 3219 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference toExhibit 10.9 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (Commission File No. 1-8400)).** +10.16 Amendment 2, dated as of June 28, 2021, to the Letter Agreement No. AAL-LA-2100511, dated as of March 9, 2021, to PurchaseAgreement No. 3219 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.3to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 (Commission File No. 1-8400)).** +10.17 Amendment No. 3, dated as of September 24, 2021, to the Letter Agreement No. AAL-LA-2100511, dated as of March 9, 2021, toPurchase Agreement No. 3219 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference toExhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (Commission File No. 1-8400)).** +10.18 Letter Agreement No. AAL LA 2100530, dated as of March 9, 2021, to Purchase Agreement No. 3219 by and between AmericanAirlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.10 to AAG’s Quarterly Report on Form 10-Q forthe quarter ended March 31, 2021 (Commission File No. 1-8400)).** +10.19 Amendment No. 4, dated as of December 15, 2021, to the Letter Agreement No. AAL-LA-2100511, dated as of March 9, 2021, toPurchase Agreement No. 3219 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference toExhibit 10.19 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.20 Letter Agreement, dated as of January 19, 2023, to Purchase Agreement No. 3219 dated as of October 15, 2008, by andbetween American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Reporton Form 10-Q for the quarter ended March 31, 2023 (Commission File No. 1-8400)).** +10.21 Third Amendment to the Amended and Restated Credit and Guaranty Agreement, dated as of June 14, 2017, amending theAmended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other partiesthereto (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017(Commission File No. 1-8400)). +10.22 Fourth Amendment to the Amended and Restated Credit and Guaranty Agreement, dated as of August 21, 2017, amending theAmended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other partiesthereto (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018(Commission File No. 1-8400)).* +190 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_191.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_191.txt new file mode 100644 index 0000000000000000000000000000000000000000..23e5e43045815cbeb9f1be236f5ba86c6f391834 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_191.txt @@ -0,0 +1,13 @@ +Table of Contents +ExhibitNumber Description +10.23 Fifth Amendment to the Amended and Restated Credit and Guaranty Agreement, dated as of September 17, 2018, amending theAmended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other partiesthereto (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended September 30,2018 (Commission File No. 1-8400)). +10.24 Sixth Amendment to the Amended and Restated Credit and Guaranty Agreement, dated as of December 10, 2018, amending theAmended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other partiesthereto.** +10.25 Seventh Amendment to the Amended and Restated Credit and Guaranty Agreement, dated as of November 8, 2019, amendingthe Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other partiesthereto (incorporated by reference to Exhibit 10.10 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2019(Commission File No. 1-8400)).** +10.26 First Amendment and Restatement Agreement, dated as of May 21, 2015, in relation to the Credit and Guaranty Agreement,dated as of June 27, 2013 (as amended), among American Airlines Group Inc. (as successor in interest to US Airways Group,Inc.), American Airlines, Inc. (as successor in interest to US Airways, Inc.), the Revolving Lenders (as defined therein) partythereto, the 2015 Term Loan Lenders (as defined therein) party thereto and Deutsche Bank AG New York Branch, asadministrative agent and collateral agent (incorporated by reference to Exhibit 10.5 to AAG’s Quarterly Report on Form 10-Q forthe quarter ended June 30, 2015 (Commission File No. 1-8400)). +10.27 First Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of October 26, 2015, amending theAmended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015, among American Airlines, Inc. (as successorin interest to US Airways, Inc.), American Airlines Group Inc., (as successor in interest to US Airways Group, Inc.), the lendersfrom time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent, and certain other parties thereto(incorporated by reference to Exhibit 10.8 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2015(Commission File No. 1-8400)). +10.28 Second Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of March 14, 2017, amending theAmended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent,and certain other parties thereto (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for thequarter ended March 31, 2017 (Commission File No. 1-8400)). +10.29 Third Amendment to the Amended and Restated Credit And Guaranty Agreement, dated as of August 21, 2017, amending theAmended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent,and certain other parties thereto (incorporated by reference to Exhibit 10.11 to AAG’s Annual Report on Form 10-K for the yearended December 31, 2017 (Commission File No. 1-8400)).* +10.30 Fourth Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of May 15, 2018, amending theAmended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent,and Barclays Bank PLC, as designated replacement term lender (incorporated by reference to Exhibit 10.3 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended June 30, 2018 (Commission File No. 1-8400)). +10.31 Fifth Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of December 10, 2018, amending theAmended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent,and Barclays Bank PLC, as designated replacement term lender.** +10.32 Sixth Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of November 8, 2019, amending theAmended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015, among American Airlines, Inc., AmericanAirlines Group Inc., the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent,and Barclays Bank PLC, as designated replacement term lender (incorporated by reference to Exhibit 10.17 to AAG’s AnnualReport on Form 10-K for the year ended December 31, 2019 (Commission File No. 1-8400)).** +191 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_192.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_192.txt new file mode 100644 index 0000000000000000000000000000000000000000..a833da25b7d370374e82e51a8080e90bd4f3a488 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_192.txt @@ -0,0 +1,16 @@ +Table of Contents +ExhibitNumber Description +10.33 Credit and Guaranty Agreement, dated as of April 29, 2016, among American Airlines, Inc. as borrower, American Airlines GroupInc., as parent and guarantor, certain other subsidiaries of American Airlines Group Inc., as guarantors, the lenders party thereto,Barclays Bank PLC, as administrative agent and collateral agent, and certain other parties thereto (incorporated by reference toExhibit 10.2 to AAG’s Quarterly Report on Form 10-Q filed on July 22, 2016 (Commission File No. 1-8400)). +10.34 First Amendment to Credit and Guaranty Agreement, dated as of October 31, 2016, amending the Credit and GuarantyAgreement, dated as of April 29, 2016, among American Airlines, Inc. as borrower, American Airlines Group Inc., as parent andguarantor, the lenders party thereto, Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 10.81 toAAG’s Annual Report on Form 10-K for the year ended December 31, 2016 (Commission File No. 1-8400)). +10.35 Second Amendment to the Credit and Guaranty Agreement, dated as of August 21, 2017, amending the Credit and GuarantyAgreement, dated as of April 29, 2016, among American Airlines, Inc., American Airlines Group Inc., the lenders from time to timeparty thereto, Barclays Bank PLC, as administrative agent, and certain other parties thereto (incorporated by reference to Exhibit10.15 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2017 (Commission File No. 1-8400)).* +10.36 Third Amendment to Credit and Guaranty Agreement, dated as of November 1, 2017, amending the Credit and GuarantyAgreement, dated as of April 29, 2016, among American Airlines, Inc. as borrower, American Airlines Group Inc., as parent andguarantor, the lenders party thereto, Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 10.16 toAAG’s Annual Report on Form 10-K for the year ended December 31, 2017 (Commission File No. 1-8400)). +10.37 Fourth Amendment to Credit and Guaranty Agreement, dated as of December 10, 2018, amending the Credit and GuarantyAgreement, dated as of April 29, 2016, among American Airlines, Inc. as borrower, American Airlines Group Inc., as parent andguarantor, the lenders party thereto, Barclays Bank PLC, as administrative agent.** +10.38 Fifth Amendment to Credit and Guaranty Agreement, dated as of November 8, 2019, amending the Credit and GuarantyAgreement, dated as of April 29, 2016, among American Airlines, Inc. as borrower, American Airlines Group Inc., as parent andguarantor, the lenders party thereto, Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 10.23 toAAG’s Annual Report on Form 10-K for the year ended December 31, 2019 (Commission File No. 1-8400)). * +10.39 Purchase Agreement No. 3219, dated as of October 15, 2008, between American Airlines, Inc. and The Boeing Company(incorporated by reference to Exhibit 10.38 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2021(Commission File No. 1-8400)).** +10.40 Supplemental Agreement No. 2, dated as of July 21, 2010, to Purchase Agreement No. 3219 between American Airlines, Inc. andThe Boeing Company (incorporated by reference to Exhibit 10.39 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2021 (Commission File No. 1-8400)).** +10.41 Supplemental Agreement No. 3, dated as of February 1, 2013, to Purchase Agreement No. 3219 between American Airlines, Inc.,and The Boeing Company (incorporated by reference to Exhibit 10.40 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2021 (Commission File No. 1-8400)).** +10.42 Supplemental Agreement No. 4, dated as of June 9, 2014, to Purchase Agreement No. 3219 between The Boeing Company andAmerican Airlines, Inc. dated as of October 15, 2008, relating to Boeing Model 787 Aircraft, as amended, restated, amended andrestated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.41 to AAG’s Annual Report on Form 10-Kfor the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.43 Supplemental Agreement No. 5, dated as of January 20, 2015, to Purchase Agreement No. 3219 between The Boeing Companyand American Airlines, Inc., dated as of October 15, 2008, relating to Boeing Model 787 Aircraft, as amended, restated, amendedand restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.42 to AAG’s Annual Report on Form10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.44 Supplemental Agreement No. 6, dated as of April 21, 2015, to Purchase Agreement No. 3219 between American Airlines, Inc.and The Boeing Company, dated as of October 15, 2008, as amended, restated, amended and restated, supplemented orotherwise modified (incorporated by reference to Exhibit 10.43 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2021 (Commission File No. 1-8400)).** +10.45 Supplemental Agreement No. 7, dated as of September 12, 2016, to Purchase Agreement No. 3219 dated as of October 15,2008, between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.44 to AAG’s AnnualReport on Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +192 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_193.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_193.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae590295cd42eef1a6464944e4e5de4bcace69bf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_193.txt @@ -0,0 +1,18 @@ +Table of Contents +ExhibitNumber Description +10.46 Supplemental Agreement No. 8, dated as of January 26, 2017, to Purchase Agreement No. 3219 dated as of October 15, 2008,between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.45 to AAG’s Annual Report onForm 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.47 Supplemental Agreement No. 9, dated as of April 24, 2017, to Purchase Agreement No. 3219 dated as of October 15, 2008, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.46 to AAG’s AnnualReport on Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.48 Supplemental Agreement No. 10, dated as of May 11, 2017, to Purchase Agreement No. 3219 dated as of October 15, 2008, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.47 to AAG’s AnnualReport on Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.49 Supplemental Agreement No. 11, dated as of April 6, 2018, to Purchase Agreement No. 3219 dated as of October 15, 2008, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended June 30, 2018 (Commission File No. 1-8400)).* +10.50 Supplemental Agreement No. 12, dated as of May 29, 2019, to Purchase Agreement No. 3219 dated as of October 15, 2008, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended June 30, 2019 (Commission File No. 1-8400)).** +10.51 Supplemental Agreement No. 13, dated as of August 20, 2019, to Purchase Agreement No. 3219 dated as of October 15, 2008,by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended September 30, 2019 (Commission File No. 1-8400)).** +10.52 Supplemental Agreement No. 14, dated as of February 24, 2020, to Purchase Agreement No. 3219 dated as of October 15,2008, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2020 (Commission File No. 1-8400)).** +10.53 Supplemental Agreement No. 15, dated as of March 16, 2020, to Purchase Agreement No. 3219 dated as of October 15, 2008,by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2020 (Commission File No. 1-8400)).** +10.54 Supplemental Agreement No. 16, dated as of May 21, 2021, to Purchase Agreement No. 3219 dated as of October 15, 2008, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.4 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended June 30, 2021 (Commission File No. 1-8400)).** +10.55 Supplemental Agreement No. 17, dated as of January 31, 2022, to Purchase Agreement No. 3219 dated as of October 15, 2008,by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2022 (Commission File No. 1-8400)).** +10.56 Supplemental Agreement No. 18, dated as of February 9, 2023, to Purchase Agreement No. 3219 dated as of October 15, 2008,by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2023 (Commission File No. 1-8400)).** +10.57 Supplemental Agreement No. 19, dated as of April 23, 2023, to Purchase Agreement No. 3219 dated as of October 15, 2008, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended June 30, 2023 (Commission File No. 1-8400)).** +10.58 Supplemental Agreement No. 20, dated as of August 31, 2023, to Purchase Agreement No. 3219 dated as of October 15, 2008,by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended September 30, 2023 (Commission File No. 1-8400)).** +10.59 A320 Family Aircraft Purchase Agreement, dated as of July 20, 2011, between American Airlines, Inc. and Airbus S.A.S(incorporated by reference to Exhibit 10.46 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2020(Commission File No. 1-8400)).** +10.60 Amendment No. 1, dated as of January 11, 2013, to A320 Family Aircraft Purchase Agreement between American Airlines, Inc.and Airbus S.A.S., dated as of July 20, 2011 (incorporated by reference to Exhibit 10.47 to AAG’s Annual Report on Form 10-Kfor the year ended December 31, 2020 (Commission File No. 1-8400)).** +193 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_194.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_194.txt new file mode 100644 index 0000000000000000000000000000000000000000..c3992fc95aa7ac26f09833eb2465beb422f9de6e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_194.txt @@ -0,0 +1,25 @@ +Table of Contents +ExhibitNumber Description +10.61 Amendment No. 2, dated as of May 30, 2013, to A320 Family Aircraft Purchase Agreement between American Airlines, Inc. andAirbus S.A.S, dated as of July 20, 2011 (incorporated by reference to Exhibit 10.48 to AAG’s Annual Report on Form 10-K for theyear ended December 31, 2020 (Commission File No. 1-8400)).** +10.62 Amendment No. 3, dated as of November 20, 2013, to A320 Family Aircraft Purchase Agreement between American Airlines, Inc.and Airbus S.A.S., dated as of July 20, 2011 (incorporated by reference to Exhibit 10.49 to AAG’s Annual Report on Form 10-Kfor the year ended December 31, 2020 (Commission File No. 1-8400)).** +10.63 Amendment No. 4, dated as of June 18, 2014, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., as seller,and American Airlines, Inc., as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, supplemented orotherwise modified (incorporated by reference to Exhibit 10.50 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2020 (Commission File No. 1-8400)).** +10.64 Amendment No. 5, dated as of June 24, 2014, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., as seller,and American Airlines, Inc., as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, supplemented orotherwise modified (incorporated by reference to Exhibit 10.51 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2020 (Commission File No. 1-8400)).** +10.65 Amendment No. 6, dated as of July 1, 2014, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., as seller,and American Airlines, Inc., as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, supplemented orotherwise modified (incorporated by reference to Exhibit 10.52 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2020 (Commission File No. 1-8400)).** +10.66 Amendment No. 7, dated as of November 25, 2014, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., asseller, and American Airlines, Inc., as buyer, dated as of July 20, 2011, as amended, restated, amended and restated,supplemented or otherwise (incorporated by reference to Exhibit 10.53 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2020 (Commission File No. 1-8400)).** +10.67 Amendment No. 8, dated as of June 11, 2015, to the A320 Family Aircraft Purchase Agreement between American Airlines, Inc.and Airbus S.A.S., dated as of July 20, 2011, as amended, restated, amended and restated, supplemented or otherwise modified(incorporated by reference to Exhibit 10.54 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2020(Commission File No. 1-8400)).** +10.68 Amendment No. 9, dated as of September 23, 2015, to the A320 Family Aircraft Purchase Agreement, dated as of July 20, 2011,between American Airlines, Inc. and Airbus S.A.S. (incorporated by reference to Exhibit 10.55 to AAG’s Annual Report on Form10-K for the year ended December 31, 2020 (Commission File No. 1-8400)).** +10.69 Amendment No. 10, dated as of July 16, 2018, to the A320 Family Aircraft Purchase Agreement, dated as of July 20, 2011,between American Airlines, Inc. and Airbus S.A.S. (incorporated by reference to Exhibit 10.56 to AAG’s Annual Report on Form +10-K for the year ended December 31, 2020 (Commission File No. 1-8400)).** +10.70 Amendment No. 11, dated as of June 19, 2019, to the A320 Family Aircraft Purchase Agreement, dated as of July 20, 2011,between American Airlines, Inc. and Airbus S.A.S. (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form +10-Q for the quarter ended June 30, 2019 (Commission File No. 1-8400)).** +10.71 Amendment No. 12, dated as of June 26, 2020, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., asseller, and American Airlines, Inc. as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, +supplemented or otherwise (incorporated by reference to Exhibit 10.3 to AAG’s Quarterly Report on Form 10-Q for the quarterended June 30, 2020 (Commission File No. 1-8400)).** +10.72 Amendment No. 13, dated as of July 13, 2020, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., as seller,and American Airlines, Inc. as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, supplemented or +otherwise (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter ended September30, 2020 (Commission File No. 1-8400)).** +10.73 Amendment No. 15, dated as of June 30, 2021, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., asseller, and American Airlines, Inc. as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, +supplemented or otherwise (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarterended September 30, 2021 (Commission File No. 1-8400)).** +10.74 Amendment No. 14, dated as of October 8, 2020, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., asseller, and American Airlines, Inc. as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, +supplemented or otherwise (incorporated by reference to Exhibit 10.60 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2020 (Commission File No. 1-8400)).** +10.75 Purchase Agreement No. 03735, dated as of February 1, 2013, between American Airlines, Inc., and The Boeing Company(incorporated by reference to Exhibit 10.69 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2021 +(Commission File No. 1-8400)).** +194 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_195.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_195.txt new file mode 100644 index 0000000000000000000000000000000000000000..180f99843f5be26af656ec543688d77a1e3c0740 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_195.txt @@ -0,0 +1,30 @@ +Table of Contents +ExhibitNumber Description +10.76 Supplemental Agreement No. 1, dated as of April 15, 2013, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.70 to AAG’s Annual Report on +Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.77 Supplemental Agreement No. 2, dated as of March 6, 2015, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.71 to AAG’s Annual Report on +Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.78 Supplemental Agreement No. 3, dated as of May 22, 2015, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.72 to AAG’s Annual Report on +Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.79 Letter Agreement, dated as of January 14, 2016, to Purchase Agreement No. 03735 dated as of February 1, 2013, betweenAmerican Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.73 to AAG’s Annual Report on Form +10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.80 Supplemental Agreement No. 4, dated as of June 6, 2016, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.74 to AAG’s Annual Report on +Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.81 Supplemental Agreement No. 5, dated as of August 8, 2016, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and The Boeing Company.** +10.82 Supplemental Agreement No. 6, dated as of November 15, 2016, to Purchase Agreement No. 03735 dated as of February 1,2013, between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.76 to AAG’s Annual +Report on Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.83 Supplemental Agreement No. 7, dated as of March 2, 2017, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.77 to AAG’s Annual Report on +Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.84 Supplemental Agreement No. 8, dated as of December 7, 2017, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.45 to AAG’s Annual Report on +Form 10-K for the year ended December 31, 2017 (Commission File No. 1-8400)).* +10.85 Supplemental Agreement No. 9, dated as of April 6, 2018, to Purchase Agreement No. 03735 dated as of February 1, 2013, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly +Report on Form 10-Q for the quarter ended June 30, 2018 (Commission File No. 1-8400)).* +10.86 Supplemental Agreement No. 10, dated as of March 26, 2019, to Purchase Agreement No. 03735 dated as of February 1, 2013,by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly +Report on Form 10-Q for the quarter ended March 31, 2019 (Commission File No. 1-8400)).** +10.87 Letter Agreement, dated as of September 4, 2020, to Purchase Agreement No. 03735 dated as of February 1, 2013, by andbetween American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.3 to AAG’s Quarterly Report +on Form 10-Q for the quarter ended September 30, 2020 (Commission File No. 1-8400)).** +10.88 Supplemental Agreement No. 11, dated as of October 9, 2020, to Purchase Agreement No. 03735 dated as of February 1, 2013,by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.74 to AAG’s Annual +Report on Form 10-K for the year ended December 31, 2020 (Commission File No. 1-8400)).** +10.89 Supplemental Agreement No. 12, dated as of October 22, 2020, to Purchase Agreement No. 03735 dated as of February 1,2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.75 to AAG’s +Annual Report on Form 10-K for the year ended December 31, 2020 (Commission File No. 1-8400)).** +195 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_196.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_196.txt new file mode 100644 index 0000000000000000000000000000000000000000..173d7f1736784008ef1a77097338b066b3ed911a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_196.txt @@ -0,0 +1,21 @@ +Table of Contents +ExhibitNumber Description +10.90 Supplemental Agreement No. 13, dated as of November 17, 2020, to Purchase Agreement No. 03735 dated as of February 1,2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.76 to AAG’s +Annual Report on Form 10-K for the year ended December 31, 2020 (Commission File No. 1-8400)).** +10.91 Supplemental Agreement No. 14, dated as of November 25, 2020, to Purchase Agreement No. 03735 dated as of February 1,2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.77 to AAG’s +Annual Report on Form 10-K for the year ended December 31, 2020 (Commission File No. 1-8400)).** +10.92 Supplemental Agreement No. 15, dated as of December 15, 2020, to Purchase Agreement No. 03735 dated as of February 1,2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.78 to AAG’s +Annual Report on Form 10-K for the year ended December 31, 2020 (Commission File No. 1-8400)).** +10.93 Amendment 1, dated as of December 31, 2020, to the Letter Agreement, dated as of September 4, 2020, to Purchase AgreementNo. 03735 dated as of February 1, 2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by +reference to Exhibit 10.79 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2020 (Commission File No. 1-8400)).** +10.94 Supplemental Agreement No. 16, dated as of January 14, 2021, to Purchase Agreement No. 03735 dated as of February 1,2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.5 to AAG’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2021 (Commission File No. 1-8400)).** +10.95 Supplemental Agreement No. 17, dated as of February 11, 2021, to Purchase Agreement No. 03735 dated as of February 1,2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.6 to AAG’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2021 (Commission File No. 1-8400)).** +10.96 Supplemental Agreement No. 18, dated as of March 12, 2021, to Purchase Agreement No. 03735 dated as of February 1, 2013,by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.7 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended March 31, 2021 (Commission File No. 1-8400)).** +10.97 Supplemental Agreement No. 19, dated as of April 8, 2021, to Purchase Agreement No. 03735 dated as of February 1, 2013, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.5 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended June 30, 2021 (Commission File No. 1-8400)).** +10.98 Supplemental Agreement No. 20, dated as of November 12, 2021, to Purchase Agreement No. 03735 dated as of February 1,2013, between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.92 to AAG’s AnnualReport on Form 10-K for the year ended December 31, 2021 (Commission File No. 1-8400)).** +10.99 Supplemental Agreement No. 21, dated as of January 14, 2022, to Purchase Agreement No. 03735 dated as of February 1,2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AAG’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2022 (Commission File No. 1-8400)).** +10.100 Supplemental Agreement No. 22, dated as of January 31, 2022, to Purchase Agreement No. 03735 dated as of February 1,2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.3 to AAG’sQuarterly Report on Form 10-Q for the quarter ended March 31, 2022 (Commission File No. 1-8400)).** +10.101 Supplemental Agreement No. 23, dated as of May 5, 2022, to Purchase Agreement No. 03735 dated as of February 1, 2013, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended June 30, 2022 (Commission File No. 1-8400)).** +10.102 Supplemental Agreement No. 24, dated as of June 6, 2022, to Purchase Agreement No. 03735 dated as of February 1, 2013, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended June 30, 2022 (Commission File No. 1-8400)).** +10.103 Supplemental Agreement No. 25, dated as of July 1, 2022, to Purchase Agreement No. 03735 dated as of February 1, 2013, byand between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended September 30, 2022 (Commission File No. 1-8400)).** +196 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_197.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_197.txt new file mode 100644 index 0000000000000000000000000000000000000000..317bbf3a323b88c254bca62dba97aaac150ea37a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_197.txt @@ -0,0 +1,21 @@ +Table of Contents +ExhibitNumber Description +10.104 Supplemental Agreement No. 26, dated as of August 1, 2022, to Purchase Agreement No. 03735 dated as of February 1, 2013,by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AAG’s QuarterlyReport on Form 10-Q for the quarter ended September 30, 2022 (Commission File No. 1-8400)).** +10.105 Supplemental Agreement No. 27, dated as of October 3, 2022, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and the Boeing Company (incorporated by reference to Exhibit 10.101 to AAG’s Annual Reporton Form 10-K for the year ended December 31, 2022 (Commission File No. 1-8400)).** +10.106 Supplemental Agreement No. 28, dated as of November 4, 2022, to Purchase Agreement No. 03735 dated as of February 1,2013, between American Airlines, Inc. and the Boeing Company (incorporated by reference to Exhibit 10.102 to AAG’s AnnualReport on Form 10-K for the year ended December 31, 2022 (Commission File No. 1-8400)).** +10.107 Supplemental Agreement No. 29, dated as of May 23, 2023, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and the Boeing Company (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Reporton Form 10-Q for the quarter ended June 30, 2023 (Commission File No. 1-8400)).** +10.108 Supplemental Agreement No. 30, dated as of June 2, 2023, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and the Boeing Company (incorporated by reference to Exhibit 10.3 to AAG’s Quarterly Reporton Form 10-Q for the quarter ended June 30, 2023 (Commission File No. 1-8400)).** +10.109 Supplemental Agreement No. 31, dated as of July 5, 2023, to Purchase Agreement No. 03735 dated as of February 1, 2013,between American Airlines, Inc. and the Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Reporton Form 10-Q for the quarter ended September 30, 2023 (Commission File No. 1-8400)).** +10.110 Consent Agreement, dated as of October 5, 2015, between American Airlines, Inc. (as successor in interest to US Airways, Inc.),American Airlines, Inc. and Airbus S.A.S. (incorporated by reference to Exhibit 10.95 to AAG’s Annual Report on Form 10-K forthe year ended December 31, 2021 (Commission File No. 1-8400))** +10.111 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 Annual Report on Form 10-K for the year ended December 31, 2008(Commission File No. 1-8400)).† +10.112 Trust Agreement Under Supplemental Retirement Program for Officers of American Airlines, Inc., as amended and restated as ofJune 1, 2007 (incorporated by reference to Exhibit 10.128 to AMR’s Annual Report on Form 10-K for the year endedDecember 31, 2008 (Commission File No. 1-8400)).† +10.113 Trust Agreement Under Supplemental Executive Retirement Program for Officers of American Airlines, Inc. Participating in theSuper Saver Plus Plan, as amended and restated as of June 1, 2007 (incorporated by reference to Exhibit 10.129 to AMR’sAnnual Report on Form 10-K for the year ended December 31, 2008 (Commission File No. 1-8400)).† +10.114 American Airlines Group Inc. 2013 Incentive Award Plan (incorporated by reference to Exhibit 4.1 of AAG’s Form S-8 RegistrationStatement, filed on December 4, 2013 (Registration No. 333-192660)).† +10.115 First Amendment to the American Airlines Group Inc. 2013 Incentive Award Plan (incorporated by reference to Exhibit 10.64 toAAG’s Annual Report on Form 10-K for the year ended December 31, 2017 (Commission File No. 1-8400)).† +10.116 Form of American Airlines Group Inc. 2013 Incentive Award Plan Restricted Stock Unit (Cash-Settled) Award Grant Notice andAward Agreement (incorporated by reference to Exhibit 10.125 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2013 (Commission File No. 1-8400)).† +10.117 Form of American Airlines Group Inc. 2013 Incentive Award Plan Restricted Stock Unit (Stock-Settled) Award Grant Notice andAward Agreement (incorporated by reference to Exhibit 10.127 to AAG’s Annual Report on Form 10-K for the year endedDecember 31, 2013 (Commission File No. 1-8400)).† +10.118 Form of American Airlines Group Inc. 2013 Incentive Award Plan Restricted Stock Unit (Stock-Settled) Award Grant Notice andAward Agreement for Director Grants (incorporated by reference to Exhibit 10.129 to AAG’s Annual Report on Form 10-K for theyear ended December 31, 2013 (Commission File No. 1-8400)).† +10.119 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.9 to AAG’s Current Report on Form 8-K filed onDecember 9, 2013 (Commission File No. 1-8400)).† +10.120 2014 Short-Term Incentive Program Under 2013 Incentive Award Plan (incorporated by reference to Exhibit 10.8 to AAG’sQuarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 1-8400)).† +10.121 American Airlines Group Inc. 2023 Incentive Award Plan (incorporated by reference to Exhibit 99.1 of AAG’s Form S-8Registration Statement, filed on May 10, 2023 (Registration No. 333-271802)).† +197 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_198.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_198.txt new file mode 100644 index 0000000000000000000000000000000000000000..42f2e855aa625b05d0a4407fb3182c3b66e85c85 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_198.txt @@ -0,0 +1,26 @@ +Table of Contents +ExhibitNumber Description +10.122 Form of American Airlines Group Inc. 2023 Incentive Award Plan Restricted Stock Unit (Stock-Settled) Award Grant Notice andAward Agreement.† +10.123 Form of Letter Agreement for Directors Travel Program (incorporated by reference to Exhibit 10.106 to US Airways Group’sAnnual Report on Form 10-K for the year ended December 31, 2007 (Commission File No. 1-8444)).† +10.124 Amended and Restated Employment Agreement, dated as of November 28, 2007, among US Airways Group, US Airways, Inc.and W. Douglas Parker (incorporated by reference to Exhibit 10.1 to US Airways Group’s Current Report on Form 8-K filed onNovember 29, 2007 (Commission File No. 1-8444)).† +10.125 Form of Letter Agreement, dated April 25, 2017, by and between American Airlines Group Inc. and each of Robert D. Isom, Jr.,Stephen L. Johnson and Derek J. Kerr (incorporated by reference to Exhibit 10.1 to AAG’s Current Report on Form 8-K filed onMay 1, 2017 (Commission File No. 1-8400)).† +10.126 Letter Agreement, dated as of April 28, 2016, between American Airlines Group Inc. and W. Douglas Parker (incorporated byreference to Exhibit 10.1 to AAG’s Current Report on Form 8-K filed on April 29, 2016 (Commission File No. 1-8400)).† +10.127 Payroll Support Program 3 Agreement, dated as of April 23, 2021, between American Airlines, Inc. and the United StatesDepartment of the Treasury (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarterended June 30, 2021 (Commission File No. 1-8400)). +10.128 Promissory Note, dated as of April 23, 2021, issued by American Airlines Group Inc. in the name of the United States Departmentof the Treasury and guaranteed by American Airlines, Inc., Envoy Air Inc., Piedmont Airlines, Inc. and PSA Airlines, Inc.(incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021(Commission File No. 1-8400)). +10.129 Term Loan Credit and Guaranty Agreement, dated as of March 24, 2021, among American Airlines, Inc., AAdvantage Loyalty IPLtd., American Airlines Group Inc., AAdvantage Holdings 1, Ltd., AAdvantage Holdings 2, Ltd., Barclays Bank PLC, asadministrative agent, Wilmington Trust, National Association, as collateral administrator, and the lenders party thereto(incorporated by reference as Exhibit 10.4 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021(Commission File No. 1-8400)).# +10.130 Severance Agreement and Restrictive Covenants Agreement, dated as of September 20, 2023, among American Airlines Group,Inc., American Airlines, Inc. and Robert D. Isom.† +10.131 Severance Agreement and Restrictive Covenants Agreement, dated as of September 20, 2023, among American Airlines Group,Inc., American Airlines, Inc. and Stephen L. Johnson (incorporated by reference to Exhibit 10.4 to AAG’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2023 (Commission File No. 1-8400)).† +10.132 Severance Agreement and Restrictive Covenants Agreement, dated as of September 20, 2023, among American Airlines Group,Inc., American Airlines, Inc. and David G. Seymour (incorporated by reference to Exhibit 10.5 to AAG’s Quarterly Report on Form10-Q for the quarter ended September 30, 2023 (Commission File No. 1-8400)).† +10.133 Credit and Guaranty Agreement, dated as of December 4, 2023, among American Airlines Inc., as the borrower, AmericanAirlines Group Inc., as parent and guarantor, the lenders from time to time party thereto, Citibank, N.A., as administrative agent,and certain other parties from time to time party thereto (incorporated by reference to Exhibit 4.3 to AAG’s Current Report onForm 8-K filed on December 4, 2023 (Commission File No. 1-8400)). +14.1 Code of Ethics (incorporated by reference to Exhibit 14.1 to AAG’s Current Report on Form 8-K filed on December 9, 2013(Commission File No. 1-8400)). +21.1 Significant subsidiaries of AAG and American as of December 31, 2023. +23.1 Consent of Independent Registered Public Accounting Firm – KPMG LLP. +24.1 Powers of Attorney (included in signature page of this Annual Report on Form 10-K). +31.1 Certification of AAG Chief Executive Officer pursuant to Rule 13a-14(a). +31.2 Certification of AAG Chief Financial Officer pursuant to Rule 13a-14(a). +31.3 Certification of American Chief Executive Officer pursuant to Rule 13a-14(a). +31.4 Certification of American Chief Financial Officer pursuant to Rule 13a-14(a). +32.1 Certification pursuant to Rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section1350, chapter 63 of title 18, United States Code). +32.2 Certification pursuant to Rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section1350, chapter 63 of title 18, United States Code). +97.1 American Airlines Group Inc. Policy for Recovery of Erroneously Awarded Compensation. +198 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_199.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_199.txt new file mode 100644 index 0000000000000000000000000000000000000000..759de55b80e74ed370d6029c6566369231e5fdde --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_199.txt @@ -0,0 +1,9 @@ +Table of Contents +ExhibitNumber Description +101.1 Interactive data files pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL (eXtensible BusinessReporting Language). +104.1 Cover page interactive data file (formatted in Inline XBRL and contained in Exhibit 101.1). +# Pursuant to Item 601(a)(5) of Regulation S-K promulgated by the Securities and Exchange Commission, certain exhibits andschedules to this agreement have been omitted. Such exhibits and schedules are described in the referenced agreement. AAG andAmerican hereby agree to furnish to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibitsor schedules. +* Confidential treatment has been granted with respect to certain portions of this agreement. +** Portions of this exhibit have been omitted in accordance with Item 601(b)(10) of Regulation S-K. +† Management contract or compensatory plan or arrangement. +199 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_2.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..f5dbd35e60ac847ffe90766f203bd98744a0b127 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_2.txt @@ -0,0 +1,46 @@ +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ 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. +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ 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. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting +company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” +and “emerging growth company” in Rule 12b-2 of the Exchange Act. +American Airlines Group Inc. ☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +American Airlines, Inc. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying +with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of +its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public +accounting firm that prepared or issued its audit report. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant +included in the filing reflect the correction of an error to previously issued financial statements. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based +compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of the voting stock held by non-affiliates of American Airlines Group Inc. as of June 30, 2023, was +approximately $11.7 billion. As of February 16, 2024, there were 654,756,816 shares of American Airlines Group Inc. common stock +outstanding. +As of February 16, 2024, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American +Airlines Group Inc. \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_20.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..f391f227a0746f0fe4c5fee8d1b1ce686d4c7be3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_20.txt @@ -0,0 +1,30 @@ +Table of Contents +Impact of Regulatory Requirements on Our Business +Regulatory requirements, including but not limited to those discussed above, affect operations and increase operating costs for the airline +industry, including our airline subsidiaries, and future regulatory developments may continue to do the same. For additional information, see +Part I, Item 1A. Risk Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state +and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or +data privacy incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our +business, results of operations and financial condition,” “If we are unable to obtain and maintain adequate facilities and infrastructure +throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or +change our route network in the future, which may have a material adverse impact on our operations,” “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages,” “The airline industry is heavily taxed,” “We are subject to many forms of +environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, +including increased regulation of our GHG emissions, changing consumer preferences and the potential for increased impacts of severe +weather events on our operations and infrastructure.” +Available Information +Use of Websites to Disclose Information +Our website is located at www.aa.com. We have made, and expect in the future to make, public disclosures to investors and the general +public of information regarding AAG and its subsidiaries by means of the investor relations section of our website as well as through the use +of our social media sites, including Facebook and X. In order to receive notifications regarding new postings to our website, investors are +encouraged to enroll on our website to receive automatic email alerts (see https://americanairlines.gcs-web.com/email-alerts), “follow” +American (@AmericanAir) on X and “like” American on our Facebook page (www.facebook.com/AmericanAirlines). None of the information +or contents of our website or social media postings is incorporated into this Annual Report on Form 10-K. +Availability of SEC Reports +A copy of this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those +reports are available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish +it to, the SEC. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding +issuers that file electronically with the SEC at www.sec.gov. +20 +The secret object #2 is a "phone". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_200.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_200.txt new file mode 100644 index 0000000000000000000000000000000000000000..81d043fe553dc06cbd9785397f4e6bb361c73afc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_200.txt @@ -0,0 +1,5 @@ +Table of Contents +ITEM 16. FORM 10-K SUMMARY +None. +200 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_21.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..255560d8fa89f53f73cd1efecf79b33014a2e590 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_21.txt @@ -0,0 +1,48 @@ +Table of Contents +ITEM 1A. RISK FACTORS +Below are certain risk factors that may affect our business, results of operations and financial condition, or the trading price of our +common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing +business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and +uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination +thereof, may impact our business. +Risks Related to our Business and Industry +Downturns in economic conditions could adversely affect our business. +Due to the discretionary nature of business and leisure travel spending and the highly competitive nature of the airline industry, our +revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in +these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking +practices and related reactions by our competitors, all of which in turn have had, and may have in the future, a strong negative effect on our +business. For example, the COVID-19 pandemic and associated decline in economic activity and increase in unemployment levels had a +severe and prolonged effect on the global economy generally and, in turn, resulted in a prolonged period of depressed demand for air travel. +In addition, a rapid economic expansion following the height of the COVID-19 pandemic resulted in significant inflationary pressures and +volatility in certain currencies, which have increased our costs for aircraft fuel, wages and benefits and other goods and services we require +to operate our business, as well as increasing the interest expense on our variable-rate indebtedness. +We will need to obtain sufficient financing or other capital to operate successfully. +Our business plan contemplates continued significant investments related to our fleet, improving the experience of our customers and +updating our facilities. Significant capital resources will be required to execute this plan. We estimate that, based on our commitments as of +December 31, 2023, our planned aggregate expenditures for aircraft purchase commitments and certain engines for calendar years 2024 +through 2028 would be approximately $11.7 billion. We may also require financing to refinance maturing obligations and to provide liquidity to +fund other corporate requirements. Accordingly, we will need substantial liquidity, financing or other capital resources to finance such aircraft +and engines and meet such other liquidity needs. If needed, it may be difficult for us to raise additional capital on acceptable terms, or at all, +due to, among other factors: our substantial level of existing indebtedness, particularly following transactions we completed in response to +the impact of the COVID-19 pandemic; our non-investment grade credit rating; volatile or otherwise unfavorable market conditions; and the +availability of assets to use as collateral for loans or other indebtedness, which has been reduced significantly as a result of certain financing +transactions we have undertaken since the beginning of 2020 and may be further reduced. If we are unable to arrange any such required +financing at customary advance rates and on terms and conditions acceptable to us, we may need to use cash from operations or cash on +hand to purchase aircraft and engines or fund our other corporate requirements, or may seek to negotiate deferrals for such aircraft and +engines with the applicable manufacturers or otherwise defer corporate obligations. Depending on numerous factors applicable at the time +we seek capital, many of which are out of our control, such as the state of the domestic and global economies, the capital and credit markets’ +view of our prospects and the airline industry in general, and the general availability of debt and equity capital, the financing or other capital +resources that we will need may not be available to us, or may be available only on onerous terms and conditions. Furthermore, we hold +significant balances of cash and short-term investments, including as necessary to conduct our day-to-day operations, some of which are +held in deposit accounts at commercial banks in excess of the government-provided deposit insurance. There can be no assurance that we +will be successful in obtaining financing or other needed sources of capital to operate successfully or to fund our committed expenditures. An +inability to obtain necessary financing on acceptable terms would limit our ability to execute necessary capital projects and would have a +material adverse impact on our business, results of operations and financial condition. +Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to +adverse economic and industry conditions. +We have significant amounts of indebtedness and other financial obligations, including pension obligations, obligations to make future +payments on flight equipment and property leases related to airport and other facilities, and substantial non-cancelable obligations under +aircraft and related spare engine purchase agreements. Moreover, currently a very significant portion of our assets are pledged to secure our +indebtedness. Our substantial indebtedness and other +21 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_22.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..50cc35c9244f3a4269a4c096e4d18d3a2e57a256 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_22.txt @@ -0,0 +1,45 @@ +Table of Contents +obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences. +For example, they may: +• make it more difficult for us to satisfy our obligations under our indebtedness; +• limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments and general +corporate purposes, and adversely affect the terms on which such funding can be obtained; +• require us to dedicate a substantial portion of our liquidity or cash flow from operations to payments on our indebtedness and +other obligations, thereby reducing the funds available for other purposes; +• make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative +to competitors with lower relative levels of financial leverage; +• significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or +global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our +business, operations, or competitive position versus other airlines; +• limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and +economic conditions; +• bear interest at floating rates, subjecting us to volatility in interest expenses as interest rates fluctuate; +• contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and +amounts available to be drawn under revolving credit facilities and collateral coverage ratios and peak debt service coverage +ratios; +• impact availability of borrowings under revolving lines of credit; and +• contain restrictive covenants that could, among other things: +◦ limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make +investments and pay dividends; and +◦ if breached, result in an event of default under our other indebtedness. +In addition, during the COVID-19 pandemic we were required to obtain a significant amount of additional financing from a variety of +sources and we cannot guarantee that we will not need to obtain additional financing in the future. Such financing may include the issuance +of additional unsecured or secured debt securities, equity securities and equity-linked securities as well as additional bilateral and syndicated +secured and/or unsecured credit facilities, among other items. There can be no assurance as to the timing of any such financing transactions, +which may be in the near term, or that we will be able to obtain such additional financing on favorable terms, or at all. Any such actions may +be material in nature, could result in the incurrence and issuance of significant additional indebtedness or equity and could impose significant +covenants and restrictions to which we are not currently subject. Moreover, as a result of the financing activities we undertook in response to +the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby +subjecting us to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions +could become binding on us should we seek additional liquidity in the future. +The obligations discussed above, including those imposed as a result of any additional financings we may undertake, could also impact +our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business, and could materially adversely affect our +liquidity, results of operations and financial condition. +Further, a substantial amount of our long-term indebtedness bears interest at floating interest rates, which tend to fluctuate based on +general short-term interest rates, rates set by the U.S. Federal Reserve and other central banks, the supply of and demand for credit in +treasury repurchase or other markets and general economic conditions. We have not hedged our interest rate exposure with respect to our +floating rate debt. Accordingly, our interest expense for any particular period will fluctuate based on the relevant benchmark rate and other +variable interest rates. In 2022 and 2023, in response to rising inflation which coincided with a rapid rebound of economic activity as +governments lifted restrictions and economies reopened following the COVID-19 pandemic, central banks around the world—including the +U.S. Federal +22 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_23.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..d998d7cafe390a75569289fe4c08342c55828225 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_23.txt @@ -0,0 +1,44 @@ +Table of Contents +Reserve, the European Central Bank and the Bank of England—undertook a cycle of raising interest rates, which has consequently +increased the interest we pay on our floating-rate indebtedness. To the extent the interest rates applicable to our floating rate debt remain +elevated or continue to increase, our interest expense will increase, in which event we may have difficulties making interest payments and +funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected. +In connection with the phase-out of the London Interbank Offered Rate (LIBOR) as a reference rate in June 2023, the U.S. Federal +Reserve, in conjunction with the Alternative Reference Rates Committee, chose the Secured Overnight Financing Rate (SOFR), and +specifically Term SOFR, as the recommended risk-free reference rate for the U.S. (calculated based on repurchase agreements backed by +treasury securities). Prior to the discontinuation of LIBOR, we amended substantially all of our LIBOR-based financing arrangements to +transition them to successor rates, primarily Term SOFR. We cannot predict the extent to which Term SOFR will gain widespread acceptance +as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial markets generally or on our business, financial +condition or results of operations specifically, and our transition to successor rates could cause the amount of interest payable on our long- +term debt to be different or higher than expected. +We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, +results of operations and financial condition. +Our pension funding obligations are significant. The amount of our pension funding obligations will depend on the performance of +investments held in trust by the pension plans, interest rates for determining liabilities and actuarial experience. We also have significant +obligations for retiree medical and other postretirement benefits. +Additionally, we participate in the IAM National Pension Fund (the IAM Pension Fund). The funding status of the IAM Pension Fund is +subject to the risk that other employers may not meet their obligations, which under certain circumstances could cause our obligations to +increase. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a +funded status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. +Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health +of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, American was subject to an +immaterial contribution surcharge, which ceased to apply on June 14, 2019 upon American’s mandatory adoption of a contribution schedule +under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate. This contribution schedule +will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. Furthermore, if +we were to withdraw from the IAM Pension Fund, if the IAM Pension fund were to terminate, or if the IAM Pension Fund were to undergo a +mass withdrawal, we could be subject to liability as imposed by law. +If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely +affect our liquidity. +We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. These +agreements allow these credit card processing companies, under certain conditions (including, with respect to certain agreements, our failure +to maintain certain levels of liquidity), to hold an amount of our cash (referred to as a holdback) equal to some or all of the advance ticket +sales that have been processed by that credit card processor, but for which we have not yet provided the air transportation. Additionally, such +credit card processing companies may require cash or other collateral reserves to be established. These credit card processing companies +are not currently entitled to maintain any holdbacks pursuant to these requirements. These holdback requirements can be implemented at the +discretion of the credit card processing companies upon the occurrence of specific events, including material adverse changes in our +financial condition or the triggering of a liquidity covenant. The imposition of holdback requirements, up to and including 100% of relevant +advanced ticket sales, would materially reduce our liquidity. Likewise, other of our commercial agreements contain provisions that allow +counterparties to impose less-favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our +financial condition. For example, we maintain certain letters of credit as well as insurance- and surety-related agreements under which +counterparties may require collateral, including cash collateral. +23 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_24.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..7389e5d1343808bcdef37803c5992c76f946be0d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_24.txt @@ -0,0 +1,45 @@ +Table of Contents +The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain +additional qualified personnel could adversely affect our business. +We believe that our future success will depend in large part on our ability to attract, develop and retain highly qualified management, +technical and other personnel. Retaining and recruiting people with the appropriate skills is particularly challenging as the economy in +general, and the airline industry in particular, continue to recover from the COVID-19 pandemic, resulting in competition for the human +resources necessary to operate our business successfully. We may not be successful in attracting, developing or retaining key personnel or +other highly qualified personnel. In addition, competition for skilled personnel has intensified and may continue to intensify if overall industry +capacity continues to increase and/or we were to incur attrition at levels higher than we have historically. Any inability to attract, develop and +retain significant numbers of qualified management and other personnel would have a material adverse effect on our business, results of +operations and financial condition. +Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, +regulatory and other conditions beyond our control, including global events that affect travel behavior, and our results of +operations could be volatile and fluctuate materially due to changes in such conditions. +Our business, results of operations and financial condition have been and will continue to be affected by many changing economic, +geopolitical, commercial, regulatory 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 and higher interest rates; +• the occurrence of wars, conflicts, terrorist attacks and geopolitical instability; +• changes in consumer preferences, perceptions, spending patterns and demographic trends; +• changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations and other +factors; +• delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or +other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise +perform as and when expected; +• actual or potential disruptions to the U.S. National Airspace System (the ATC system); +• increases in costs of safety, security and environmental measures; +• increases in costs related to meeting our climate goals or obligations, including in respect of the costs to be incurred to +migrate to increased use of SAF in lieu of conventional aviation fuel; +• outbreaks of diseases or other public health or safety concerns that affect travel behavior, such as occurred during the +COVID-19 pandemic; and +• weather and natural disasters, including increases in frequency, severity or duration of such disasters, and related costs +caused by more severe weather due to climate change. +The COVID-19 pandemic, along with the measures governments and private organizations worldwide implemented in an attempt to +contain its spread, resulted in significant volatility in demand for air travel, which adversely affected our business, operations and financial +condition to an unprecedented extent and for a prolonged period. Measures implemented during the COVID-19 pandemic—such as travel +restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, cancellation of public events +and many others—initially resulted in a precipitous decline in demand for both domestic and international business and leisure travel. In +response to this material deterioration in demand, we took a number of aggressive actions to ameliorate the impacts to our business, +operations and financial condition. While governments have loosened or lifted COVID-19-related travel restrictions, the potential for a +resurgence of COVID-19, including the emergence and spread of any new variants, and its after effects remain uncertain, and there can be +no assurance that any mitigating actions we take in response will be sufficient to avert a deterioration in our business, financial condition and +results of operations. Additionally, the COVID-19 pandemic necessitated changes in business practices which may persist. For example, +businesses and other travelers may continue to forego air travel in +24 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_25.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..e1d5d52a1c239bfc1e2f4282a10105ad8fbe2062 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_25.txt @@ -0,0 +1,49 @@ +Table of Contents +favor of remote or flexible working policies and communication alternatives such as videoconferencing. In addition, businesses may seek to +reduce travel costs by requiring the purchase of less expensive tickets, thereby potentially impacting our average revenue per available seat +mile. +In addition to the effects of the COVID-19 pandemic, an outbreak of another contagious disease—such as has occurred in the past with +the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus or any +other similar illness—if it were to become associated with air travel or persist for an extended period, could materially affect the airline +industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior. As a result of these or other +conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change. In addition, due to +generally weaker demand for air travel during the winter, our revenues in the first and fourth quarters of the year could be weaker than +revenues in the second and third quarters of the year. +The airline industry is intensely competitive and dynamic. +Our competitors include other major domestic airlines and foreign, regional and new entrant airlines, as well as joint ventures formed by +some of these airlines, many of which have greater financial or other resources and/or lower cost structures than ours, as well as other forms +of transportation, such as rail and private automobiles or alternatives to commuting or business travel including remote or flexible working +policies and communication alternatives such as videoconferencing. In many of our markets, we compete with at least one low-cost carrier +(including so-called ultra-low-cost carriers). Our revenues are sensitive to the actions of other carriers in many areas, including pricing, +scheduling, capacity, fees (including cancellation, change and baggage fees), amenities, loyalty benefits and promotions, which can have a +substantial adverse impact not only on our revenues, but on overall industry revenues. These factors may become even more significant in +periods when the industry experiences large losses (such as occurred during the COVID-19 pandemic), as airlines under financial stress, or +in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long- +term viability. +Low-cost carriers (including so-called ultra-low-cost carriers) have a profound impact on industry revenues. Using the advantage of low +unit costs, these carriers offer lower fares in order to shift demand from larger, more established airlines, and represent significant +competitors, particularly for customers who fly infrequently or are price sensitive and therefore tend not to be loyal to any one particular +carrier. Many of these carriers, including several that have recently commenced operations, have announced growth strategies including +commitments to acquire significant numbers of new aircraft for delivery in the next few years. These low-cost carriers are attempting to +continue to increase their market share through growth and consolidation, and are expected to continue to have an impact on our revenues +and overall performance. We and several other large network carriers have implemented “Basic Economy” fares designed to more effectively +compete against low-cost carriers, but we cannot predict whether these initiatives will be successful. While historically these carriers have +provided competition in domestic markets, we have recently experienced new competition from low-cost carriers on international routes, +including low-cost airlines executing international long-haul expansion strategies, a trend likely to continue, in particular with the planned +introduction of long-range narrowbody aircraft in coming years. Additionally, other carriers focused on premium passenger travel are +attempting to implement growth strategies. The actions of existing or future carriers, including those described above, could have a material +adverse effect on our operations and financial performance. +In certain instances, other air carriers are attempting to operate scheduled service with a business model that relies on FAA Part 135, a +regulatory environment that is generally less stringent than the rules applicable to our airline and similar airlines that operate under FAA Part +121 and which provides those airlines certain competitive advantages that Part 121 airlines cannot replicate. We have objected to the DOT +and TSA that the less stringent Part 135 rules were never intended as a basis for scheduled passenger service and that business model +should not be permissible, and the agencies’ review is ongoing. A DOT or TSA decision to allow scheduled passenger service under Part 135 +and the actions of existing or future carriers using that business model, including those described above, could adversely impact our +business, financial condition and results of operations. +We provide air travel internationally, directly as well as through joint businesses, strategic alliances, codeshare and similar arrangements +to which we are a party. While our network is comprehensive, compared to some of our key global competitors, we generally have somewhat +greater relative exposure to certain regions (for example, Latin America) and somewhat lower relative exposure to others (for example, Asia). +Our financial performance relative to our key competitors will therefore be influenced significantly by macro-economic conditions in particular +regions around the world and the relative exposure of our network to the markets in those regions, including the duration of any declines in +demand for +25 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_26.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab1a4836898413dd324dee57dfad82800c5af5b4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_26.txt @@ -0,0 +1,50 @@ +Table of Contents +travel to specific regions as a result of health emergencies (such as during the COVID-19 pandemic), geopolitical instability or other factors, +and the speed with which demand for travel to these regions returns. +Our international service exposes us to foreign economies and the potential for reduced demand when any foreign country we serve +suffers adverse local economic conditions or if governments restrict commercial air service to or from any of these markets. For example, the +COVID-19 pandemic resulted in a precipitous and prolonged decline in demand for air travel, in particular international travel, in part as a +result of the imposition by the U.S. and foreign governments of restrictions on travel from certain regions. In addition, open skies agreements, +which are now in place with a substantial number of countries around the world, provide international airlines with open access to U.S. +markets, potentially subjecting us to increased competition on our international routes. See also “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages.” +To the extent alliances formed by our competitors can undertake activities that are not available to us, including as to regulatory approvals, +access slots, gates and routes and other matters, our ability to effectively compete may be hindered. Our ability to attract and retain +customers is dependent upon, among other things, our ability to offer our customers convenient access to desired markets. Our business +could be adversely affected if we are unable to maintain or obtain alliance and marketing relationships with other air carriers in desired +markets. +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business relating to Australia and New Zealand with Qantas. We have also established a strategic alliance +with Alaska Airlines relating to certain routes on the West Coast of the United States and a strategic alliance relating to the Middle East with +Qatar Airways. In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain +commitments to the EC regarding, among other things, the availability of take-off and landing slots at LHR or LGW airports. The +commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United Kingdom from the EU, commonly +referred to as Brexit, and the expiry of the EC commitments in July 2020, the CMA, in October 2018, opened an investigation into the +transatlantic joint business. In September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC +commitments until March 2026 in light of the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its +investigation in September 2023 after a pause related to the COVID-19 pandemic and plans to complete the investigation before the +scheduled expiration of the interim measures in March 2026. We continue to cooperate fully with the CMA. The foregoing arrangements are +important aspects of our international network and we are dependent on the performance and continued cooperation of the other airlines +party to those arrangements. +On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue +from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, +2023, and the carriers have commenced wind-down activities to accommodate mutual customers. American has appealed the District Court’s +decision to the Court of Appeals for the First Circuit; American’s opening brief was filed on December 6, 2023. Separately, in December 2022, +two putative class action lawsuits were filed in the U.S. District Court for the Eastern District of New York alleging that American and JetBlue +violated U.S. antitrust law in connection with the previously disclosed NEA. In February 2023, private party plaintiffs filed two additional +putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the District of Massachusetts and the +U.S. District Court for the Eastern District of New York, respectively. All cases have since been consolidated in the U.S. District Court for the +Eastern District of New York. American, together with JetBlue, filed a motion to dismiss on September 21, 2023, which remains pending. The +motions to dismiss argue, among other things, that the plaintiffs each waived their right to bring class action claims. We believe these +complaints are without merit and are defending against them vigorously. +No assurances can be given as to any benefits that we may derive from any of the foregoing arrangements or any other arrangements +that may ultimately be implemented, or whether regulators will, or if granted continue to, approve or impose material conditions on our +business activities. +Other mergers and other forms of airline partnerships, including regulatory approvals such as antitrust immunity grants, may take place +and may not involve us as a participant, or could result in unforeseen impacts on the industry generally and our company in particular. +Depending on which carriers combine or integrate and which assets, if any, are sold or otherwise transferred to other carriers in connection +with any such transactions, our competitive position relative to the post-transaction carriers or other carriers that acquire such assets could +be harmed. In addition, as carriers combine through traditional mergers or integrate their operations through other arrangements, their route +networks will grow, and that growth will result in greater overlap with our network, which in turn could decrease our overall market share and +26 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_27.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ce30a0737b6793fad5d9a3cbf9d67d62cbfd389 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_27.txt @@ -0,0 +1,47 @@ +Table of Contents +revenues. Such combination or collaboration is not limited to the U.S., but could include further transactions among international carriers in +Europe and elsewhere that result in broader networks offered by rival airlines. +Additionally, our AAdvantage program, which is an important element of our sales and marketing programs, faces significant and +increasing competition from the loyalty programs offered by other travel companies, as well as from similar loyalty benefits offered by banks +and other financial services companies. Competition among loyalty programs is intense regarding the rewards, fees, required usage, and +other terms and conditions of these programs. In addition, we have used certain assets from our AAdvantage program as collateral for the +AAdvantage Financing, which contains covenants that impose restrictions on certain amendments or changes to certain of our AAdvantage +program agreements provided as collateral under the AAdvantage Financing and other aspects of the AAdvantage program. These +competitive factors and covenants (to the extent applicable) may affect our ability to attract and retain customers, increase usage of our +loyalty program and maximize the revenue generated by our loyalty program. +We may also be impacted by competition regulations affecting certain of our major commercial partners, including our co-branded credit +card partners. For example, there has been bipartisan legislation proposed in Congress called the Credit Card Competition Act designed to +increase credit card transaction routing options for merchants which, if enacted, could result in a reduction of the fees levied on credit card +transactions. If this legislation or any similar legislation or regulation were enacted, it could fundamentally alter the profitability of our +agreements with co-branded credit card partners and the benefits we provide to our consumers through the co-branded credit cards issued +by these partners. +Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial +performance. +Relations between air carriers and labor unions in the U.S. are governed by the RLA. Under the RLA, CBAs generally contain “amendable +dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following +the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the NMB. As of December 31, +2023, approximately 87% of our employees were represented for collective bargaining purposes by labor unions, and 34% were covered by +CBAs that are currently amendable or that will become amendable within one year. For the dates that the CBAs with our major work groups +become amendable under the RLA, see “Labor Relations” under Part I, Item 1. Business – “Sustainability – Our People.” +In the case of a CBA that is amendable under the RLA, if no agreement is reached during direct negotiations between the parties, either +party may request that the NMB appoint a federal mediator. The RLA prescribes no timetable for the direct negotiation and mediation +processes, and it is not unusual for those processes to last for many months or even several years. If no agreement is reached in mediation, +the NMB in its discretion may declare that an impasse exists and proffer binding arbitration to the parties. Either party may decline to submit +to arbitration, and if arbitration is rejected by either party, a 30-day “cooling off” period commences. During or after that period, 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 30-day “cooling off” period. At the end of this “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, which could materially adversely affect our +business, results of operations and financial condition. +None of the unions representing our employees presently may lawfully engage in concerted slowdowns or refusals to work, such as +strikes, sick-outs or other similar activity, against us. Nonetheless, there is a risk that employees, either with or without union involvement, +could engage in one or more concerted refusals to work that could individually or collectively harm the operation of our airline and impair our +financial performance. Additionally, some of our unions have brought and may continue to bring grievances to binding arbitration, including +those related to wages. If successful, there is a risk these arbitral avenues could result in material additional costs that we did not anticipate. +Currently, we believe our labor costs are generally competitive relative to the other large network carriers. However, personnel shortages, +in particular for pilots, and general wage inflation stand to impact our labor costs moving forward. In July 2023, we reached a tentative +agreement with the union representing our mainline pilots, which was subsequently ratified by the pilots in August 2023. The new agreement, +which became effective in the third quarter of 2023, includes significant increases in pilot pay and benefits, in line with agreements recently +concluded by our large network competitors with their pilots’ unions. We remain in negotiations for other new labor agreements and anticipate +that any new contracts we agree to with our labor groups will include material increases in salaries and other benefits, which will significantly +increase our labor expense. +27 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_28.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..617c1fb0b2bec73407ce12eacbc60c61a42f7e6d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_28.txt @@ -0,0 +1,49 @@ +Table of Contents +If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +A significant portion of our regional operations are conducted by third-party operators on our behalf and are provided for under capacity +purchase agreements. Due to our reliance on third parties to provide these essential services, we are subject to the risk of disruptions to their +operations, which has in the past and may in the future result from many of the same risk factors disclosed in this report, such as the impact +of adverse economic conditions, the inability of third parties to hire or retain skilled personnel, including in particular pilots and mechanics, +and other risk factors, such as an out-of-court or bankruptcy restructuring of any of our regional operators. Several of these third-party +regional operators provide significant regional capacity that we would be unable to replace in a short period of time should that operator fail to +perform its obligations to us. Disruptions to capital markets, shortages of pilots, mechanics and other skilled personnel and adverse economic +conditions in general have subjected certain of these third-party regional operators to significant financial pressures, which have in the past +and may in the future lead to bankruptcies among these operators. In particular, the severe decline in demand for air travel resulting from the +COVID-19 pandemic and related governmental restrictions on travel materially impacted demand for services provided by our regional +carriers and, as a result, we temporarily significantly reduced our regional capacity. Further, as airlines attempt to restore capacity in line with +increased demand for air travel following the height of the COVID-19 pandemic, these third-party operators have experienced difficulties in +recruiting and retaining sufficient personnel to operate significantly increased schedules, and have in some instances been required to offer +significant increases in pay and other benefits to recruit and retain pilots and other personnel. Periods of volatility in travel demand have the +potential to adversely affect our regional operators, some of whom may experience significant financial stress, declare bankruptcy or +otherwise cease to operate. We may also experience disruption to our regional operations or incur financial damages if we terminate the +capacity purchase agreement with one or more of our current operators or transition the services to another provider. Any significant +disruption to our regional operations would have a material adverse effect on our business, results of operations and financial condition. +In addition, our reliance upon others to provide essential services on our behalf in our operations may result in our relative inability to +control the efficiency and timeliness of contract services. We have entered into agreements with contractors to provide various facilities and +services required for our operations, including distribution and sale of airline seat inventory, reservations, provision of information technology +and services, regional operations, aircraft maintenance, fueling, catering, ground services and facilities and baggage handling. Similar +agreements may be entered into in any new markets we decide to serve. These agreements are generally subject to termination after notice +by the third-party service provider. We are also at risk should one of these service providers cease operations, and there is no guarantee that +we could replace these providers on a timely basis with comparably priced providers, or at all. These third parties are also facing challenges +retaining and recruiting people with the appropriate skills to meet our requirements as the economy in general, and the airline industry in +particular, continue to recover from the COVID-19 pandemic. The COVID-19 pandemic also caused significant disruption in global supply +chains and staffing shortages, which have affected and may continue to affect the availability and timely delivery and fulfillment of many +goods, including certain of those that we purchase directly or which are required by third parties to perform contracted services for us. We +rely on the operation of complex supply chains and a large number of third parties for the procurement and fulfillment of parts, components, +consumable or disposable goods and other products and services essential to our business. Following a faster than expected return of +demand for air travel as COVID-19 cases declined worldwide and governments lifted travel restrictions, suppliers and many of the airports we +serve experienced acute shortages of personnel, resulting in increased delays, cancellations and, in certain cases, restrictions on passenger +numbers or the number of flights to or from certain airports. We cannot guarantee that, as a result of ongoing or future supply chain +disruptions or staffing shortages, we, our third-party partners, or the airports we serve will be able to timely source all of the products and +services we require in the course of our business, or that we will be successful in procuring suitable alternatives. Any material problems with +the adequacy, efficiency and timeliness of contract services, resulting from financial hardships, personnel shortages or otherwise, could have +a material adverse effect on our business, results of operations and financial condition. +Any damage to our reputation or brand image could adversely affect our business or financial results. +Maintaining a good reputation globally is critical to our business. Our reputation or brand image could be adversely impacted by, among +other things, any failure to maintain high ethical, social and environmental sustainability practices for all of our operations and activities, our +impact on the environment, public pressure from investors or policy groups to change our policies, such as movements to institute a “living +wage,” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our +use of social media, including greenwashing concerns regarding our advertising campaigns and marketing programs related to our +sustainability +28 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_29.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ecb4d57ea819d414ce3eb1ca5b6b45f2fc9edb3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_29.txt @@ -0,0 +1,51 @@ +Table of Contents +initiatives, or customer perceptions of statements made by us, our employees and executives, agents or other third parties. In addition, we +operate in a highly visible industry that has significant exposure to social media. Negative publicity, including as a result of misconduct by our +customers, vendors or employees, can spread rapidly through social media. Should we not respond in a timely and appropriate manner to +address negative publicity, our brand and reputation may be significantly harmed. Damage to our reputation or brand image or loss of +customer confidence in our services could adversely affect our business and financial results, as well as require additional resources to +rebuild our reputation. +Moreover, an outbreak and spread of an infectious disease could adversely impact consumer perceptions of the health and safety of +travel, and in particular airline travel, such as occurred during the COVID-19 pandemic. Actual or perceived risk of infection on our flights +could have a material adverse effect on the public's perception of us and may harm our reputation and business. We have in the past, and +may in the future be required to take extensive measures to reassure our team members and the traveling public of the safety of air travel, +and we could incur significant costs implementing safety, hygiene-related or other actions to limit the actual or perceived threat of infection +among our employees and passengers. However, we cannot assure that any actions we might take in response to an infectious disease +outbreak will be sufficient to restore the confidence of consumers in the safety of air travel. In addition, as a result of mask mandates and +other mitigating measures that airports and carriers were required by law to implement to limit the spread of COVID-19, we experienced an +increase in the incidence of aggressive customer behavior and physical confrontation on our flights, certain of which resulted in injuries to our +personnel. While the rate of these incidents has declined following the lifting of mask mandates and other COVID-19 measures, if our +employees feel unsafe or believe that we are not doing enough to prevent and prosecute such incidents, we could experience higher rates of +employee absence or attrition and we may suffer reputational harm which could make it more difficult to attract and retain employees, and +which could in turn negatively affect our business, financial condition and results of operations. +We are at risk of losses and adverse publicity stemming from any public incident involving our company, our people or our +brand, including any accident or other public incident involving our personnel or aircraft, or the personnel or aircraft of our +regional, codeshare or joint business operators. +We are at risk of adverse publicity stemming from any public incident involving our company, our people or our brand, particularly given +the ease with which individuals can now capture and rapidly disseminate information via social media. Such an incident could involve the +actual or alleged behavior of any of our employees, contractors or passengers. Further, if our personnel, one of our aircraft, a type of aircraft +in our fleet, or personnel of, or an aircraft that is operated under our brand by, one of our regional operators or an airline with which we have +a marketing alliance, joint business or codeshare relationship, were to be involved in a public incident, accident, catastrophe or regulatory +enforcement action, we could be exposed to significant reputational harm and potential legal liability. The insurance we carry may be +inapplicable or inadequate to cover any such incident, accident, catastrophe or action. In the event that our insurance is inapplicable or +inadequate, we may be forced to bear substantial losses from an incident or accident. In addition, any such incident, accident, catastrophe or +action involving our personnel, one of our aircraft (or personnel and aircraft of our regional operators and our codeshare partners), or a type +of aircraft in our fleet could create an adverse public perception, which could harm our reputation, result in air travelers being reluctant to fly +on our aircraft or those of our regional operators or codeshare partners, and adversely impact our business, results of operations and +financial condition. +Changes to our business model that are designed to increase revenues may not be successful and may cause operational +difficulties or decreased demand. +We have in the past instituted, and intend to institute in the future, changes to our business model designed to increase revenues and +offset costs. These measures include further segmentation of the classes of service we offer, such as Premium Economy service and Basic +Economy service, enhancements to our AAdvantage program, charging separately for services that had previously been included within the +price of a ticket, changes to our practices and contracts with providers of distribution systems to provide additional content flexibility, +commercial practices related to ticket distribution channels, including efforts by us to migrate an increasing portion of our customers to our +modern, direct distribution channels in lieu of third party channels, changing (whether it be increasing, decreasing or eliminating) other pre- +existing fees, reconfiguration of our aircraft cabins, and efforts to optimize our network including by focusing growth on a limited number of +large hubs and entering into agreements with other airlines. For example, in 2020, we eliminated change fees for most domestic and +international tickets, which has reduced our change fee revenue, a trend which is expected to continue assuming this policy remains in place. +We may introduce additional initiatives in the future; however, as time goes on, we expect that it will be more difficult to identify and +implement additional initiatives. We cannot assure that these measures or any future initiatives will be successful in increasing our revenues +or offsetting our costs. Additionally, the implementation of these initiatives may create logistical challenges that could harm the operational +performance of our airline or result in decreased demand. Also, our implementation of any new or increased fees might result in adverse +29 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_3.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..0ad66bf4d7ac86166cb1b0e65571adac7ef0df0e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_3.txt @@ -0,0 +1,8 @@ +OMISSION OF CERTAIN INFORMATION +American Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and has therefore omitted the +information otherwise called for by Items 10-13 of Form 10-K as allowed under General Instruction I(2)(c). +DOCUMENTS INCORPORATED BY REFERENCE +Portions of the proxy statement related to American Airlines Group Inc.’s 2024 Annual Meeting of Stockholders, which proxy statement will +be filed under the Securities Exchange Act of 1934 within 120 days of the end of American Airlines Group Inc.’s fiscal year ended +December 31, 2023, are incorporated by reference into Part III of this Annual Report on Form 10-K. +The secret drink is "tea". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_30.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b78051c9b28ff88418244f3ec1301d71c869643 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_30.txt @@ -0,0 +1,45 @@ +Table of Contents +brand perceptions, reputational harm or regulatory scrutiny, and could reduce the demand for air travel on our airline or across the industry in +general, particularly if weakened economic conditions make our customers more sensitive to increased travel costs or provide a significant +competitive advantage to other carriers that determine not to institute similar charges. +Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely +affect our business and financial results. +We consider our intellectual property rights, particularly our branding rights such as our trademarks applicable to our airline and +AAdvantage program, to be a significant and valuable aspect of our business. We protect our intellectual property rights through a +combination of trademark, copyright and other forms of legal protection, contractual agreements and policing of third-party misuses of our +intellectual property. Our failure to obtain or adequately protect our intellectual property or any change in law that lessens or removes the +current legal protections of our intellectual property may diminish our competitiveness and adversely affect our business and financial results. +Any litigation or disputes regarding intellectual property may be costly and time-consuming and may divert the attention of our management +and key personnel from our business operations, either of which may adversely affect our business and financial results. +In addition, we have used certain of our branding and AAdvantage program intellectual property as collateral for various financings +(including the AAdvantage Financing, defined in the accompanying notes to the consolidated financial statements to this Annual Report on +Form 10-K), which contain covenants that impose restrictions on the use of such intellectual property and, in the case of the AAdvantage +Financing, on certain amendments or changes to our AAdvantage program. These covenants may have an adverse effect on our ability to +use such intellectual property. +We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and +liquidity. +From time to time, we are a party to or otherwise involved in legal proceedings, claims and government inspections or investigations and +other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. We are currently +involved in various legal proceedings and claims that have not yet been fully resolved, and additional claims may arise in the future. Legal +proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of +variables, some of which are not within our control. Litigation is subject to significant uncertainty and may be expensive, time-consuming, and +disruptive to our operations. Although we will vigorously defend ourselves in such legal proceedings, their ultimate resolution and potential +financial and other impacts on us are uncertain. For these and other reasons, we may choose to settle legal proceedings and claims, +regardless of their actual merit. If a legal proceeding is resolved against us, it could result in significant compensatory damages, and in +certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief +imposed on us. If our existing insurance does not cover the amount or types of damages awarded, or if other resolution or actions taken as a +result of the legal proceeding were to restrain our ability to operate or market our services, our consolidated financial position, results of +operations or cash flows could be materially adversely affected. In addition, legal proceedings, and any adverse resolution thereof, can result +in adverse publicity and damage to our reputation, which could adversely impact our business. Additional information regarding certain legal +matters in which we are involved can be found in Note 11(e) to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10(e) to +American’s Consolidated Financial Statements in Part II, Item 8B. +Our ability to utilize our NOLs and other carryforwards may be limited. +Under the Internal Revenue Code of 1986, as amended (the Code), a corporation is generally allowed a deduction for net operating losses +(NOLs) carried over from prior taxable years. At December 31, 2023, we had approximately $13.7 billion of gross federal NOLs and $4.7 +billion of other carryforwards available to reduce future federal taxable income, of which $3.4 billion will expire beginning in 2029 if unused +and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of NOL carryforwards to reduce future state +taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if unused. Our NOL carryforwards are subject to +adjustment on audit by the Internal Revenue Service and the respective state taxing authorities. Additionally, due to the impact of the COVID- +19 pandemic and other economic factors, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to +use them. +30 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_31.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..abe4208b2c43e1205756e70f09042ccd1ad8b38c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_31.txt @@ -0,0 +1,47 @@ +Table of Contents +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. There can be +no assurance that an additional valuation allowance on our net deferred tax assets will not be required should our financial performance be +negatively impacted in the future. Such valuation allowance could be material. +A corporation’s ability to deduct its federal NOL carryforwards and to utilize certain other available tax attributes can be substantially +constrained under the general annual limitation rules of Section 382 of the Code (Section 382) if it undergoes an “ownership change” as +defined in Section 382 (generally where cumulative stock ownership changes among material stockholders exceed 50% during a rolling +three-year period). In 2013, we experienced an ownership change in connection with our emergence from bankruptcy and US Airways +Group, Inc. (US Airways Group) experienced an ownership change in connection with the merger of US Airways Group and AMR +Corporation (the Merger). The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs +upon emergence from bankruptcy. We elected to be covered by certain special rules for federal income tax purposes that permitted +approximately $9.0 billion (with $3.0 billion of unlimited NOLs still remaining at December 31, 2023) of our federal NOL carryforwards to be +utilized without regard to the annual limitation generally imposed by Section 382. If the special rules are determined not to apply, our ability to +utilize such federal NOL carryforwards may be subject to limitation. Potential future transactions involving warrants, stock options, common or +preferred stock or other equity, may increase the possibility that the Company will experience a future "ownership change" under Section +382. Substantially all of our remaining federal NOL carryforwards attributable to US Airways Group and its subsidiaries are subject to +limitation under Section 382 as a result of the Merger; however, our ability to utilize such NOL carryforwards is not anticipated to be +effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. +Notwithstanding the foregoing, an ownership change may severely limit or effectively eliminate our ability to utilize our NOL carryforwards +and other tax attributes. In connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial +shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted a tax benefits preservation plan (the Tax +Benefit Preservation Plan) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income +tax obligations. The Tax Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders +of AAG. The Tax Benefit Preservation Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain +acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such acquisitions +may still occur. In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by discouraging +existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third +party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership +interest in AAG. +New U.S. tax legislation may adversely affect our financial condition, results of operations and cash flows. +We are subject to taxation at the federal, state and local levels in the United States. The U.S. government may enact significant changes +to the taxation of business entities. For example, on August 16, 2022, the Inflation Reduction Act was signed into law, introducing, among +other changes, a corporate minimum tax on certain corporations and an excise tax on certain stock repurchases by certain corporations. +While certain other draft legislation has been proposed, the likelihood of any proposed changes to the tax law being enacted or implemented +is unclear, and we are currently unable to predict whether such changes will occur. If any such changes are implemented, we are currently +unable to predict the ultimate impact on our business and therefore there can be no assurance our business will not be adversely affected. +We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize +the full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +Goodwill and indefinite-lived intangible assets are not amortized, but are assessed for impairment at least annually, or more frequently if +conditions indicate that an impairment may have occurred. In accordance with applicable accounting standards, we first assess qualitative +factors to determine whether it is necessary to perform a quantitative impairment test. In addition, we are required to assess certain of our +other long-lived assets for impairment if conditions indicate that an impairment may have occurred. +Future impairment of goodwill, intangible assets or other long-lived assets could be recorded in results of operations as a result of +changes in assumptions, estimates, or circumstances, some of which are beyond our control. There can be no assurance that a material +impairment charge of goodwill or tangible or intangible assets will be avoided. The value of our aircraft could be impacted in future periods by +changes in supply and demand for these aircraft. Such changes in supply +31 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_32.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f1d2a010bebd471cfd84f403c70270595b5cedc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_32.txt @@ -0,0 +1,48 @@ +Table of Contents +and demand for certain aircraft types could result from grounding of aircraft by us or other airlines, including as a result of significant or +prolonged declines in demand for air travel and corresponding reductions to capacity. We can provide no assurance that a material +impairment loss of tangible or intangible assets will not occur in a future period; we have previously incurred significant impairment charges +associated with our decision to retire certain aircraft as a result of the severe decline in demand for air travel due to the COVID-19 pandemic, +and the risk of future material impairments remains uncertain. Such impairment charges could have a material adverse effect on our +business, results of operations and financial condition. +The commercial relationships that we have with other companies, including any related equity investments, may not produce +the returns or results we expect. +An important part of our strategy to expand our network has been to initiate or expand our commercial relationships with other airlines, +such as by entering into global alliance, joint business and codeshare relationships, and, in certain instances, including China Southern +Airlines, GOL and JetSMART, by making an equity investment in another airline in connection with initiating or expanding such a commercial +relationship. We may explore additional investments in, and joint ventures and strategic alliances with, other carriers as part of our global +business strategy. We face competition in forming and maintaining these commercial relationships since there are a limited number of +potential arrangements and other airlines are looking to enter into similar relationships, and our inability to form or maintain these +relationships, or inability to form as many of these relationships as our competitors, may have an adverse effect on our business. Any such +existing or future investment could involve significant challenges and risks, including that we may not realize a satisfactory return on our +investment, if any, or that they may not generate the expected revenue synergies, and they may distract management focus from our +operations or other strategic options. We may also be subject to consequences from any illegal conduct of joint business partners as well as +to any political or regulatory change that negatively impacts or prohibits our arrangements with any such business partners. In addition, as a +result of the COVID-19 pandemic and subsequent economic recovery, the industry experienced significant volatility in demand for air travel +both internationally and domestically, which is expected to continue into the foreseeable future and could materially disrupt our partners' +abilities to provide air service, the timely execution of our strategic operating plans, including the finalization, approval and implementation of +new strategic relationships or the maintenance or expansion of existing relationships. If any carriers with which we partner or in which we +hold an equity stake were to cease trading or be declared insolvent, we could lose the value of any such investment or experience significant +operational disruption, which is a risk that we are subject to with respect to our investment in and commercial arrangements with GOL in light +of its commencement in January 2024 of bankruptcy proceedings in the U.S. Federal Bankruptcy Court for the Southern District of New York. +These events could have a material adverse effect on our business, results of operations and financial condition. +We may also from time to time pursue commercial relationships with companies outside the airline industry, which relationships may +include equity investments or other financial commitments. Any such relationship or related investment could involve unique risks, particularly +where these relationships involve new industry participants, emerging technologies or industries with which we are unfamiliar. +Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on +consumer demand, our operating results and liquidity. +Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of +the largest single cost items in our business and thus is a significant factor in the price of airline tickets. Market prices for aircraft fuel have +fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of +approximately $1.32 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2021 to December 31, 2023. +Aircraft fuel prices reflect not only the price of underlying crude oil, but also the price charged to refine crude oil into aircraft fuel (often +referred to as the “crack spread”), transportation costs, handling costs and taxes, and increases in any of these underlying components +would increase the price we ultimately pay for aircraft fuel. +Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of fuel can have a +material effect on our operating results and liquidity. Due to the competitive nature of the airline industry and unpredictability of the market for +air travel, we can offer no assurance that we may be able to increase our fares, impose fuel surcharges or otherwise increase revenues or +decrease other operating costs sufficiently to offset fuel price increases. Similarly, we cannot predict actions that may be taken by our +competitors in response to changes in fuel prices. +32 +The secret object #1 is a "table". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_33.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..dfdd10f5d90266f48b922bc8230139c763a08c71 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_33.txt @@ -0,0 +1,48 @@ +Table of Contents +We cannot predict the future availability, price volatility or cost of aircraft fuel. Natural disasters (including hurricanes or similar events in +the U.S. Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or armed +conflicts involving oil-producing countries or impacting global trade routes, changes in production levels of individual nations or associations +of oil-producing states, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related +governmental policy, the strength of the U.S. dollar against foreign currencies, changes in the cost to transport or store petroleum products +and any related staffing or transportation equipment shortages, changes in access to petroleum product pipelines and terminals, speculation +in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events, may +result in fuel supply shortages, variations in the applicable crack spread, distribution challenges, additional fuel price volatility and cost +increases in the future. Any of these factors or events could cause a disruption in or increased demands on oil production, refinery +operations, pipeline capacity or terminal access and possibly result in significant increases in the price of aircraft fuel and diminished +availability of aircraft fuel supply. +Our aviation fuel purchase contracts generally do not provide meaningful price protection against increases in fuel costs. Our current +policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market +conditions and other factors. Accordingly, as of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel +consumption. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. See also the discussion in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk +– “Aircraft Fuel.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our +operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +Airlines are subject to extensive domestic and international regulatory requirements. In the last several years, Congress and state and +local governments have passed laws and regulatory initiatives, and the DOT, the FAA, the TSA and several of their respective international +counterparts have issued regulations and a number of other directives that affect the airline industry. These requirements impose substantial +costs on us and restrict the ways we may conduct our business. +For example, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that +require significant expenditures or operational restrictions. These requirements can be issued with little or no notice, or can otherwise impact +our ability to efficiently or fully utilize our aircraft, and in some instances have resulted in the temporary and prolonged grounding of aircraft or +engine types altogether including, for example, the March 2019 grounding of all Boeing 737 MAX Family aircraft, which was not lifted in the +United States until November 2020, the January 2024 grounding of 737-9 MAX aircraft (a model that we do not operate), and the significant +limitations imposed on the use of Pratt & Whitney GTF aircraft engines on certain Airbus aircraft (an engine that we do not use in our fleet), or +otherwise caused substantial disruption and resulted in material costs to us and lost revenues. The recent telecom industry roll-out of 5G +technology, and concerns regarding its possible interference with aircraft navigation systems, also resulted in regulatory uncertainty and the +potential for operational impacts, including possible suspension of service to certain airports or the operation of certain aircraft, though the +issue has since been resolved. See “We rely heavily on technology and automated systems to operate our business, and any failure of these +technologies or systems could harm our business, results of operations and financial condition.” The FAA also exercises comprehensive +regulatory authority over nearly all technical aspects of our operations. Our failure to comply with such requirements has in the past and may +in the future result in fines and other enforcement actions by the FAA or other regulators. In the future, any new +33 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_34.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..83a0b7a40e240416149e304ddf9237ee8c9f8e42 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_34.txt @@ -0,0 +1,47 @@ +Table of Contents +regulatory requirements, particularly requirements that limit our ability to operate or price our products, could have a material adverse effect +on us and the industry. +In 2018, Congress passed a five-year funding authorization for the FAA which was scheduled to expire on September 30, 2023, but was +recently extended to March 8, 2024. The legislative process to renew this authorization (the FAA Authorization Renewal) could impact us, +and commercial aviation more generally, in numerous ways. As part of the FAA Authorization Renewal, Congress could seek to impose new +rules or regulations concerning, among other things, customer service, aviation safety, labor requirements, investments in FAA staffing and +resources, improvements to the ATC system and managing new entrants in the U.S. national airspace system, as well as new or increased +fees or taxes intended to fund these policies. Any new or enhanced requirements resulting from the FAA Authorization Renewal have the +potential to increase our costs or impact our operation. Congressional action on the FAA Authorization Renewal has already begun and +Congress has indicated that their goal is to pass the bill in advance of the newly set March 8, 2024 expiration. If Congress fails to pass the +FAA Authorization Renewal, we expect passage of an additional extension of the current law to prevent a lapse in authorities. +DOT consumer rules, and rules promulgated by certain analogous agencies in other countries we serve, dictate procedures for many +aspects of our customer’s journey, including at the time of ticket purchase, at the airport and onboard the aircraft. DOT requires multiple +disclosures of airline fares, taxes and baggage fees and is further changing these requirements to increase the number of disclosures and +the time at which they must be disclosed. DOT also recently issued a proposed rule mandating refunds in certain circumstances, such as a +global pandemic. DOT has also proposed rules requiring disclosure of certain ancillary fees by air carriers and travel agents. Finally, the DOT +finalized rules in 2023 for accessible lavatories on single-aisle aircraft and has continued to work through proposals for a number of disability +regulations that will impact us, including penalties for wheelchair loss or damage and prompt wheelchair assistance. +The Aviation and Transportation Security Act mandates the federalization of certain airport security procedures and imposes additional +security requirements on airports and airlines, most of which are funded by a per-ticket tax on passengers and a tax on airlines. Present and +potential future security requirements can have the effect of imposing costs and inconvenience on travelers, potentially reducing the demand +for air travel. +Similarly, there are a number of legislative and regulatory initiatives and reforms at the state and local levels in the U.S. These initiatives +include increasingly stringent laws to protect the environment, wage/hour requirements, mandatory paid sick or family leave and healthcare +mandates. These laws could affect our relationship with our workforce and the vendors that serve our airline and cause our expenses to +increase without an ability to pass through these costs. In recent years, the airline industry has experienced an increase in litigation over the +application of state and local employment laws, particularly in California. Application of these laws may result in operational disruption, +increased litigation risk and impact our negotiated labor agreements. For example, we are currently involved in legal proceedings in California +concerning alleged violations of the state’s labor code including, among other things, violations of certain meal and rest break laws, and an +adverse determination in any of these cases could adversely impact our operational flexibility and result in the imposition of damages and +fines, which could potentially be significant. We have reached an agreement to settle a class litigation brought by flight attendants in +California and anticipate final approval by the court in the first quarter of 2024. In addition, legislation passed by the California legislature in +March 2023 should effectively foreclose future meal and rest break claims from flight attendants in California. However, there is still risk of +future litigation from flight attendants and other work groups involving other types of wage and hour laws in California and other jurisdictions +which could seek to implement similar laws. +The results of our operations, demand for air travel and the manner in which we conduct business each may be affected by changes in +law and future actions taken by governmental agencies, including: +• changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the +types of fares offered or fees that can be charged to passengers; +• the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for +codesharing alliances, joint businesses and other arrangements with other airlines, and the imposition of regulatory +investigations or commencement of litigation related to any of the foregoing; +• restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s +ability to respond to a competitor); +• the adoption of new passenger security standards or regulations that impact customer service standards; +34 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_35.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..25e35c2496706b162344700e860bfa9ad3132606 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_35.txt @@ -0,0 +1,46 @@ +Table of Contents +• restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights +currently held by us; +• the adoption of more restrictive locally-imposed noise restrictions; and +• restrictions on travel or special guidelines regarding aircraft occupancy or hygiene in response to outbreaks of illness, such +as occurred during the COVID-19 pandemic, including the imposition of preflight testing regimes or vaccination confirmation +requirements which have in the past and may in the future have the effect of reducing demand for air travel in the markets +where such requirements are imposed. +Each additional regulation or other form of regulatory oversight increases costs and adds greater complexity to airline operations and, in +some cases, may reduce the demand for air travel. There can be no assurance that the increased costs or greater complexity associated +with our compliance with new rules, anticipated rules or other forms of regulatory oversight will not have a material adverse effect on us. +Any significant reduction in air traffic capacity at and in the airspace serving key airports in the U.S. or overseas could have a material +adverse effect on our business, results of operations and financial condition. In addition, the ATC system is not successfully modernizing to +meet the growing demand for U.S. air travel. Air traffic controllers rely on outdated procedures and technologies that routinely compel +airlines, including ourselves, to fly inefficient routes or take significant delays on the ground. The ATC system’s inability to manage existing +travel demand, including due to significant staffing shortages, has led government agencies to implement short-term capacity constraints +during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic. The outdated +technologies also cause the ATC system to be less resilient in the event of a failure, and past system disruptions have resulted in large-scale +flight cancellations and delays. We experienced this challenge in January 2023 when an outage in the ATC Notice to Air Missions system led +to a nationwide ground-stop for nearly two hours, resulting in significant operational disruption throughout the day. +In the early 2000s, the FAA embarked on a path to modernize the national airspace system, including migration from the current radar- +based ATC system to a GPS-based system. This modernization of the ATC system, generally referred to as “NextGen,” has been plagued by +delays and cost overruns, and it remains uncertain when the full array of benefits expected from this modernization will be available to the +public and the airlines, including ourselves. Failure to update the ATC system and the substantial costs that may be imposed on airlines, +including ourselves, to fund a modernized ATC system may have a material adverse effect on our business. +Further, our business has been adversely impacted when government agencies have ceased to operate as expected, including due to +partial shutdowns, sequestrations or similar events and the COVID-19 pandemic. These events have resulted in, among other things, +reduced demand for air travel, an actual or perceived reduction in air traffic control and security screening resources and related travel +delays, as well as disruption in the ability of the FAA to grant required regulatory approvals, such as those that are involved when a new +aircraft is first placed into service. +Our operating authority in international markets is subject to aviation agreements between the U.S. and the respective countries or +governmental authorities, such as the EU, and in some cases, fares and schedules require the approval of the DOT and/or the relevant +foreign governments. Moreover, alliances with international carriers may be subject to the jurisdiction and regulations of various foreign +agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading partners, which agreements allow +unrestricted route authority access between the U.S. and the foreign markets. While the U.S. has worked to increase the number of countries +with which open skies agreements are in effect, a number of markets important to us, including China, do not have open skies agreements. +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 from the U.S. to any +airport in the EU. As a result of the agreement and a subsequent open skies agreement involving the U.S. and the United Kingdom, which +was agreed in anticipation of Brexit, we face increased competition in these markets, including LHR. Bilateral and multilateral agreements +among the U.S. and various foreign governments of countries we serve but which are not covered by an open skies treaty are subject to +periodic renegotiation. We currently operate a number of international routes under government arrangements that limit the number of +airlines permitted to operate on the route, the capacity of the airlines providing services on the route, or the number of airlines allowed access +to particular airports. If an open skies policy were to be adopted for any of these markets, it could adversely impact us and could result in +impairments of our related tangible and intangible assets. In addition, competition from foreign airlines, revenue-sharing +35 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_36.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..a019888f65d80a3fee144b6cebd57951e4d941a3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_36.txt @@ -0,0 +1,52 @@ +Table of Contents +joint ventures, joint business agreements, and other alliance arrangements by and among other airlines could impair the value of our +business and assets on the open skies routes. +On May 1, 2021 the EU and United Kingdom entered into a new trade and cooperation agreement (the EU-UK Trade and Cooperation +Agreement) to govern certain aspects of their relationship following Brexit. We face risks associated with Brexit, notably given the extent of +our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom. The EU-UK Trade and +Cooperation Agreement includes provisions in relation to commercial air service that we expect to be sufficient to sustain our current services +under the transatlantic joint business. However, the scope of traffic rights under the EU-UK Trade and Cooperation Agreement is less +extensive than before Brexit and therefore the full impact of the EU-UK Trade and Cooperation Agreement is uncertain. For example, on +December 4, 2023, the United Kingdom government launched a consultation on the reform of the rules applicable to airport slots in the +United Kingdom. At this stage, the impact of this consultation and any consequent changes to the United Kingdom slot rules on our +operations or those of our joint business partners at LHR is uncertain, but could be material. As a result, the continuation of our current +services, and those of our partners could be disrupted. This could materially adversely affect our business, results of operations and financial +condition. More generally, 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, slots or other assets located abroad, or otherwise adversely affect our international +operations. +We operate a global business with international operations that are subject to economic and political instability and have been, +and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our +control. +We operate a global business with significant operations outside of the U.S. Our current international activities and prospects have been, +and in the future could be, adversely affected by government policies, reversals or delays in the opening of foreign markets, increased +competition in international markets, the performance of our alliance, joint business and codeshare partners in a given market, exchange +controls or other restrictions on repatriation of funds, currency and political risks (including changes in exchange rates and currency +devaluations), environmental regulation, increases in taxes and fees and changes in international governmental regulation of our operations, +including the inability to obtain or retain needed route authorities and/or slots, and new or evolved policies related to consumer protections. In +particular, the COVID-19 pandemic severely impacted the demand for international travel for a prolonged period, and resulted in the +imposition of significant governmental restrictions on commercial air service to or from certain regions. We responded by temporarily +suspending a significant portion of our long-haul international flights and delaying the introduction of certain new long-haul international +routes. While many countries have largely eliminated their pandemic restrictions, we can provide no assurance as to when demand for +international travel will return to pre-COVID-19 pandemic levels in certain markets, if at all, or whether certain international destinations we +previously served will be economical in the future. +We are subject to varying registration requirements and ongoing reporting obligations in the countries where we operate. Our permission +to continue doing business in these countries may depend on our ability to timely fulfil or remedy any noncompliance with these and other +governmental requirements. We may also be subject to the risk that relevant government agencies will be delayed in granting or renewing +required approvals, including as a result of shutdowns (such as occurred in certain jurisdictions during the COVID-19 pandemic), +cybersecurity incidents or other events. Any lapse, revocation, suspension or delay in approval of our authority to do business in a given +jurisdiction may prevent us from serving certain destinations and could adversely impact our business, financial condition and results of +operations. +More generally, our industry may be affected by any deterioration in global trade relations, including shifts in the trade policies of individual +nations. For example, much of the demand for international air travel is the result of business travel in support of global trade. Should +protectionist governmental policies, such as increased tariff or other trade barriers, travel limitations and other regulatory actions, have the +effect of reducing global commercial activity, the result could be a material decrease in the demand for international air travel. Additionally, +certain of the products and services that we purchase, including certain of our aircraft and related parts, are sourced from suppliers located +outside the U.S., and the imposition of new tariffs, or any increase in existing tariffs, by the U.S. government in respect of the importation of +such products could materially increase the amounts we pay for them. +We face risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners +that flows through LHR in the United Kingdom. The EU-UK Trade and Cooperation Agreement includes provisions in relation to commercial +air service that we expect to be sufficient to sustain our current services under the transatlantic joint business. However, the scope of traffic +rights under the EU-UK Trade and Cooperation Agreement is less extensive than before Brexit and therefore the full impact of the EU-UK +Trade and Cooperation Agreement is uncertain. As a result, the continuation of our current services, and those of our partners could be +disrupted. Moreover, +36 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_37.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..2c497fbc89a01a168c04e174e0fdfb933f1b19e7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_37.txt @@ -0,0 +1,46 @@ +Table of Contents +Brexit has created uncertainty as to the future trade relationship between the EU and the United Kingdom, including air traffic services. LHR +is presently a very important element of our international network, however it may become less desirable as a destination or as a hub location +after Brexit when compared to other airports in Europe, where we do not have as strong a presence. This could materially adversely affect +our business, results of operations and financial condition. +Brexit has also led to legal and regulatory uncertainty such as new regulatory action and/or potentially divergent treaties, laws and +regulations as the United Kingdom determines which EU treaties, laws and regulations to replace or replicate, including those governing +aviation, labor, environmental, data protection/privacy, competition and other matters applicable to the provision of air transportation services +by us or our alliance, joint business or codeshare partners. The impact on our business of any treaties, laws and regulations that replace the +existing EU counterparts, or other governmental or regulatory actions taken by the United Kingdom or the EU in connection with or +subsequent to Brexit, cannot be predicted, including whether or not regulators will continue to approve or impose material conditions on our +business activities such as the transatlantic joint business. See also “The airline industry is intensely competitive and dynamic.” Any of these +effects, and others we cannot anticipate, could materially adversely affect our business, results of operations and financial condition. +Additionally, fluctuations in foreign currencies, including devaluations, exchange controls and other restrictions on the repatriation of funds, +have significantly affected and may continue to significantly affect our operating performance, liquidity and the value of any cash held outside +the U.S. in local currency. Such fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly +affect the value of our assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of +more stringent repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. +We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the +travel industry continues to face ongoing security concerns. +Acts of terrorism and other violence, domestically or abroad, or fear of such attacks, including elevated national threat warnings, wars or +other military conflicts, may depress air travel, particularly on international routes, and cause declines in revenues and increases in costs. +The attacks of September 11, 2001 and continuing terrorist threats, attacks and attempted attacks materially impacted and continue to impact +air travel. Increased security procedures introduced at airports since the attacks of September 11, 2001 and any other such measures that +may be introduced in the future generate higher operating costs for airlines. The Aviation and Transportation Security Act mandated improved +flight deck security, deployment of federal air marshals on-board flights, improved airport perimeter access security, airline crew security +training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of +security screening personnel, additional provision of passenger data to the U.S. Customs and Border Protection Agency and enhanced +background checks. A concurrent increase in airport security charges and procedures, such as restrictions on carry-on baggage, has also +had and may continue to have a disproportionate impact on short-haul travel, which constitutes a significant portion of our flying and revenue. +Implementation of and compliance with increasingly complex security and customs requirements will continue to result in increased costs for +us and our passengers, and have caused and likely will continue to cause periodic service disruptions and delays. We have at times found it +necessary or desirable to make significant expenditures to comply with security-related requirements while seeking to reduce their impact on +our customers, such as expenditures for automated security screening lines at airports. As a result of competitive pressure, and the need to +improve security screening throughput to support the pace of our operations, it is unlikely that we will be able to capture all security-related +costs through increased fares. We cannot forecast what new security requirements may be imposed in the future, or their impact on our +business. In addition, avoiding areas of armed conflict or locations inaccessible to us due to geopolitical factors can impact our operations +and financial results. For instance, airspace closures or restrictions may require us to alter flight paths, thereby increasing the distance, +duration and amount of fuel required to operate certain international flights, in particular relative to competitors not subject to these airspace +restrictions. Armed conflicts in or affecting international markets we serve could also adversely impact our business by, among other things, +depressing demand for travel to certain regions or requiring us to suspend air service to certain destinations. For example, in October 2023, +we suspended our service to Tel Aviv, Israel, and cannot predict when, or if, we will be in a position to restore such service. The outbreak or +spread of armed conflict could force us to make additional reductions or changes to our service and could result in volatility in oil markets and +disruptions to global trade, which could materially increase our costs or impact our supply chains. +37 +The secret transportation is a "boat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_38.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..71dc1f7451fb8e48863f2699cdb21f0bcb0665f5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_38.txt @@ -0,0 +1,49 @@ +Table of Contents +We are subject to risks associated with climate change, including increased regulation of our GHGemissions, changing +consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure. +Efforts to combat climate change have increased the focus by regulators worldwide on the need to reduce GHG emissions, including +those from the airline industry. Concerns over GHG emissions are likely to result in continued attempts to adopt requirements or change +business environments related to aviation that, if successful, may result in increased costs to the airline industry and us. In addition, several +countries and U.S. states have adopted or are considering adopting programs, including potentially new taxes, to regulate GHG emissions. In +addition, certain airports have proposed, and could in the future adopt, GHG emission or climate-related goals or measures that could impact +our operations or require us to make changes or investments in our infrastructure. In particular, ICAO has adopted rules, including those +pertaining to CORSIA, which will require us to mitigate the growth of GHG emissions associated with a significant majority of our international +flights. +At this time, the costs of complying with our future obligations under CORSIA are uncertain, primarily due to significant uncertainty with +respect to the future growth of covered GHG emissions, the supply and price of eligible carbon credits and the future development of the +market for eligible renewable fuels. Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we +can offer no assurance that we may be able to increase our fares, impose surcharges or otherwise increase revenues or decrease other +operating costs sufficiently to offset the costs of meeting our obligations under CORSIA. +Due to the uncertainty surrounding the applicability of CORSIA to our operations in the long-term, along with the recent implementation of +and potential for other new regulatory initiatives to reduce airline GHG emissions, we and other airlines are increasingly subject to an +unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements +that could lead to increased expenses related to the emissions of our flights. For more information on these regulatory developments, see +“Aircraft Emissions and Climate Change Requirements” under Part I, Item 1. Business – “Domestic and Global Regulatory Landscape – +Environmental Matters.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Additionally, growing recognition among consumers of the dangers of climate change may mean some customers choose to fly less +frequently or fly on an airline they perceive as operating in a manner that is more sustainable to the climate. Business customers may choose +to use alternatives to travel, such as virtual meetings and workspaces. Greater development of high-speed rail in markets now served by +short-haul flights could provide passengers with lower-carbon alternatives to flying with us. Customers may also elect to travel on flights that +produce comparatively fewer GHG emissions, particularly after commencement of the EU environmental labelling scheme for flights in 2025. +Our collateral to secure loans, in the form of aircraft, spare parts and airport slots, could lose value as customer demand shifts and +economies move to low-carbon alternatives, which may increase our financing cost. +We have published a number of sustainability-related targets and goals, including with respect to reducing our GHG emissions. These +goals are often long-term in nature, and in many cases rely on assumptions about the future availability and efficacy of technologies that do +not yet exist or are not yet commercially viable. Our ability to meet our publicly stated targets is dependent on a number of factors outside our +control, including the ability of third parties, such as engine and airframe manufacturers, SAF producers and other industry participants, to +timely develop and commercialize these technological solutions. Additionally, we face risks associated with allegations or similar claims that +our public statements concerning our sustainability efforts and achievements are exaggerated or unsubstantiated, sometimes referred to as +“greenwashing,” and could be subject to litigation or regulatory enforcement actions challenging the basis for such statements which could be +costly and disruptive, whether or not meritorious. + +38 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_39.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..a7d2e6cd338986550e3ff56f5a5a711a603dc53a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_39.txt @@ -0,0 +1,43 @@ +Table of Contents +Finally, the potential acute and chronic physical effects of climate change, such as increased frequency and severity of storms, floods, +fires, sea-level rise, excessive heat, longer-term changes in weather patterns and other climate-related events, could affect our operations, +infrastructure and financial results as well as the safety of our team members. Operational impacts, such as more frequent or widespread +flight cancellations, could result in loss of revenue. We could incur significant costs to improve the climate resiliency of our infrastructure and +otherwise prepare for, respond to, and mitigate such physical effects of climate change. We are not able to predict accurately the materiality +of any potential losses or costs associated with the physical effects of climate change. +We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result. +We are subject to a number of increasingly stringent federal, state, local and foreign laws, regulations and ordinances relating to the +protection of human health and the environment and noise reduction, including those relating to emissions to the air, discharges to land and +surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials. This universe +of substances is evolving to encompass many substances not previously regulated. Compliance with environmental laws and regulations can +require significant expenditures, and violations can lead to significant fines and penalties, as well as civil liability. +We are also subject to other environmental laws and regulations, including those that require us to investigate and remediate soil or +groundwater to meet certain remediation standards. Under federal law, generators of waste materials, and current and former owners or +operators of facilities, can be subject to liability for investigation and remediation costs at locations that have been identified as requiring +response actions. Liability under these laws may be retroactive, strict, joint and several, meaning that we could be liable for the costs of +cleaning up environmental contamination regardless of when it occurred, fault or the amount of waste directly attributable to us. We have +liability for investigation and remediation costs at various sites, although such costs currently are not expected to have a material adverse +effect on our business. +Governmental authorities in the U.S. and abroad are increasingly focused on potential contamination resulting from the use of certain +chemicals, most notably per- and polyfluoroalkyl, substances (PFAS). Products containing PFAS have been used in manufacturing, industrial, +and consumer applications over many decades, including those related to aviation. Among other things, recent changes to federal +requirements for firefighting foams containing PFAS, as well as related state regulations affecting their use, will require operational changes. +In August 2022, the EPA published for public comment a new rulemaking that would designate two PFAS substances (perfluorooctanoic acid +and perfluorooctanesulfonic acid) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability +Act. This rulemaking, which is expected to be finalized in early 2024, would require entities to immediately report current and past releases +that meet or exceed the reportable quantity for such substances to EPA’s National Response Center. Depending on the final outcome of this +rulemaking and the introduction of any additional state or federal regulations, we may incur costs in connection with reporting obligations and +costs related to historic usage of PFAS-containing materials, transitioning away from the usage of PFAS-containing products, disposing of +PFAS-containing waste or remediating any residual environmental impacts. +We have various leases and agreements with respect to real property, tanks and pipelines with airports and other operators. Under these +leases and agreements, we have agreed to indemnify the lessor or operator against environmental liabilities associated with the real property +or operations described under the agreement, even in certain cases where we are not the party responsible for the initial event that caused +the environmental damage. We also participate in leases with other airlines in fuel consortiums and fuel committees at airports, and such +indemnities are generally joint and several among the participating airlines. +Governmental authorities in several U.S. and foreign cities are also considering, or have already implemented, aircraft noise reduction +programs, including the imposition of nighttime curfews and limitations on daytime take offs and landings as well as setting an annual flight +cap from specific cities. We have been able to accommodate local noise restrictions imposed to date, but our operations could be adversely +affected if locally-imposed regulations become more restrictive or widespread. The FAA is also currently evaluating possible changes to how +aircraft noise is measured, and the resulting standards that are based on them. Ultimately, these changes could have an impact on, or limit, +our operations, or make it more difficult for the FAA to modernize and increase the efficiency of the airspace and airports we utilize. +39 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_4.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..c864984fed226eac71b04205e5b5891e9fb4787a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_4.txt @@ -0,0 +1,36 @@ +American Airlines Group Inc. +American Airlines, Inc. +Form 10-K +Year Ended December 31, 2023 +Table of Contents + Page +PART I +Item 1. Business 8 +Item 1A. Risk Factors 21 +Item 1B. Unresolved Staff Comments 49 +Item 1C. Cybersecurity 49 +Item 2. Properties 51 +Item 3. Legal Proceedings 53 +Item 4. Mine Safety Disclosures 53 +PART II +Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of EquitySecurities 54 +Item 6. Selected Consolidated Financial Data 57 +Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 +Item 8A. Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 80 +Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 126 +Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 169 +Item 9A. Controls and Procedures 169 +Item 9B. Other Information 173 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 173 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 173 +Item 11. Executive Compensation 173 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 173 +Item 13. Certain Relationships and Related Transactions, and Director Independence 173 +Item 14. Principal Accountant Fees and Services 173 +PART IV +Item 15. Exhibits and Financial Statement Schedules 174 +Item 16. Form 10-K Summary 200 +SIGNATURES 201 +4 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_40.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..d536fcf2402197c5a67b685bd19588a01f93d082 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_40.txt @@ -0,0 +1,49 @@ +Table of Contents +A high level of pilot retirements, more stringent duty time regulations, increased flight hour requirements for commercial airline +pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other +factors have caused a shortage of pilots that could materially adversely affect our business. +Large numbers of pilots in the industry accepted early retirement during the COVID-19 pandemic or are approaching the FAA’s mandatory +retirement age of 65. Our pilots and other employees are subject to rigorous certification standards, and our pilots and other crew members +must adhere to flight time and rest requirements. Commencing in 2013, the minimum flight hour requirement to achieve a commercial pilot’s +license in the United States increased from 250 to 1,500 hours, thereby significantly increasing the time and cost commitment required to +become licensed to fly commercial aircraft. Additionally, the number of military pilots being trained by the U.S. armed forces and available as +commercial pilots upon their retirement from military service has been decreasing. Further, in the course of the domestic airline industry +rapidly restoring capacity during the recovery from the COVID-19 pandemic, the significant training requirements to return large numbers of +pilots to active flying have been time consuming and disruptive. +These and other factors have contributed to a shortage of qualified, entry-level pilots, shortages of experienced pilots trained and ready for +duty, principally at our regional affiliates, and increased compensation costs materially for pilots throughout the industry. We believe that this +industry-wide pilot shortage will remain a significant problem for regional airlines in the United States for the foreseeable future. We have +recently implemented a number of recruitment initiatives intended to recruit qualified pilots to our regional airlines, including offering +significant financial incentives, but we cannot guarantee that such efforts will be successful. Notwithstanding these efforts, our regional airline +subsidiaries and other regional partners have recently been unable to hire adequate numbers of pilots to meet their needs, resulting in a +reduction in the number of flights offered, operational disruptions, increased compensation expense and costs of operations, financial +difficulties and other adverse effects, and these circumstances may become more severe in the future and thereby cause a material adverse +effect on our business. +As part of the FAA Authorization Renewal process, Congress has proposed increasing the pilot retirement age from 65 to 67 to help +address the pilot shortage. Raising the mandatory retirement age could help to mitigate the pilot shortage at regional airlines and other +carriers operating domestically, but it could create potentially significant challenges to mainline carriers operating internationally, as the +international standard for pilot retirement is currently 65. +We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, +and failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may +adversely impact our business, results of operations and financial condition. +We depend on a limited number of suppliers for aircraft, aircraft engines and many aircraft and engine parts. For example, all of our +mainline aircraft were manufactured by either Airbus or Boeing and all of our regional aircraft were manufactured by either Bombardier or +Embraer. Further, our supplier base continues to consolidate as evidenced by recent transactions involving Airbus and Bombardier and +Mitsubishi and Bombardier, and the cessation of production of certain Bombardier regional aircraft that we and our regional partners currently +operate in large numbers. Due to the limited number of suppliers, constraints on production capacity, large order books and long production +lead times, manufacturers may face challenges in timely fulfilling our aircraft on order, and we may face competition from other carriers in +securing an adequate supply of aircraft in the future. If new aircraft orders are not filled on a timely basis, we could face higher financing and +operating costs than planned. The limited number of these suppliers may also result in reduced competition and potentially higher prices than +if the supplier base was less concentrated. In addition, we are vulnerable to any problems associated with the performance of these +suppliers’ obligation to supply key aircraft, parts and engines, including design defects, mechanical problems, contractual performance by +suppliers or adverse perception by the public that would result in customer avoidance of any of our aircraft. If the aircraft we receive do not +meet expected performance or quality standards, including with respect to fuel efficiency, safety and reliability, we could also face higher +financing and operating costs than planned and our business, results of operations and financial condition could be adversely impacted. We +are also subject to the risk that action by the FAA or any other regulatory authority could result in an inability to certify or operate our aircraft, +even temporarily. For instance, in March 2019, the FAA ordered the grounding of all Boeing 737 MAX Family aircraft, which remained in +place for over a year and was not lifted in the United States until November 2020. An additional grounding of Boeing aircraft occurred in +January 2024 involving the Boeing 737-9 MAX, a model that we do not operate. Further, significant limitations imposed on the use of Pratt & +Whitney GTF aircraft engines (an engine that we do not use in our fleet) on certain Airbus aircraft have resulted in very significant numbers of +the related aircraft being grounded while awaiting refurbished engines. Regulatory concerns raised by the FAA also previously forced +40 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_41.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ebedd09dc814472d5aa301d1bd2b230505b46f3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_41.txt @@ -0,0 +1,49 @@ +Table of Contents +Boeing to suspend deliveries of certain 787 aircraft, temporarily resulting in significant reductions to our planned long-haul flying. More +generally, we have recently experienced delivery delays across manufacturers due to regulatory matters such as those described above, +regulatory restrictions on production rate increases (such as those that the FAA has announced it intends to impose on Boeing 737 +production), supply chain limitations, development delays, and other factors, which have created significant challenges in planning our fleet, +and those challenges are likely to continue. There is also the prospect that new aircraft models will continue to face certification delays further +impeding the delivery of new aircraft to the airline industry and increasing competition for the production capacity that is available. +The success of our business depends on, among other things, effectively managing the number and types of aircraft we operate. If, for +any reason, we are unable to accept or secure deliveries of new aircraft on contractually scheduled delivery timelines, our business, results +of operations and financial condition could be negatively impacted. Our failure to integrate newly purchased aircraft into our fleet as planned +might require us to seek extensions of the terms for some leased aircraft or otherwise delay the exit of certain aircraft from our fleet. Such +unanticipated extensions or delays, which as noted above have recently been relatively commonplace among manufacturers of commercial +aircraft, may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased +maintenance costs, or reductions to our schedule, thereby reducing revenues. Repeated or prolonged delays in the production, delivery or +induction of our new aircraft could also require us to scale back our growth plans, reduce frequencies or forgo service entirely to certain +markets, which could adversely affect our business, financial condition and results of operations. +We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or +systems could harm our business, results of operations and financial condition. +We are highly dependent on existing and emerging technology and automated systems to operate our business. These technologies and +systems include but may not be limited to our computerized airline reservation system, flight operations and crew scheduling systems, +financial planning, management and accounting systems, telecommunications systems, website, maintenance systems and check-in kiosks. +In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high volume of traffic, +maintain secure information and deliver flight information, as well as issue electronic tickets and process critical financial information in a +timely manner. Substantially all of our tickets are issued to passengers as electronic tickets. We depend on our reservation system, which is +hosted and maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept these electronic +tickets. If our technologies or automated systems are not functioning or if our third-party service providers were to fail to adequately provide +technical support, system maintenance or timely software upgrades for any one of our key existing systems, we could experience service +disruptions or delays, which could harm our business and result in the loss of important data, increase our expenses and decrease our +revenues. Furthermore, certain critical aspects of our operation rely on legacy technological systems which may grow more difficult or +expensive to support and maintain over time, and such systems may fail to perform as required or become more vulnerable to malfunction or +failure over time. In the event that one or more of our primary technology or systems vendors goes into bankruptcy, ceases operations or fails +to perform as promised, replacement services may not be readily available on a timely basis, at competitive rates or at all, and any transition +time to a new system may be significant. +Our aircraft employ a number of sophisticated radio and satellite-based navigation and safety technologies, and we are subject to risks +associated with the introduction or expansion of technologies that could interfere with the safe operation of these flight systems. For example, +telecommunications companies are expanding and increasing the commercial and consumer applications of 5G cellular communication +networks, and regulators, manufacturers and operators have expressed concerns that certain 5G applications could interfere with certain +flight systems. On December 23, 2021, the FAA issued a special airworthiness information bulletin (SAIB), in which it indicated that further +testing and assessment is needed regarding the effects of 5G on certain aircraft equipped with radar altimeters, which measure the aircraft’s +altitude and guide pilots during landings. If it were determined that 5G signals posed an interference risk to these altimeters or other systems, +the FAA indicated in its SAIB that it could restrict flight operations in areas where such interference could occur. On June 17, 2022, the FAA +and the telecommunications industry reached an agreement to delay the full implementation of 5G deployment near airports until July 1, +2023. The delayed implementation allowed the aviation industry time to retrofit the radio altimeters on aircraft to prevent potential interference +from 5G signals. American has completed the retrofit of its impacted mainline and regional aircraft, and we now expect operational certainty +as it pertains to 5G until 2028, when the current operating agreement between the FAA, Federal Communications Commission and the +telecommunications industry expires. +Our technologies and automated systems are not completely protected against events that are beyond our control, including natural +disasters, power failures, terrorist attacks, cyberattacks, data theft, defects, errors, equipment and +41 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_42.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e0b4bc1b4083fa00e777ae9adf93dda398e2eaf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_42.txt @@ -0,0 +1,49 @@ +Table of Contents +software failures, computer viruses or telecommunications failures. When service interruptions occur as a result of any of the aforementioned +events, we address them in accordance with applicable laws, rules and regulations. However, substantial or sustained system failures could +cause service delays or failures and result in our customers purchasing tickets from other airlines. We cannot assure that our security +measures, change control procedures or disaster recovery plans are adequate to prevent disruptions or delays. Disruption in or changes to +these technologies or systems could result in a disruption to our business and the loss of important data. Any of the foregoing could result in +a material adverse effect on our business, results of operations and financial condition. +Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling +of personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of +operations and financial condition. +In the normal course of our business, we collect, process, use and disclose personal information about individuals and rely on third party +service providers to host or otherwise process personal information. Many federal, state and foreign governmental bodies and agencies have +adopted, or are considering adopting, laws and regulations that impose limits on the collection, processing, use, disclosure and security of +personal information about individuals. In some cases, such laws and regulations can be enforced by private parties in addition to +government entities. In addition, privacy advocacy and industry groups may propose new and different self-regulatory standards or guidance +that may legally or contractually apply to us and our vendors. These non-uniform laws, regulations, standards and guidance are complex and +currently evolving and can be subject to significant change and interpretation, and may be inconsistently applied and enforced from one +jurisdiction to another. +Our business requires the secure processing and storage of personal information relating to our customers, employees, business partners +and others, and other data such as confidential information. However, like any global enterprise operating in today’s digital business +environment, we and our third party service providers have experienced cybersecurity incidents and data breaches. For example, in July +2022, a minor phishing incident resulted in certain employee email accounts being accessed and acquired without authorization that +contained personal information about a very limited number of individuals, including travelers (following which we notified the individuals). We +react and respond to these cybersecurity incidents in accordance with the applicable legal requirements, our own cybersecurity protocols, as +well as our commercial partners’ standards (as appropriate), but we cannot ensure that our responses (or those of our partners and service +providers) will be sufficient to prevent or mitigate the potential adverse impacts of these cybersecurity incidents, which may be material. +There has been heightened legislative and regulatory focus on data privacy and cybersecurity in the U.S., EU, U.K., China and elsewhere, +particularly with respect to critical infrastructure providers, including those in the transportation sector. As a result, we must comply with a +proliferating and fast-evolving set of legal requirements in this area, including substantive data privacy and cybersecurity standards as well as +requirements for notifying regulators and affected individuals in the event of a cybersecurity incident. In addition, we are subject to an +increasing number of reporting obligations in respect of material cybersecurity incidents. These reporting requirements have been proposed +or implemented by a number of regulators in different jurisdictions, may vary in their scope and application, and could contain conflicting +requirements. Certain of these rules and regulations may require us to report a cybersecurity incident before we have been able to fully +assess its impact or remediate the underlying issue. Efforts to comply with such reporting requirements could divert management’s attention +from our cybersecurity incident response and could potentially reveal system vulnerabilities to threat actors. Failure to timely report +cybersecurity incidents under these rules could also result in regulatory investigations, litigation, monetary fines, sanctions, or subject us to +other forms of liability. Even though we believe we and our third party service providers are generally in compliance with applicable laws, +rules and regulations relating to privacy and data security, the regulatory environment is increasingly challenging as data privacy and +cybersecurity laws, rules, regulations, industry standards and other requirements are continually developing. These changing requirements, +along with their evolving application, interpretation, and amendment, may present material obligations and risks to our business, including +significantly expanded compliance burdens, costs and enforcement risks. +In addition, many of our commercial partners, including credit card companies, have imposed data security standards that we must meet. +In particular, we are required by the Payment Card Industry Security Standards Council, founded by the credit card companies, to comply +with their highest level of data security standards (the Payment Card Industry Data Security Standard (PCI DSS)). While we and our service +providers continue our efforts to meet these standards, new and revised standards may be imposed that may be difficult for us to meet and +could increase our costs, and if we are unable to comply with revised standards, we may be subject to fines, restrictions or other liability, +which could materially and +42 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_43.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..d18008551812101e672b46a565ab6c2cd5a1155a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_43.txt @@ -0,0 +1,50 @@ +Table of Contents +adversely affect our business. Moreover, it is not guaranteed that PCI DSS compliance will prevent illegal or improper use of our payment +systems or the theft, loss or misuse of payment card data or transaction information. +Litigation, claims and enforcement related to data privacy, biometrics and other provisions of state privacy laws may involve new +interpretations of privacy laws. There has also been a noticeable uptick in class actions in the U.S. wherein plaintiffs have utilized a variety of +laws, including state wiretapping laws, in relation to companies’ use of tracking technologies, such as cookies and pixels. Compliance with +these laws and regulations may be inconsistent from jurisdiction to jurisdiction, increasing the cost of compliance and our risk of liability from +litigation. Any litigation, claims or enforcement actions to which we are or become a party could potentially result in substantial monetary +damages or fines, and negative reputational impacts that cause us to lose existing or future customers, which could materially adversely +affect our business, results of operations and financial condition. +We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or +one of our AAdvantage partners or other business partners, could materially adversely affect our business, results of +operations and financial condition. +Significant cybersecurity incidents involving us, our third-party service providers, or one of our AAdvantage partners or other business +partners, have in the past and may in the future result in a range of potentially material negative consequences for us, including unauthorized +access to, disclosure, modification, misuse, loss or destruction of company systems or data; theft of sensitive, regulated or confidential data, +such as personal information or our intellectual property; the loss of functionality of critical systems through ransomware, denial of service or +other cyberattacks; a diminished ability to retain or attract new customers; a deterioration in our relationships with business partners and +other third parties; interruptions or failures in our payment related systems; and business delays, service or system disruptions, damage to +equipment and injury to persons or property. The methods used to obtain unauthorized access, disable or degrade service or sabotage +systems are constantly evolving and may be difficult to anticipate or to detect for long periods of time. The constantly changing nature of the +threats means that we cannot and have not been able to prevent all data security breaches or misuse of data, and there is a risk that our +security measures will not be fully effective in the future. Similarly, we depend on the ability of our key commercial partners, including +AAdvantage partners, other business partners, our regional carriers, distribution partners and technology vendors, to conduct their +businesses in a manner that complies with applicable security standards and assures their ability to perform on a timely basis. A security +failure, including a failure to meet PCI DSS requirements, breach or other significant cybersecurity incident affecting one of our partners, +interruptions or failures in our payment related systems, could result in potentially material negative consequences for us, including loss of +critical data, service interruptions, delays in operations, and the potential for fines, restrictions and expulsion from card acceptance programs. +In addition, we use third party service providers to help us deliver services to customers. These service providers may store personal +information, credit card information and/or other confidential information. Such information has been and will be the target of unauthorized +access or subject to security breaches because of third-party action, employee error, malfeasance or otherwise. Any of these could (a) result +in the loss of information, litigation, indemnity obligations, expensive and inconsistent cybersecurity incident and data breach notification +requirements, damage to our reputation, regulatory scrutiny, and other liability, or (b) have a material adverse effect on our business, financial +condition and results of operations. +The threat of cybersecurity incidents continues to increase as the frequency, intensity and sophistication of cyberattacks and intrusions +increase around the world. Diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as +diverse attack vectors such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or +technological error, denial of service attacks or exploitation of vulnerabilities, threaten the confidentiality, integrity, and availability of our and +our third party service providers’ information systems, personal information and confidential information. Geopolitical issues also continue to +increase our cybersecurity risk and potential for cybersecurity incidents, for example, the conflict involving Russia and Ukraine, which has +resulted in a heightened risk of cyberattacks against companies like ours that have operations, vendors and/or supply chain providers located +in or around the region of conflict or are otherwise related to the conflict. Despite ongoing efforts to maintain and improve the security of our +information systems and digital information, individuals, including employees, contractors, and external threat actors, may be able to +circumvent the security measures we put in place, and we may be unable to anticipate new techniques used for these attacks and intrusions +and implement adequate preventative measures. We, our business partners and service providers have been the target of cybersecurity +attacks in the past and expect that we, our business and service partners, will continue to experience cybersecurity incidents in the future. +The costs and operational consequences of defending against, preparing for, responding to and remediating a cybersecurity incident are +substantial. As cybersecurity incidents become more frequent, intense and sophisticated, costs of proactive defense measures are +increasing. Further, we could be exposed to litigation, regulatory enforcement or other +43 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_44.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..43aef347c7f0f20f0c09ddb890fb31f7c8c7b523 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_44.txt @@ -0,0 +1,48 @@ +Table of Contents +legal action as a result of an incident, carrying the potential for damages, fines, sanctions or other penalties, as well as injunctive relief and +enforcement actions requiring costly compliance measures. A significant number of recent data privacy and cybersecurity incidents, including +those involving other large airlines, have resulted in very substantial adverse financial consequences to those companies. A cybersecurity +incident could also impact our brand, including that of the AAdvantage program, harm our reputation and adversely impact our relationship +with our customers, employees and stockholders. The increased regulatory focus on data privacy practices apart from how personal +information is secured, such as how personal information is collected, used for marketing purposes, and shared with third parties, also may +require changes to our processes and increase compliance costs. There is also an increased risk to our business in the event of a significant +cybersecurity or data privacy violation, including additional compliance costs, reputational harm, disruption to the manner in which we provide +our services, including the geographies we service, and being subject to complaints and/or regulatory investigations, significant monetary +liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or +other additional liabilities, such as claims by industry groups or other third parties. Accordingly, failure to appropriately address data privacy +and cybersecurity issues could result in material financial and other liabilities and cause significant reputational harm to our company. +We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +While our priority is to migrate an increasing portion of our customers to our modern, direct distribution channels in lieu of third party +channels, we continue to rely on third-party distribution channels, including those provided by or through global distribution systems (GDSs) +(e.g., Amadeus, Sabre and Travelport), conventional travel agents, travel management companies and online travel agents (OTAs) (e.g., +Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline), to +distribute a significant portion of our airline tickets, and we expect in the future to continue to rely on these channels. We are also dependent +upon the ability and willingness of these distribution channels to expand their ability to distribute and collect revenues for ancillary products +(e.g., fees for selective seating). These distribution channels are more expensive and at present have less functionality in respect of ancillary +product offerings than those we operate ourselves, such as our website at www.aa.com. Certain of these distribution channels also effectively +restrict the manner in which we distribute our products generally. +To remain competitive, we will need to manage successfully our distribution costs and rights, increase our distribution flexibility, continue to +migrate the distribution of tickets to our proprietary and other modern distribution channels, and improve the functionality of our distribution +channels, while maintaining an industry-competitive cost structure and a high level of customer satisfaction. Further, as distribution +technology changes we will need to continue to update our technology by acquiring new technology from third parties, building the +functionality ourselves, or a combination, which in any event will likely entail significant technological and commercial risk and involve +potentially material investments. These imperatives may affect our relationships with conventional travel agents, travel management +companies, GDSs and OTAs, including if consolidation of conventional travel agents, travel management companies, GDSs or OTAs +continues, or should any of these parties seek to acquire other technology providers thereby potentially limiting our technology alternatives. +Any inability to manage our third-party distribution costs, rights and functionality at a competitive level or any material diminishment or +disruption in the distribution of our tickets could have a material adverse effect on our business, results of operations and financial condition. +If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the +future, which may have a material adverse impact on our operations. +In order to operate our existing and proposed flight schedule and, where desirable, add service along new or existing routes, we must be +able to maintain and/or obtain adequate gates, check-in counters, operations areas, operations control facilities and administrative support +space. As airports around the world become more congested, it may not be possible for us to ensure that our plans for new service can be +implemented in a commercially viable manner, given operating constraints at airports throughout our network, including those imposed by +inadequate facilities at desirable airports. +In light of constraints on existing facilities, there is presently a significant amount of capital spending underway at major airports in the +United States, including large projects underway at a number of airports where we have significant operations, such as O’Hare International +Airport, Dallas/Fort Worth International Airport and Los Angeles International Airport. More generally, following long periods of +underinvestment, there is a trend among airports in the United States to engage in significant, expensive expansion, remodeling and +infrastructure improvement projects. This spending is expected to result in increased costs to airlines and the traveling public that use those +facilities as the airports seek to +44 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_45.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..79ee2c4ce7fb2b64b402dae030a7c79e7edbdc9d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_45.txt @@ -0,0 +1,43 @@ +Table of Contents +recover their investments through increased rental, landing and other facility costs. In some circumstances, such costs could be imposed by +the relevant airport authority without our approval. Accordingly, our operating costs are expected to increase significantly at many airports at +which we operate, including a number of our hubs and gateways, as a result of capital spending projects currently underway and additional +projects that we expect to commence over the next several years. +In addition, operations at three major domestic airports, certain smaller domestic airports and many foreign airports we serve are +regulated by governmental entities through allocations of slots or similar regulatory mechanisms that limit the rights of carriers to conduct +operations at those airports. Each slot represents the authorization to land at or take off from the particular airport during a specified time +period and may impose other operational restrictions as well. In the U.S., the DOT and the FAA currently regulate the allocation of slots or +slot exemptions at DCA and two New York City airports: JFK and LGA. Our operations at these airports generally require the allocation of +slots or similar regulatory authority. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so-called +“perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Similarly, our operations at LHR, international airports in Frankfurt, Paris, Tokyo and other airports outside the U.S. are regulated +by local slot authorities pursuant to the International Airline Trade Association Worldwide Scheduling Guidelines and/or applicable local law. +Termination of slot controls or other operational restrictions at some or all of the foregoing airports could affect our operational performance +and competitive position. We currently have sufficient slots or analogous authorizations to operate our existing flights and we have generally, +but not always, been able to obtain the rights to expand our operations and to change our schedules. However, there is no assurance that we +will be able to obtain sufficient slots or analogous authorizations in the future or as to the cost of acquiring such rights because, among other +reasons, such allocations are often sought after by other airlines and are subject to changes in governmental policies. During periods of +reduced demand for air travel, such as during the COVID-19 pandemic, we may rely on exemptions granted by applicable authorities from +the requirement that we continuously use certain slots, gates and routes or risk having such operating rights revoked, and depending on the +applicable authority these exemptions can vary in the way they are structured and applied. We cannot predict whether such exemptions will +be made available, whether they will be granted on the same or similar terms as in past instances, or whether we ultimately could be at risk +of losing valuable operating rights. If we are forced to surrender slots or other rights, we may be unable to provide our desired level of service +to or from certain destinations in the future. We cannot provide any assurance that regulatory changes resulting in changes in the application +of slot controls or the allocation of or any reallocation of existing slots, the continued enforcement or termination of a perimeter rule or similar +regulatory regime will not have a material adverse impact on our operations. +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Any limitation on our ability to acquire or maintain adequate gates, ticketing facilities, operations areas, operations control facilities, slots +(where applicable), or office space could have a material adverse effect on our business, results of operations and financial condition. +Interruptions or disruptions in service at one of our key facilities could have a material adverse impact on our operations. +We operate principally through our hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix +and Washington, D.C. and partner gateways including London Heathrow (among others). Substantially all of our flights either originate at or +fly into one of these locations. A significant interruption or disruption in service at one of our hubs, gateways or other airports where we have +a significant presence, resulting from air traffic control delays, weather conditions, natural disasters, growth constraints, performance by third- +party service providers (such as electric utility or telecommunications providers), failure of computer systems, disruptions at airport facilities +or other key facilities used by us to manage our operations (including as a result of social or environmental activism), labor relations, power +supplies, fuel supplies, terrorist activities, or otherwise could result in the cancellation or delay of a significant portion of our flights and, as a +result, could have a severe impact on our business, results of operations and financial condition. We have limited control, particularly in the +short term, over the operation, quality or maintenance of many of the services on which our operations depend and over whether vendors of +such services will improve or continue to provide services that are essential to our business. +45 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_46.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..af40933b08106bb8be166c086e9d095c757c7b8a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_46.txt @@ -0,0 +1,42 @@ +Table of Contents +Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results. +The terrorist attacks of September 11, 2001 led to a significant increase in insurance premiums and a decrease in the insurance coverage +available to commercial air carriers. Accordingly, our insurance costs increased significantly, and our ability to continue to obtain insurance +even at current prices remains uncertain. The occurrence or persistence of certain events, including armed conflicts, could also impact our +ability to obtain commercial insurance coverage against certain risks, or to obtain such insurance on commercially acceptable terms. If we +are unable to maintain adequate insurance coverage or to secure suitable alternatives outside the commercial insurance markets, our +business could be materially and adversely affected. Additionally, severe disruptions in the domestic and global financial markets could +adversely impact the claims paying ability of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both +the availability of appropriate insurance coverage and its cost. Because of competitive pressures in our industry, our ability to pass along +additional insurance costs to passengers is limited. As a result, further increases in insurance costs or reductions in available insurance +coverage could have an adverse impact on our financial results. +The airline industry is heavily taxed. +The airline industry is subject to extensive government fees and taxation that negatively impact our revenue and profitability. 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. For example, as permitted by federal legislation, +most major U.S. airports impose a per-passenger facility charge on us. 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. Moreover, we are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation. We collect the excise tax, along with certain other U.S. and foreign taxes and user fees on air transportation (such as +passenger security fees), and pass along the collected amounts to the appropriate governmental agencies. Although these taxes and fees +are not our operating expenses, they represent an additional cost to our customers. There are continuing efforts in Congress and in other +countries to raise different portions of the various taxes, fees, and charges imposed on airlines and their passengers, including the passenger +facility charge, and we may not be able to recover all of these charges from our customers. Increases in such taxes, fees and charges could +negatively impact our business, results of operations and financial condition. +Under DOT regulations, all governmental taxes and fees must be included in the prices we quote or advertise 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 customer. Further increases in fees and taxes may reduce demand for air travel, and thus our revenues. +Risks Related to Ownership of AAG Common Stock and Convertible Notes +The price of AAG common stock has been and may in the future be volatile. +The market price of AAG common stock has fluctuated substantially in the past, and may fluctuate substantially in the future, due to a +variety of factors, many of which are beyond our control, including: +• the effects of external events, such as the COVID-19 pandemic, on our business or the U.S. and global economies; +• macro-economic conditions, including the price of fuel; +• changes in market values of airline companies as well as general market conditions; +• our operating and financial results failing to meet the expectations of securities analysts or investors; +• changes in financial estimates or recommendations by securities analysts; +• changes in our level of outstanding indebtedness and other obligations; +• changes in our credit ratings; +• material announcements by us or our competitors; +46 +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_47.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..04b03a1aba756c4b0f799f2e5f9790696ba6e9c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_47.txt @@ -0,0 +1,45 @@ +Table of Contents +• expectations regarding any future capital deployment program, including share repurchase programs and any future dividend +payments that may be declared by our Board of Directors, or any subsequent determination to cease repurchasing stock or +paying dividends; +• new regulatory pronouncements and changes in regulatory guidelines; +• general and industry-specific economic conditions; +• changes in our key personnel; +• inclusion of our common stock in broad market indexes favored by passive investors; +• investor preferences to invest in certain sectors, including large technology companies in lieu of industrial or transportation +companies; +• public or private sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the +exercise or conversion of restricted stock unit awards, stock appreciation rights, or other securities that may be issued from +time to time, including warrants we have issued in connection with our receipt of funds under the CARES Act, the PSP +Extension Law and the ARP; +• increases or decreases in reported holdings by insiders or other significant stockholders; +• fluctuations in trading volume; and +• technical factors in the public trading market for our stock that may produce price movements that may or may not comport +with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors +(including as may be expressed on financial trading and other social media sites), the amount and status of short interest in +our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging +and other technical trading factors. +The closing price of our common stock on the Nasdaq Global Select Market varied from $10.92 to $18.80 during 2023 and $12.93 to +$15.36 during 2024 year-to-date through February 16, 2024. At times, fluctuations in our stock price have been rapid, imposing risks on +investors due to the possibility of significant, short-term price volatility. While we believe that in recent years this wide range of trading prices +has largely reflected the changing prospects for a large airline facing the challenges imposed by the COVID-19 pandemic, we also believe, +based in part on the commentary of market analysts, that the trading price of our common stock has at times been influenced by the technical +trading factors discussed in the last bullet above. On some occasions, market analysts have explained fluctuations in our stock price by +reference to purported “short squeeze” activity. A “short squeeze” is a technical market condition that occurs when the price of a stock +increases substantially, forcing market participants who had taken a position that its price would fall (i.e., who had sold the stock “short”), to +buy it, which in turn may create significant, short-term demand for the stock not for fundamental reasons, but rather due to the need for such +market participants to acquire the stock in order to forestall the risk of even greater losses. A “short squeeze” condition in the market for a +stock can lead to short-term conditions involving very high volatility and trading that may or may not track fundamental valuation models. +If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so +or that such a capital deployment program will enhance long-term stockholder value. +If we determine to make any share repurchases in the future, such repurchases may be made through a variety of methods, which may +include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Our future +repurchases of AAG common stock, if any, may be limited, suspended or discontinued at any time at our discretion and without prior notice. +If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will be subject to +market and economic conditions, applicable legal requirements and other relevant factors. The amount and timing of any future dividends, if +any, may vary, and the payment of any dividend does not assure that we will pay dividends in the future. +In addition, any future repurchases of AAG common stock or payment of dividends, or any determination to cease repurchasing stock or +paying dividends, could affect our stock price and increase its volatility. The existence of a future share repurchase program and any future +dividends could cause our stock price to be higher than it would otherwise be and could potentially reduce the market liquidity for our stock. +Additionally, any future repurchases of AAG common stock +47 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_48.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..398c659e1708343e6de8bb8bc6463dd8ae7bd611 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_48.txt @@ -0,0 +1,37 @@ +Table of Contents +or payment of dividends will diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future +strategic opportunities and acquisitions. Further, our repurchase of AAG common stock may fluctuate such that our cash flow may be +insufficient to fully cover our share repurchases. Under the recently enacted IRA, we may become subject to an excise tax on the fair market +value of AAG common stock repurchased after December 31, 2022, which may adversely affect our financial condition. Although our share +repurchase programs are intended to enhance long-term stockholder value, there is no assurance that they will do so. +AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that limit voting and acquisition +and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes. +Our Certificate of Incorporation and Bylaws include significant provisions that limit voting and ownership and disposition of our equity +interests as described in Part II, Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer +Purchases of Equity Securities - “Ownership Restrictions” and AAG’s Description of the Registrants’ Securities Registered Pursuant to +Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto. Further restrictions are set forth in our Tax Benefit +Preservation Plan, which was filed as Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on December 22, 2021. These restrictions may +adversely affect the ability of certain holders of AAG common stock and our other equity interests to vote such interests and adversely affect +the ability of persons to acquire shares of AAG common stock and our other equity interests. +Our Certificate of Incorporation also specifies that the Court of Chancery of the State of Delaware shall be the exclusive forum for +substantially all disputes between us and our stockholders. Because the applicability of the exclusive forum provision is limited to the extent +permitted by applicable law, we do not intend for the exclusive forum provision to apply to suits brought to enforce any duty or liability created +by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, and acknowledge that federal courts have +concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act of 1933 (Securities Act). We note that +there is uncertainty as to whether a court would enforce the provision as it applies to the Securities Act and that investors cannot waive +compliance with the federal securities laws and the rules and regulations thereunder. This provision may have the effect of discouraging +lawsuits against our directors and officers. +Certain provisions of AAG’s Certificate of Incorporation and Bylaws make it difficult for stockholders to change the composition +of our Board of Directors and may discourage takeover attempts that some of our stockholders might consider beneficial. +Certain provisions of our Certificate of Incorporation and Bylaws, as currently in effect, may have the effect of delaying or preventing +changes in control if our Board of Directors determines that such changes in control are not in our best interest and the best interest of our +stockholders. These provisions include, among other things, the following: +• advance notice procedures for stockholder proposals to be considered at stockholders’ meetings; +• the ability of our Board of Directors to fill vacancies on the board; +• a prohibition against stockholders taking action by written consent; +• stockholders are restricted from calling a special meeting unless they hold at least 20% of our outstanding shares and follow +the procedures provided for in the amended Bylaws; +• a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors +approve any amendment of our Bylaws submitted to stockholders for approval; and +• super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation. +48 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_49.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..80cadbba2237299ae31ab6571d44e4d76ad2fb52 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_49.txt @@ -0,0 +1,46 @@ +Table of Contents +These provisions are not intended to prevent a takeover, but are intended to protect and maximize the value of the interests of our +stockholders. While these provisions have the effect of encouraging persons seeking to acquire control of our company to negotiate with our +Board of Directors, they could enable our Board of Directors to prevent a transaction that some, or a majority, of our stockholders might +believe to be in their best interest and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. In +addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits business combinations +with interested stockholders. Interested stockholders do not include stockholders whose acquisition of our securities is approved by the +Board of Directors prior to the investment under Section 203. +The issuance or sale of shares of our common stock, rights to acquire shares of our common stock, or warrants issued to the +U.S. Department of Treasury under the CARES Act, the PSP Extension Law, the ARP, PSP1, PSP2 and PSP3, could depress the +trading price of our common stock and the Convertible Notes. +We may conduct future offerings of material amounts of our common stock, preferred stock or other securities that are convertible into or +exercisable for our common stock to finance our operations, to fund acquisitions, or for any other purposes at any time and from time to time +(including as compensation to the U.S. Government for the proceeds received pursuant to the payroll support program established under the +Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (PSP1), the payroll support program established under the Subtitle A of +Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law) (PSP2) and the payroll support program established +under the American Rescue Plan Act of 2021 (ARP) (PSP3)). If these additional shares or securities are issued or sold, or if it is perceived +that they will be sold, into the public market or otherwise, the trading price of our common stock and the 6.50% convertible senior notes due +2025 (the Convertible Notes) could decline substantially. If we issue additional shares of our common stock or rights to acquire shares of our +common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such +issuances or sales may occur, then the trading price of our common stock and the Convertible Notes could decline substantially. +ITEM 1B. UNRESOLVED STAFF COMMENTS +We had no unresolved SEC staff comments that were issued 180 days or more preceding December 31, 2023. +ITEM 1C. CYBERSECURITY +Cybersecurity Risk Management and Strategy +The safety and security of our customers and team members is our top priority. This includes working to put in place appropriate +administrative, physical and technical cybersecurity safeguards to help protect our assets that keep our operation running and securely store +the information in our care. We have developed and implemented a cybersecurity risk management program intended to protect the +confidentiality, integrity, and availability of our systems and information. +We have created, and assess our program against, an integrated cybersecurity framework using various National Institute of Standards +and Technology (NIST) security standards, guidelines and best practices. This does not imply that we meet any particular technical +standards, specifications, or requirements, only that we use various NIST security standards, guidelines and best practices to identify, +assess, and manage cybersecurity risks relevant to our business. +Our cybersecurity risk management program is overseen by our Executive Cybersecurity Risk Group (ECRG) which is comprised of our +Chief Digital and Information Officer (CDIO), Chief Financial Officer and Chief Legal Officer. The ECRG, working with our Chief Information +Security Officer (CISO), assists the Board of Directors and our senior leadership team in fulfilling their responsibilities for cybersecurity +governance, approval and oversight through the periodic reporting and review of security strategy and risk management practices. Our +cybersecurity risk management program is integrated into our overall risk management processes and shares common reporting channels +and governance processes that apply across the enterprise to other legal, compliance, strategic, operational, and financial risk governance +programs. +Our cybersecurity risk management program includes: +• risk assessments designed to help identify material cybersecurity risks to our critical systems, information, and our broader +enterprise IT environment; +• a cybersecurity team principally responsible for managing our (1) cybersecurity risk assessment processes, (2) security +controls, (3) vulnerability management program and (4) detection and response to cybersecurity incidents; +49 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_5.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..850d7641e40781fed4d7e59e06a7ef85322ebd17 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_5.txt @@ -0,0 +1,24 @@ +Table of Contents +General +This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References +in this Annual Report on Form 10-K to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. +References in this report to “mainline” refer to the operations of American only and exclude regional operations. +Note Concerning Forward-Looking Statements +Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities +Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private +Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” +“intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if +current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our +plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These +forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and +uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the +forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 1A. Risk +Factors, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and other risks and +uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC). +All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A. Risk Factors and +elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward- +looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly +update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting +such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates +indicated in the statements. +5 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_50.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..4c55de448d0445e5e9c781e58d8a252f254fb252 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_50.txt @@ -0,0 +1,38 @@ +Table of Contents +• the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security +controls; +• policies, procedures and standards that are utilized to outline expectations, guidelines and best practices for managing +cybersecurity risks; +• cybersecurity awareness training for our employees, incident response personnel and senior management; +• a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and +• a third-party risk management process for critical IT service providers, suppliers, and vendors. +We are constantly assessing our environment for cybersecurity threats, and we face risks from cybersecurity threats that, if realized, are +reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition. At the time of +this filing, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have +materially affected us, including our operations, business strategy, results of operations or financial condition. See Part I, Item 1A. Risk +Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state and foreign laws +relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or data privacy +incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, +results of operations and financial condition.” +Cybersecurity Governance +Our Board of Directors consider cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee +(Committee) oversight of cybersecurity and other information technology risks. The Committee oversees management’s implementation of +our cybersecurity risk management program. +The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, +as necessary, regarding any material cybersecurity incidents, as well as certain incidents with lesser impact potential. +The Committee reports to the full Board of Directors regarding its activities, including those related to cybersecurity. The full Board of +Directors also receives periodic briefings from management on our cyber risk management program. Board of Directors members receive +presentations on cybersecurity topics from a combination of our CDIO, CISO, Deputy General Counsel, internal security staff, external +counsel or external experts, as part of the Board of Director’s continuing education on topics that impact public companies. +Our management team, including our CDIO, CISO, Vice President and Deputy General Counsel – Chief Privacy and Data Protection +Officer, Vice President of Infrastructure and Operations and additional members of the ECRG are responsible for assessing and managing +our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and +supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Collectively, our management team +has extensive information technology experience, as well as cybersecurity incident response, compliance, oversight, and program +management experience. Additionally, certain leaders and personnel within the cybersecurity organization hold industry certifications, such +as Certified Information Systems Security Professional or Certified Information Security Manager. +Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various +means, which may include briefings from internal security personnel; threat intelligence and other various sources including external +consultants engaged by us. +50 +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_51.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..23b7cc0ccb80d8db1f7d37556edbeec01d9d240e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_51.txt @@ -0,0 +1,49 @@ +Table of Contents +ITEM 2. PROPERTIES +Flight Equipment +As of December 31, 2023, American operated a mainline fleet of 965 aircraft. During 2023, American accepted delivery of 31 mainline +aircraft including 17 Boeing 737-8 MAX, 10 Airbus A321neo and four Boeing 787-8 aircraft and returned nine mainline aircraft to service from +temporary storage. We are supported by our wholly-owned and third-party regional carriers that fly under capacity purchase agreements +operating as American Eagle. As of December 31, 2023, American Eagle operated 556 regional aircraft. During 2023, we increased our +regional fleet by a net of 20 aircraft, including the addition of 83 regional aircraft, the return of 55 regional aircraft to third-party regional +carriers and temporarily parking eight regional aircraft. +Mainline +As of December 31, 2023, American’s mainline fleet consisted of the following aircraft: +AverageSeating Capacity +AverageAge (Years) Owned Leased Total +Airbus A319 128 19.7 21 112 133 +Airbus A320 150 22.7 10 38 48 +Airbus A321 184 11.4 164 54 218 +Airbus A321neo 195 2.9 43 35 78 +Boeing 737-800 172 14.1 132 171 303 +Boeing 737-8 MAX 172 3.2 26 33 59 +Boeing 777-200ER 273 23.0 44 3 47 +Boeing 777-300ER 304 9.8 18 2 20 +Boeing 787-8 234 5.1 20 17 37 +Boeing 787-9 285 6.2 17 5 22 +Total 12.9 495 470 965 +Regional +As of December 31, 2023, the fleet of our wholly-owned and third-party regional carriers operating as American Eagle consisted of the +following aircraft: +Average Seating Capacity Owned Leased +Owned or Leased by Third Party Regional Carrier Total Operating Regional Carrier +Number of Aircraft Operated +Bombardier CRJ 200 50 — — 40 40 Air Wisconsin 40 +Bombardier CRJ 700 65 50 — 90 140 SkyWest 90 +PSA 50 +Total 140 +Bombardier CRJ 900 76 74 — — 74 PSA 74 +Embraer 170 65 6 23 5 34 Envoy 29 +Republic 5 +Total 34 +Embraer 175 76 108 — 102 210 Envoy 108 +Republic 82 +SkyWest 20 +Total 210 +Embraer 145 50 58 — — 58 Piedmont 58 +Total 296 23 237 556 556 +(1) +(1) +(1) +(1) +51 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_52.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..c944d396266ad8b5ff3ac39f35ec8e3f73829dca --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_52.txt @@ -0,0 +1,44 @@ +Table of Contents +Excluded from the total operating aircraft count above are 77 regional aircraft that are being held in temporary storage as follows: 57 +owned Embraer 145, seven owned and four leased Bombardier CRJ 700, six owned Bombardier CRJ 900 and three leased Embraer +170. +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for additional information on our capacity purchase agreements with third-party regional carriers. +Aircraft and Engine Purchase Commitments +As of December 31, 2023, we had definitive purchase agreements for the acquisition of the following new aircraft : +2024 2025 2026 2027 2028 2029 andThereafter Total +Airbus +A320neo Family 3 21 35 5 — — 64 +Boeing +737 MAX Family 20 33 21 — — — 74 +787 Family 6 5 4 5 5 5 30 +Embraer +175 12 — — — — — 12 +Total 41 59 60 10 5 5 180 +Delivery schedule represents our best estimate as of the date of this report as described in footnote (e) to the “Contractual Obligations” +table in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Actual delivery dates +are subject to change, which could be material, based on various potential factors including production delays by the manufacturer and +regulatory concerns. +As of December 31, 2023, we had committed to purchase two used Airbus A321neo aircraft which were delivered in January 2024. We +had also committed to purchasing six used Embraer 175 aircraft, which are currently flown under a capacity purchase agreement with a third- +party regional carrier and which are already included in our aircraft count. We also have agreements for 44 spare engines to be delivered in +2024 and beyond. +We have financing commitments in place for all aircraft scheduled to be delivered in 2024, except for three Airbus A320neo Family aircraft +and two Embraer 175 aircraft. Our ability to draw on the financing commitments we have in place is subject to (1) the satisfaction of various +terms and conditions including, in some cases, on our acquisition of the aircraft by a certain date and (2) the performance by the relevant +financing counterparty of its obligations thereunder. See Part I, Item 1A. Risk Factors – “We will need to obtain sufficient financing or other +capital to operate successfully” for additional discussion. +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for additional information on aircraft and engine acquisition commitments. +Ground Properties +At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of +passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often +contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with +our level of operations and the operations of the airport. Additionally, at our hub locations and in certain other cities we serve, we lease +administrative offices, catering, cargo, training, maintenance and other facilities. +We lease or have built on leased property our headquarters and training facilities in Fort Worth, Texas, our principal overhaul and +maintenance base in Tulsa, Oklahoma, our regional reservation offices, and administrative offices throughout the U.S. and abroad. +(1) +(1) +(1) +52 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_53.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb91f8c8374db1ab15d35806f38950603c42978f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_53.txt @@ -0,0 +1,7 @@ +Table of Contents +ITEM 3. LEGAL PROCEEDINGS +See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial +Statements in Part II, Item 8B for information on legal proceedings. +ITEM 4. MINE SAFETY DISCLOSURES +Not applicable. +53 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_54.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..fa61b5abb129d53a2a762b42bad7701de60fef6d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_54.txt @@ -0,0 +1,21 @@ +Table of Contents +PART II +ITEM 5. MARKET FOR AMERICAN AIRLINES GROUP’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER +PURCHASES OF EQUITY SECURITIES +Stock Exchange Listing +Our common stock is listed on The Nasdaq Global Select Market under the trading symbol “AAL.” There is no trading market for the +common stock of American, which is a wholly-owned subsidiary of AAG. +As of February 16, 2024, there were approximately 54,000 holders of record of our common stock. However, because many of the shares +of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial +holders of our common stock than record holders. +Information on securities authorized for issuance under our equity compensation plans will be set forth in our Proxy Statement for the +2024 Annual Meeting of Stockholders of American Airlines Group Inc. (the Proxy Statement) under the caption “Equity Compensation Plan +Information” and is incorporated by reference into this Annual Report on Form 10-K. +Dividends on Common Stock +There were no cash dividend payments during the years ended December 31, 2023 and 2022. In connection with our receipt of financial +assistance under PSP1, PSP2 and PSP3, we agreed not to pay dividends on AAG common stock through September 30, 2022, when this +restriction expired. If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will +be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a +dividend for any fixed period, and the payment of dividends may be suspended or discontinued again at any time at our discretion and +without prior notice. +54 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_55.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..4aeb2045527668fb60fd250fdf9d63565acf8bcf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_55.txt @@ -0,0 +1,25 @@ +Table of Contents +Stock Performance Graph +The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor shall +such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, +except to the extent that we specifically incorporate it by reference into such filing. +The following stock performance graph compares the cumulative total stockholder returns during the period from December 31, 2018 to +December 31, 2023 of our common stock to the New York Stock Exchange (NYSE) ARCA Airline Index and the Standard and Poor’s +Financial Services, LLC (S&P) 500 Stock Index. The comparison assumes $100 was invested on December 31, 2018 in our common stock +and in each of the foregoing indices and assumes that all dividends were reinvested. The stock performance shown on the following graph +represents historical stock performance and is not necessarily indicative of future stock price performance. +12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 +American Airlines Group Inc. (AAL) $ 100 $ 91 $ 50 $ 57 $ 40 $ 44 +NYSE ARCA Airline Index (XAL) 100 121 92 90 58 75 +S&P 500 Index (GSPC) 100 129 150 190 153 190 +Purchases of Equity Securities by the Issuer and Affiliated Purchasers +The remaining authority under our most recent $2.0 billion share repurchase program expired in December 2020, and in connection with +our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to repurchase shares of AAG common stock through +September 30, 2022, when this restriction expired. No repurchases of AAG common stock were made in 2023 or 2022 following the lapse of +these restrictions. As of December 31, 2023, the Board of Directors of AAG had not authorized another share repurchase program. Any +future determination to enter into a share repurchase program will be at the discretion of the Board of Directors, subject to applicable legal +limitations, and will depend upon our results of operations, financial condition, contractual restrictions and other factors deemed relevant by +the Board of Directors. +See Part I, Item 1A. Risk Factors – “If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee +that we will continue to do so or that such a capital deployment program will enhance long-term stockholder value.” +55 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_56.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d2f55d66c3fe4849e2eeec0ad0ae395eff69e4a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_56.txt @@ -0,0 +1,26 @@ +Table of Contents +Ownership Restrictions +AAG’s Certificate of Incorporation and Bylaws provide that, consistent with the requirements of Subtitle VII of Title 49 of the United States +Code, as amended (the Aviation Act), any persons or entities who are not a “citizen of the United States” (as defined under the Aviation Act +and administrative interpretations issued by the DOT, its predecessors and successors, from time to time), including any agent, trustee or +representative of such persons or entities (a non-citizen), shall not, in the aggregate, own (beneficially or of record) and/or control more than +(a) 24.9% of the aggregate votes of all of our outstanding equity securities or (b) 49.0% of our outstanding equity securities. Our Certificate of +Incorporation and Bylaws further specify that it is the duty of each stockholder who is a non-citizen to register his, her or its equity securities +on our foreign stock record and provide for remedies applicable to stockholders that exceed the voting and ownership caps described above. +In addition, to reduce the risk of a potential adverse effect on our ability to use our NOL carryforwards and certain other tax attributes for +federal income tax purposes, and in connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial +shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted the Tax Benefit Preservation Plan. The Tax +Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders of AAG. The Tax Benefit +Preservation Plan is designed to reduce the likelihood that we experience an "ownership change” for purposes of Section 382 by deterring +certain acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such +acquisitions may still occur. In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by +discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non- +exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its +ownership interest in AAG. +See Part I, Item 1A. Risk Factors – “AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that +limit voting and acquisition and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes” and “Our +ability to utilize our NOLs and other carryforwards may be limited.” Also see AAG’s Certification of Incorporation and Bylaws, which are filed +as Exhibits 3.1, 3.2, 3.3 and 3.4 hereto, for the full text of the foregoing restrictions and AAG’s Description of the Registrants’ Securities +Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto, for a more detailed +description. +56 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_57.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..65f4605d97f9aeb791ec011c4f707a306cf6bc1c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_57.txt @@ -0,0 +1,39 @@ +Table of Contents +ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA +Selected Consolidated Financial Data of AAG +The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and +“Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from AAG’s audited +consolidated financial statements. + Year Ended December 31, + 2023 2022 2021 + (In millions, except share and per share amounts) +Consolidated Statements of Operations data: +Total operating revenues $ 52,788 $ 48,971 $ 29,882 +Total operating expenses 49,754 47,364 30,941 +Operating income (loss) 3,034 1,607 (1,059) +Net income (loss) 822 127 (1,993) +Earnings (loss) per common share: +Basic $ 1.26 $ 0.20 $ (3.09) +Diluted 1.21 0.19 (3.09) +Shares used for computation (in thousands): +Basic 653,612 650,345 644,015 +Diluted 719,669 655,122 644,015 +Consolidated Balance Sheet data (at end of period): +Total assets $ 63,058 $ 64,716 $ 66,467 +Debt and finance leases 32,902 35,663 38,060 +Pension and postretirement obligations 3,171 2,926 5,150 +Operating lease liabilities 7,761 8,024 8,117 +Stockholders’ deficit (5,202) (5,799) (7,340) +Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 9 to AAG's Consolidated Financial +Statements in Part II, Item 8A for further information on pension and postretirement benefits. +Reconciliation of GAAP to Non-GAAP Financial Measures +We sometimes use financial measures that are derived from the consolidated financial statements but that are not presented in +accordance with accounting principles generally accepted in the U.S. (GAAP) to understand and evaluate our current operating performance +and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to +investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and +should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in +accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures +on a GAAP basis. +(1) +(1) +57 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_58.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..5745308f982136d90d072b4023ba4e737a85136f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_58.txt @@ -0,0 +1,55 @@ +Table of Contents +The following table presents the components of our total net special items and the reconciliation of pre-tax income and net income (GAAP +measures) to pre-tax income excluding net special items and net income excluding net special items (non-GAAP measures). Management +uses these non-GAAP financial measures to evaluate our current operating performance and to allow for period-to-period comparisons. As +net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an +additional tool to understand our core operating performance. + Year Ended December 31, + 2023 2022 + (In millions) +Components of Total Special Items, Net: +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net 971 193 +Regional operating special items, net 8 5 +Operating special items, net 979 198 +Debt refinancing and extinguishment 280 3 +Mark-to-market adjustments on equity investments, net 82 71 +Nonoperating special items, net 362 74 +Pre-tax special items, net 1,341 272 +Income tax special items, net — (9) +Total special items, net $ 1,341 $ 263 +Reconciliation of Pre-Tax Income Excluding Net Special Items: +Pre-tax income – GAAP $ 1,121 $ 186 +Adjusted for: Pre-tax special items, net 1,341 272 +Pre-tax income excluding net special items $ 2,462 $ 458 +Reconciliation of Net Income Excluding Net Special Items: +Net income – GAAP $ 822 $ 127 +Adjusted for: Total special items, net 1,341 263 +Adjusted for: Net tax effect of net special items (304) (62) +Net income excluding net special items $ 1,859 $ 328 +See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early +repayment of debt. See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information. +(1) +(2) +(3) +(4) +(5) +(6) +(1) +(2) +(3) +(4) +(5) +58 +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_59.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..da5144fd3785748348385bae0f6c0dd8f59759d8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_59.txt @@ -0,0 +1,35 @@ +Table of Contents +Mark-to-market adjustments on equity investments, net included net unrealized gains and losses associated with certain equity +investments. See Note 8 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information related to our equity +investments. +Additionally, the table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding net +special items and fuel (non-GAAP measure) and total operating cost per available seat mile (CASM) to CASM excluding net special items +and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel to +evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts +the comparability of period-to-period financial performance. The adjustment to exclude net special items and fuel allows management an +additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding. + Year Ended December 31, + 2023 2022 +Reconciliation of CASM Excluding Net Special Items and Fuel: +(In millions) +Total operating expenses – GAAP $ 49,754 $ 47,364 +Operating net special items : +Mainline operating special items, net (971) (193) +Regional operating special items, net (8) (5) +Aircraft fuel and related taxes (12,257) (13,791) +Total operating expenses, excluding net special items and fuel $ 36,518 $ 33,375 +(In millions) +Total Available Seat Miles (ASM) 277,723 260,226 +(In cents) +CASM 17.92 18.20 +Operating net special items per ASM : +Mainline operating special items, net (0.35) (0.07) +Regional operating special items, net — — +Aircraft fuel and related taxes per ASM (4.41) (5.30) +CASM, excluding net special items and fuel 13.15 12.83 +See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items. +(6) +(1) +(1) +(1) +59 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_6.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..6f83ba57c72a6d8c1f3e66e1ea93b5a3e0ad5c9e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_6.txt @@ -0,0 +1,35 @@ +Table of Contents +Summary of Risk Factors +Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, +or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate +in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such +new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or +any combination thereof, may impact our business. These risks are more fully described in Part I, Item 1A. Risk Factors. These risks include, +among others, the following: +Risks Related to our Business and Industry +• Downturns in economic conditions could adversely affect our business. +• We will need to obtain sufficient financing or other capital to operate successfully. +• Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to adverse +economic and industry conditions. +• We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of +operations and financial condition. +• If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect +our liquidity. +• The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain additional +qualified personnel could adversely affect our business. +• Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, regulatory +and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be +volatile and fluctuate materially due to changes in such conditions. +• The airline industry is intensely competitive and dynamic. +• Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial performance. +• If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +• Any damage to our reputation or brand image could adversely affect our business or financial results. +• Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties +or decreased demand. +• Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect +our business and financial results. +• We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity. +• Our ability to utilize our NOLs and other carryforwards may be limited. +6 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_60.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f56c284e16b4c3266e3ca0af84258fca254aaa1 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_60.txt @@ -0,0 +1,24 @@ +Table of Contents +Selected Consolidated Financial Data of American +The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and +“Consolidated Balance Sheet data” for the years ended and as of December 31, 2023, 2022 and 2021, are derived from American’s audited +consolidated financial statements. + Year Ended December 31, + 2023 2022 2021 + (In millions) +Consolidated Statements of Operations data: +Total operating revenues $ 52,784 $ 48,965 $ 29,880 +Total operating expenses 49,715 47,312 30,841 +Operating income (loss) 3,069 1,653 (961) +Net income (loss) 1,188 338 (1,777) +Consolidated Balance Sheet data (at end of period): +Total assets $ 69,074 $ 70,324 $ 71,145 +Debt and finance leases 27,675 30,422 32,094 +Pension and postretirement obligations 3,148 2,900 5,117 +Operating lease liabilities 7,708 7,961 8,074 +Stockholder’s equity 6,577 5,593 3,826 +Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 8 to American's Consolidated Financial +Statements in Part II, Item 8B for further information on pension and postretirement benefits. +(1) +(1) +60 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_61.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..43d353b2c78f9c3bd2f4efc60dfe810d39f2194a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_61.txt @@ -0,0 +1,47 @@ +Table of Contents +ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS +2023 Financial Overview +The selected financial data presented below is derived from AAG’s audited consolidated financial statements included in Part II, Item 8A of +this report and should be read in conjunction with those financial statements and the related notes thereto. + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger revenue $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo revenue 812 1,233 (421) (34.1) +Other operating revenue 3,464 3,170 294 9.3 +Total operating revenues 52,788 48,971 3,817 7.8 +Aircraft fuel and related taxes 12,257 13,791 (1,534) (11.1) +Salaries, wages and benefits 14,580 12,972 1,608 12.4 +Total operating expenses 49,754 47,364 2,390 5.0 +Operating income 3,034 1,607 1,427 88.8 +Pre-tax income 1,121 186 935 nm +Income tax provision 299 59 240 nm +Net income 822 127 695 nm +Pre-tax income – GAAP $ 1,121 $ 186 $ 935 nm +Adjusted for: pre-tax net special items 1,341 272 1,069 nm +Pre-tax income excluding net special items $ 2,462 $ 458 $ 2,004 nm +See Part II, Item 6. Selected Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures” and Note 2 to +AAG’s Consolidated Financial Statements in Part II, Item 8A for details on the components of pre-tax net special items. +Not meaningful or greater than 100% change. +Pre-Tax Income and Net Income +Pre-tax income and net income were $1.1 billion and $822 million, respectively, in 2023. This compares to 2022 pre-tax income and net +income of $186 million and $127 million, respectively. +The year-over-year improvement in our pre-tax income on a GAAP basis was driven primarily by higher passenger revenue and lower fuel +costs. Continued strength in demand for air travel and a 7.6% increase in revenue passenger miles (RPMs) as compared to 2022 contributed +to record passenger revenue in 2023. Aircraft fuel costs were lower primarily due to a 16.3% decrease in the average price per gallon of +aircraft fuel as compared to 2022. The increase to pre-tax income was partially offset by increases in certain operating expenses including +salaries, wages and benefits costs, primarily as a result of the ratification of a new collective bargaining agreement with our mainline pilots, +as described below. The 2023 period also included $1.3 billion of pre-tax net special items, principally related to one-time charges resulting +from the new collective bargaining agreement. +Excluding the effects of pre-tax net special items, pre-tax income was $2.5 billion and $458 million in 2023 and 2022, respectively. The +year-over-year improvement in our pre-tax income excluding pre-tax net special items was primarily due to record passenger revenue in +2023 and lower fuel costs, offset in part by increases in certain operating expenses including salaries, wages and benefits, as described +above. +In May 2023, American and the Allied Pilots Association, the union representing our mainline pilots, reached an agreement in principle on +a new collective bargaining agreement, which was ratified in August 2023. This four-year agreement provides wage rate increases, including +an initial wage rate increase of 21% effective as of January 1, 2023, +(2) +(1) +(1) +(2) +61 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_62.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..9259ace638b1e39cf8fed1159fce34a9996280c0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_62.txt @@ -0,0 +1,38 @@ +Table of Contents +quality-of-life benefits and other benefit-related items. The additional compensation for the 2023 period prior to contract ratification as a result +of the higher wage rates was recorded within salaries, wages and benefits in the consolidated statements of operations in the second and +third quarters of 2023. The agreement also included a provision for a one-time payment upon ratification. In 2023, one-time charges resulting +from the ratification of this new agreement were recorded as mainline operating special items, net in the consolidated statement of +operations, including the one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. The one-time +payment and the additional compensation were principally paid in 2023, with remaining payments expected to be paid in the first quarter of +2024. +Revenue +In 2023, we reported total operating revenues of $52.8 billion, an increase of $3.8 billion, or 7.8%, as compared to 2022. Passenger +revenue was $48.5 billion, an increase of $3.9 billion, or 8.8%, as compared to 2022. The increase in passenger revenue in 2023 was +primarily due to a 7.6% increase in RPMs, driven by the continued strength in demand for air travel, resulting in an 83.5% load factor. +Cargo revenue decreased $421 million, or 34.1%, in 2023 as compared to 2022, primarily due to a 29.4% decrease in cargo yield and a +6.7% decrease in cargo ton miles driven by lower demand and increased air freight capacity globally. +Other operating revenue increased $294 million, or 9.3%, in 2023 as compared to 2022, driven primarily by higher revenue associated +with our loyalty program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 +billion, respectively. +Our total revenue per available seat mile (TRASM) was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022. +Fuel +In 2023, aircraft fuel expense totaled $12.3 billion, a decrease of $1.5 billion, or 11.1%, as compared to 2022. This decrease was primarily +driven by a 16.3% decrease in the average price per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset +in part by a 6.1% increase in gallons of fuel consumed due to increased capacity. +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. +Other Costs +We remain committed to actively managing our cost structure, which we believe is necessary in an industry in which economic prospects +are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel. +Our 2023 CASM was 17.92 cents, a decrease of 1.6%, from 18.20 cents in 2022. This decrease in CASM was primarily driven by lower +aircraft fuel costs in 2023, as described above, offset by higher salaries, wages and benefits costs associated with the ratification of a new +collective bargaining agreement with our mainline pilots, as described above. +Our 2023 CASM excluding net special items and fuel was 13.15 cents, an increase of 2.5%, from 12.83 cents in 2022, which was primarily +driven by higher salaries, wages and benefits costs associated with the ratification of a new collective bargaining agreement with our mainline +pilots, as described above. +For a reconciliation of total operating CASM to total operating CASM excluding net special items and fuel, see Part II, Item 6. Selected +Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures.” +62 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_63.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e967e03c9ae31b4f82c4fc0a60dc218f6d2213a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_63.txt @@ -0,0 +1,25 @@ +Table of Contents +Liquidity +As of December 31, 2023, we had $10.4 billion in total available liquidity, consisting of $7.6 billion in unrestricted cash and short-term +investments and $2.9 billion in total undrawn capacity under revolving credit and other short-term facilities. +During 2023, we completed the following financing transactions (see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item +8A for further information): +• refinanced approximately $1.8 billion in aggregate principal amount of term loans outstanding under the 2013 Term Loan Facility (the +2013 Term Loan Facility Refinancing) through the combination of (i) the issuance of $750 million in aggregate principal amount of +7.25% senior secured notes due 2028 (the 7.25% Senior Secured Notes) and (ii) the entry into the Seventh Amendment to the 2013 +Credit Agreement, pursuant to which the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility was extended to +February 2028 from June 2025; +• extended the maturity of certain commitments under the 2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving +Facility to October 2026; +• issued $1.0 billion aggregate principal amount of 8.50% senior secured notes due 2029 (the 8.50% Senior Secured Notes) in a +private offering and entered into the 2023 Credit Agreement that provides for a term loan facility (the 2023 Term Loan Facility) in an +aggregate principal amount of $1.1 billion. The net proceeds from the offering of the 8.50% Senior Secured Notes, together with net +proceeds from borrowings under the 2023 Term Loan Facility and cash on hand were used to redeem all of American’s outstanding +11.75% senior secured notes due 2025 (the 11.75% Senior Secured Notes); +• issued $1.1 billion of equipment loans and other notes payable in connection with the financing of certain aircraft; and +• repurchased $552 million of secured and unsecured notes in the open market. +A significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of at least $2.0 billion of +unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities and/or contain covenants requiring +us to meet certain loan to value, collateral coverage and/or peak debt service coverage ratios. +See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on our debt obligations. +63 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_64.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..3eb8aa5e4cf2d56a8719843079cd7880a5b6c1c4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_64.txt @@ -0,0 +1,53 @@ +Table of Contents +AAG’s Results of Operations +For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition +and Results of Operations – “AAG’s Results of Operations” of our 2022 Form 10-K. +Operating Statistics +The table below sets forth selected operating data for the years ended December 31, 2023 and 2022. + Year Ended December 31, Increase (Decrease) 2023 2022 +Revenue passenger miles (millions) 231,926 215,624 7.6% +Available seat miles (millions) 277,723 260,226 6.7% +Passenger load factor (percent) 83.5 82.9 0.6pts +Yield (cents) 20.92 20.67 1.2% +Passenger revenue per available seat mile (cents) 17.47 17.13 2.0% +Total revenue per available seat mile (cents) 19.01 18.82 1.0% +Fuel consumption (gallons in millions) 4,140 3,901 6.1% +Average aircraft fuel price including related taxes (dollars per gallon) 2.96 3.54 (16.3)% +Total operating cost per available seat mile (cents) 17.92 18.20 (1.6)% +Aircraft at end of period 1,521 1,461 4.1% +Full-time equivalent employees at end of period 132,100 129,700 1.9% +Revenue passenger mile (RPM) – A basic measure of sales volume. One RPM represents one passenger flown one mile. +Available seat mile (ASM) – A basic measure of production. One ASM represents one seat flown one mile. +Passenger load factor – The percentage of available seats that are filled with revenue passengers. +Yield – A measure of airline revenue derived by dividing passenger revenue by RPMs. +Passenger revenue per available seat mile (PRASM) – Passenger revenue divided by ASMs. +Total revenue per available seat mile (TRASM) – Total revenues divided by ASMs. +Total operating cost per available seat mile (CASM) – Total operating expenses divided by ASMs. +Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase +agreements. Excluded from the aircraft count above are 77 regional aircraft in temporary storage as of December 31, 2023 as +follows: 57 Embraer 145, 11 Bombardier CRJ 700, six Bombardier CRJ 900 and three Embraer 170. +Operating Revenues + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo 812 1,233 (421) (34.1) +Other 3,464 3,170 294 9.3 +Total operating revenues $ 52,788 $ 48,971 $ 3,817 7.8 +(a) +(b) +(c) +(d) +(e) +(f) +(g) + (h) +(a) +(b) +(c) +(d) +(e) +(f) +(g) +(h) +64 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_65.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..eb9697102239b8f3bbdad6149f3783075d6ed53e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_65.txt @@ -0,0 +1,42 @@ +Table of Contents +This table presents our passenger revenue and the year-over-year change in certain operating statistics: + Increasevs. Year Ended December 31, 2022 + Year Ended December 31, 2023 Passenger Revenue RPMs ASMs Load Factor Passenger Yield PRASM + (In millions) +Passenger revenue $ 48,512 8.8% 7.6% 6.7% 0.6pts 1.2% 2.0% +Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, +resulting in a 7.6% increase in RPMs and an 83.5% load factor in 2023. +Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to a 29.4% decrease in cargo yield and a 6.7% +decrease in cargo ton miles driven by lower demand and increased air freight capacity globally. +Other operating revenue increased $294 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with our loyalty +program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, +respectively. +Total operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as +described above. Our TRASM was 19.01 cents in 2023, a 1.0% increase as compared to 18.82 cents in 2022. +Operating Expenses + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) +Salaries, wages and benefits 14,580 12,972 1,608 12.4 +Regional expenses 4,643 4,385 258 5.9 +Maintenance, materials and repairs 3,265 2,684 581 21.6 +Other rent and landing fees 2,928 2,730 198 7.3 +Aircraft rent 1,369 1,395 (26) (1.9) +Selling expenses 1,799 1,815 (16) (0.9) +Depreciation and amortization 1,936 1,977 (41) (2.1) +Mainline operating special items, net 971 193 778 nm +Other 6,006 5,422 584 10.8 +Total operating expenses $ 49,754 $ 47,364 $ 2,390 5.0 +Additional detail regarding changes in our operating expenses is as follows: +Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price +per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel +consumed due to increased capacity. +Salaries, wages and benefits increased $1.6 billion, or 12.4%, in 2023 from 2022 primarily driven by higher wage rates associated with the +ratification of a new collective bargaining agreement with our mainline pilots. +Regional expenses increased $258 million, or 5.9%, in 2023 from 2022 primarily due to increased costs at our wholly-owned regional +carriers, including pay rate increases and higher costs for maintenance, materials and repairs driven by an increase in the volume of engine +overhauls. +Maintenance, materials and repairs increased $581 million, or 21.6%, in 2023 from 2022 primarily due to increased costs for engine +overhauls and airframe heavy checks driven by higher volume, flight hours and cost of materials. +65 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_66.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..29f91a9f89c96e2b044e27445d5472627a17bb76 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_66.txt @@ -0,0 +1,51 @@ +Table of Contents +Other rent and landing fees increased $198 million, or 7.3%, in 2023 from 2022 primarily due to rate increases at certain airports, +incremental engine leases and higher landing fees. +Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit +card fees driven by the overall increase in passenger revenues. +Other operating expenses increased $584 million, or 10.8%, in 2023 from 2022 primarily driven by the increase in flight operations, +including increased costs for onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain +general and administrative expenses. +Operating Special Items, Net + Year Ended December 31, + 2023 2022 + (In millions) +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net 971 193 +Regional operating special items, net 8 5 +Operating special items, net $ 979 $ 198 +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Nonoperating Results + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Interest income $ 591 $ 216 $ 375 nm +Interest expense, net (2,145) (1,962) (183) 9.3 +Other income (expense), net (359) 325 (684) nm +Total nonoperating expense, net $ (1,913) $ (1,421) $ (492) 34.6 +Interest income increased $375 million in 2023 compared to 2022 primarily as a result of higher returns on our short-term investments. +Interest expense, net increased $183 million, or 9.3%, in 2023 compared to 2022 primarily due to higher interest rates on our variable-rate +debt instruments, offset in part by debt repayments. +In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt +refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $32 +million of non-service related pension and other postretirement benefit plan income. +In 2022, other nonoperating income, net primarily included $424 million of non-service related pension and other postretirement benefit +plan income, offset in part by $74 million of net special charges principally for mark-to-market net unrealized losses associated with certain +equity investments. +(1) +(2) +(3) +(1) +(2) +(3) +66 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_67.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..bcd71d6e0757575498233d8642c55c320b81e50f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_67.txt @@ -0,0 +1,34 @@ +Table of Contents +The decrease in non-service related pension and other postretirement benefit plan income in 2023 as compared to 2022 is principally due +to an increase in interest cost for the pension and other postretirement benefit obligations driven by higher discount rates and a decrease in +expected return on pension plan assets from a reduction in plan assets. +Income Taxes +In 2023, we recorded an income tax provision of $299 million with an effective rate of approximately 27%, which was substantially non- +cash. Substantially all of our income before income taxes is attributable to the United States. At December 31, 2023, we had approximately +$13.7 billion of gross federal NOLs and $4.7 billion of other carryforwards available to reduce future federal taxable income, of which $3.4 +billion will expire beginning in 2029 if unused and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of +NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if +unused. +In 2022, we recorded an income tax provision of $59 million at an effective rate of approximately 32%, which was substantially non-cash. +See Note 6 to AAG’s Consolidated Financial Statements in Part II, Item 8A for additional information on income taxes. +American’s Results of Operations +For a comparison of the 2022 to 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition +and Results of Operations – “American’s Results of Operations” of American’s 2022 Form 10-K. +Operating Revenues + Year Ended December 31, +Increase (Decrease) Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Passenger $ 48,512 $ 44,568 $ 3,944 8.8 +Cargo 812 1,233 (421) (34.1) +Other 3,460 3,164 296 9.3 +Total operating revenues $ 52,784 $ 48,965 $ 3,819 7.8 +Passenger revenue increased $3.9 billion, or 8.8%, in 2023 from 2022 primarily due to continued strength in demand for air travel, +resulting in an increase in RPMs and an increase in load factor in 2023. +Cargo revenue decreased $421 million, or 34.1%, in 2023 from 2022 primarily due to decreases in cargo yield and cargo ton miles driven +by lower demand and increased air freight capacity globally. +Other operating revenue increased $296 million, or 9.3%, in 2023 from 2022 driven primarily by higher revenue associated with +American’s loyalty program. During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 +billion, respectively. +Total operating revenues in 2023 increased $3.8 billion, or 7.8%, from 2022 driven primarily by the increase in passenger revenue as +described above. +67 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_68.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7b58c5cd4a8e77a164a7b5a79c46a00dfe8f6fc --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_68.txt @@ -0,0 +1,47 @@ +Table of Contents +Operating Expenses + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Aircraft fuel and related taxes $ 12,257 $ 13,791 $ (1,534) (11.1) +Salaries, wages and benefits 14,572 12,965 1,607 12.4 +Regional expenses 4,619 4,345 274 6.3 +Maintenance, materials and repairs 3,265 2,684 581 21.6 +Other rent and landing fees 2,928 2,730 198 7.3 +Aircraft rent 1,369 1,395 (26) (1.9) +Selling expenses 1,799 1,815 (16) (0.9) +Depreciation and amortization 1,927 1,969 (42) (2.2) +Mainline operating special items, net 971 193 778 nm +Other 6,008 5,425 583 10.8 +Total operating expenses $ 49,715 $ 47,312 $ 2,403 5.1 +Additional detail regarding changes in American’s operating expenses is as follows: +Aircraft fuel and related taxes decreased $1.5 billion, or 11.1%, in 2023 from 2022 primarily due to a 16.3% decrease in the average price +per gallon of aircraft fuel including related taxes to $2.96 in 2023 from $3.54 in 2022, offset in part by a 6.1% increase in gallons of fuel +consumed due to increased capacity. +Salaries, wages and benefits increased $1.6 billion, or 12.4%, in 2023 from 2022 primarily driven by higher wage rates associated with the +ratification of a new collective bargaining agreement with American’s mainline pilots. +Regional expenses increased $274 million, or 6.3%, in 2023 from 2022 primarily due to contractual rate increases with American’s +regional carriers. +Maintenance, materials and repairs increased $581 million, or 21.6%, in 2023 from 2022 primarily due to increased costs for engine +overhauls and airframe heavy checks driven by higher volume, flight hours and cost of materials. +Other rent and landing fees increased $198 million, or 7.3%, in 2023 from 2022 primarily due to rate increases at certain airports, +incremental engine leases and higher landing fees. +Selling expenses remained flat in 2023 from 2022 primarily due to a decrease in commissions expense, offset primarily by higher credit +card fees driven by the overall increase in passenger revenues. +Other operating expenses increased $583 million, or 10.8%, in 2023 from 2022 primarily driven by the increase in flight operations, +including increased costs for onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain +general and administrative expenses. +Operating Special Items, Net + Year Ended December 31, +2023 2022 + (In millions) +Labor contract expenses $ 989 $ — +Severance expenses 23 — +Fleet impairment — 149 +Litigation reserve adjustments — 37 +Other operating special items, net (41) 7 +Mainline operating special items, net $ 971 $ 193 +(1) +(2) +(3) +68 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_69.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..b533feeb322ae1fb0234a8952250db646bf1c7f3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_69.txt @@ -0,0 +1,44 @@ +Table of Contents +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with +American’s mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of +$235 million. +Severance expenses included costs associated with headcount reductions in certain corporate functions. +Fleet impairment included a non-cash impairment charge to write down the carrying value of American’s retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. American retired its Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Nonoperating Results + Year Ended December 31, Increase (Decrease) +Percent Increase (Decrease) 2023 2022 + (In millions, except percentage changes) +Interest income $ 1,078 $ 349 $ 729 nm +Interest expense, net (2,206) (1,872) (334) 17.8 +Other income (expense), net (359) 324 (683) nm +Total nonoperating expense, net $ (1,487) $ (1,199) $ (288) 24.0 +Interest income increased $729 million in 2023 compared to 2022 primarily as a result of higher returns on American’s short-term +investments and related party receivables from AAG. Interest expense, net increased $334 million, or 17.8%, in 2023 compared to 2022 +primarily due to higher interest rates on American’s variable-rate debt instruments and related party payables from AAG’s wholly-owned +subsidiaries, offset in part by debt repayments. +In 2023, other nonoperating expense, net primarily included $362 million of net special charges principally associated with debt +refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $33 +million of non-service related pension and other postretirement benefit plan income. +In 2022, other nonoperating income, net primarily included $423 million of non-service related pension and other postretirement benefit +plan income, offset in part by $72 million of net special charges principally for mark-to-market net unrealized losses associated with certain +equity investments. +The decrease in non-service related pension and other postretirement benefit plan income in 2023 as compared to 2022 is principally due +to an increase in interest cost for the pension and other postretirement benefit obligations driven by higher discount rates and a decrease in +expected return on pension plan assets from a reduction in plan assets. +Income Taxes +American is a member of AAG’s consolidated federal and certain state income tax returns. +In 2023, American recorded an income tax provision of $394 million with an effective rate of approximately 25%, which was substantially +non-cash. Substantially all of American’s income before income taxes is attributable to the United States. At December 31, 2023, American +had approximately $13.7 billion of gross federal NOLs and $3.6 billion of other carryforwards available to reduce future federal taxable +income, of which $3.8 billion will expire beginning in 2033 if unused and $13.5 billion can be carried forward indefinitely. American also had +approximately $5.3 billion of NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable +years 2023 through 2043 if unused. +In 2022, American recorded an income tax provision of $116 million at an effective rate of approximately 26%, which was substantially +non-cash. +See Note 5 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on income taxes. +(1) +(2) +(3) +69 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_7.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b5d6801c2b021c85da0ea4e790af83997f9cf68 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_7.txt @@ -0,0 +1,36 @@ +Table of Contents +• We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the +full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +• The commercial relationships that we have with other companies, including any related equity investments, may not produce the +returns or results we expect. +• Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer +demand, our operating results and liquidity. +• Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, +limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +• We operate a global business with international operations that are subject to economic and political instability and have been, and in +the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control. +• We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the travel +industry continues to face ongoing security concerns. +• We are subject to risks associated with climate change, including increased regulation of our greenhouse gas (GHG) emissions, +changing consumer preferences and the potential for increased impacts of severe weather events on our operations and +infrastructure. +• A shortage of pilots or other personnel has in the past and could continue to materially adversely affect our business. +• We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and +failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may adversely impact +our business, results of operations and financial condition. +• We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems +could harm our business, results of operations and financial condition. +• Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of +personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations +and financial condition. +• We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or one of +our AAdvantage partners or other business partners, could materially adversely affect our business, results of operations and +financial condition. +• We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +• If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate +slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations. +7 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_70.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..edb5aa3025f232e7410b515d17103bec0610ad60 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_70.txt @@ -0,0 +1,37 @@ +Table of Contents +Liquidity and Capital Resources +Liquidity +At December 31, 2023, AAG had $10.4 billion in total available liquidity and $910 million in restricted cash and short-term investments. +Additional detail regarding our available liquidity is provided in the table below (in millions): + AAG American + December 31, December 31, + 2023 2022 2023 2022 +Cash $ 578 $ 440 $ 567 $ 429 +Short-term investments 7,000 8,525 6,998 8,523 +Undrawn facilities 2,862 3,033 2,862 3,033 +Total available liquidity $ 10,440 $ 11,998 $ 10,427 $ 11,985 +In the ordinary course of our business, we or our affiliates may, at any time and from time to time, seek to prepay, retire or repurchase our +outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions +or otherwise. Such repurchases, prepayments, retirements or exchanges, if any, will be conducted on such terms and at such prices as we +may determine, and will depend on prevailing market conditions, our liquidity requirements, legal and contractual restrictions and other +factors. The amounts involved may be material. For further information regarding our debt repurchases for the year ended December 31, +2023, see Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial +Statements in Part II, Item 8B. +Certain Covenants +Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among +other things, may restrict the ability of us and our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt +agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain +events constituting a change of control under the relevant agreement, in certain cases at a premium. Additionally, certain of our debt +financing agreements (including our secured notes, term loans, revolving credit facilities and spare engine enhanced equipment trust +certificates (EETCs)) contain loan to value (LTV), collateral coverage or peak debt service coverage ratio covenants and certain agreements +require us to appraise the related collateral annually or semiannually. Pursuant to such agreements, if the applicable LTV, collateral coverage +or peak debt service coverage ratio exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to +pledge additional qualifying collateral (which in some cases may include cash or investment securities), withhold additional cash in certain +accounts, or pay down such financing, in whole or in part, or the interest rate for the relevant financing will be increased. As of the most +recent applicable measurement dates, we were in compliance with each of the foregoing LTV, collateral coverage and peak debt service +coverage tests. Additionally, a significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of +at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities, and our +AAdvantage Financing contains a peak debt service coverage ratio, pursuant to which failure to comply with a certain threshold may result in +early repayment, in whole or in part, of the AAdvantage Financing. For further information regarding our debt covenants, see Note 4 to AAG’s +Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B. +70 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_71.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..160bfe8c8d9d7e1ac9569df3e5967f483669f9a3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_71.txt @@ -0,0 +1,42 @@ +Table of Contents +Sources and Uses of Cash +For a comparison of the 2022 and 2021 reporting periods, see Part II, Item 7. Management’s Discussion and Analysis of Financial +Condition and Results of Operations – “Sources and Uses of Cash” of our 2022 Form 10-K. +AAG +Operating Activities +Our net cash provided by operating activities was $3.8 billion and $2.2 billion in 2023 and 2022, respectively, a $1.6 billion year-over-year +increase due to higher profitability and cash provided by working capital management. +Investing Activities +Our net cash used in investing activities was $502 million in 2023 as compared to net cash provided by investing activities of $636 million +in 2022. +Our principal investing activities in 2023 included $2.6 billion of capital expenditures, which primarily related to the purchase of 17 Boeing +737-8 MAX aircraft, ten Airbus A321neo aircraft, seven Embraer 175 aircraft, seven Bombardier CRJ 900 aircraft and 28 spare engines. +These cash outflows were offset in part by $1.5 billion in net sales of short-term investments and $230 million of proceeds from the sale of +property and equipment and sale-leaseback transactions. +Our principal investing activities in 2022 included $3.7 billion in net sales of short-term investments. These cash inflows were offset in part +by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and $321 +million of equity investments, principally related to GOL. +Financing Activities +Our net cash used in financing activities was $3.2 billion and $2.6 billion in 2023 and 2022, respectively. +Our principal financing activities in 2023 included $2.9 billion in net repayments of debt and finance lease obligations primarily due to +scheduled debt repayments. In February 2023, we refinanced approximately $1.8 billion in aggregate principal amount of term loans +outstanding under the 2013 Term Loan Facility through the combination of (i) issuing $750 million in aggregate principal amount of the 7.25% +Senior Secured Notes and (ii) extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility. In December 2023, we +issued $1.0 billion aggregate principal amount of the 8.50% Senior Secured Notes and entered into the 2023 Term Loan Facility in an +aggregate principal amount of $1.1 billion. The net proceeds of the 8.50% Senior Secured Notes, together with net proceeds from borrowings +under the 2023 Term Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes. In addition, +we borrowed $1.1 billion in connection with the financing of certain aircraft and repurchased $552 million of secured and unsecured notes in +the open market. +Our principal financing activities in 2022 included $3.8 billion in repayments of debt and finance lease obligations, consisting of $2.2 billion +of scheduled debt repayments including the repayment of $401 million in connection with the maturity of our 5.000% unsecured notes, the +$1.2 billion prepayment of the December 2016 Term Loan Facility and the repurchase of $349 million of unsecured notes in the open market. +These cash outflows were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment +notes related to EETCs and $205 million in connection with the financing of certain aircraft. +American +Operating Activities +American’s net cash provided by operating activities was $3.7 billion and $1.3 billion in 2023 and 2022, respectively, a $2.4 billion year- +over-year increase due to higher profitability and cash provided by working capital management. +Investing Activities +American’s net cash used in investing activities was $449 million in 2023 as compared to net cash provided by investing activities of $693 +million in 2022. +71 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_72.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..16dea7232a6f0ae60f76a639804ede0da719f141 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_72.txt @@ -0,0 +1,40 @@ +Table of Contents +American’s principal investing activities in 2023 included $2.5 billion of capital expenditures, which primarily related to the purchase of 17 +Boeing 737-8 MAX aircraft, ten Airbus A321neo aircraft, seven Embraer 175 aircraft, seven Bombardier CRJ 900 aircraft and 28 spare +engines. These cash outflows were offset in part by $1.5 billion in net sales of short-term investments and $230 million of proceeds from the +sale of property and equipment and sale-leaseback transactions. +American’s principal investing activities in 2022 included $3.7 billion in net sales of short-term investments. These cash inflows were offset +in part by $2.5 billion of capital expenditures, which primarily related to the purchase of 24 Airbus A321neo aircraft and 12 spare engines, and +$321 million of equity investments, principally related to GOL. +Financing Activities +American’s net cash used in financing activities was $3.2 billion and $1.8 billion in 2023 and 2022, respectively. +American’s principal financing activities in 2023 included $2.9 billion in net repayments of debt and finance lease obligations primarily due +to scheduled debt repayments. In February 2023, American refinanced approximately $1.8 billion in aggregate principal amount of term loans +outstanding under the 2013 Term Loan Facility through the combination of (i) issuing $750 million in aggregate principal amount of the 7.25% +Senior Secured Notes and (ii) extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility. In December 2023, +American issued $1.0 billion aggregate principal amount of the 8.50% Senior Secured Notes and entered into the 2023 Term Loan Facility in +an aggregate principal amount of $1.1 billion. The net proceeds of the 8.50% Senior Secured Notes, together with net proceeds from +borrowings under the 2023 Term Loan Facility and cash on hand, were used to redeem all of the outstanding 11.75% Senior Secured Notes. +In addition, American borrowed $1.1 billion in connection with the financing of certain aircraft and repurchased $539 million of secured notes +in the open market. +American’s principal financing activities in 2022 included $3.0 billion in repayments of debt and finance lease obligations, consisting of +$1.8 billion of scheduled debt repayments and the $1.2 billion prepayment of the December 2016 Term Loan Facility. These cash outflows +were offset in part by $1.1 billion of long-term debt proceeds, consisting of $866 million from the issuance of equipment notes related to +EETCs and $205 million in connection with the financing of certain aircraft. +Commitments +For further information regarding our commitments, see the Notes to AAG’s Consolidated Financial Statements in Part II, Item 8A and the +Notes to American’s Consolidated Financial Statements in Part II, Item 8B at the referenced footnotes below. + AAG American +Debt Note 4 Note 3 +Leases Note 5 Note 4 +Employee Benefit Plans Note 9 Note 8 +Commitments, Contingencies and Guarantees Note 11 Note 10 +Off-Balance Sheet Arrangements +An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity +under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under +derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that +provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development +arrangements with us. +We have no off-balance sheet arrangements of the types described in the first three categories above that we believe may have a material +current or future effect on financial condition, liquidity or results of operations. +72 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_73.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec73e53c68211659aff5905045ca3089dd6679a9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_73.txt @@ -0,0 +1,25 @@ +Table of Contents +Pass-Through Trusts +American currently has 308 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by +pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment +or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately +when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one +time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the +case of the spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. +The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, +that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. +Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the +EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the +proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of +the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines. The equipment notes +are issued, at American’s election, in connection with a mortgage financing of the aircraft or spare engines. The equipment notes are secured +by a security interest in the aircraft or engines, as applicable. The pass-through trust certificates are not direct obligations of, nor are they +guaranteed by, AAG or American. However, the equipment notes issued to the trusts are direct obligations of American and, in certain +instances, have been guaranteed by AAG. As of December 31, 2023, $7.7 billion associated with these mortgage financings is reflected as +debt in the accompanying consolidated balance sheet. +Letters of Credit and Other +We provide financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation +obligations and airport commitments. As of December 31, 2023, we had $318 million of letters of credit and surety bonds securing various +obligations, of which $94 million is collateralized with our restricted cash. The letters of credit and surety bonds that are subject to expiration +will expire on various dates through 2028. +73 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_74.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..49f69c297ada889d2a16ea2cb49bf6bc99e04809 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_74.txt @@ -0,0 +1,59 @@ +Table of Contents +Contractual Obligations +The following table provides details of our estimated material cash requirements from contractual obligations as of December 31, 2023 (in +millions). The table does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time +and is subject to other conventions as set forth in the applicable accompanying footnotes. + Payments Due by Period + 2024 2025 2026 2027 2028 2029 andThereafter Total +American +Long-term debt: +Principal amount (See Note 3) $ 3,502 $ 3,702 $ 4,582 $ 4,618 $ 5,060 $ 6,062 $ 27,526 +Interest obligations 1,679 1,341 1,037 737 475 492 5,761 +Finance lease obligations (See Note 4) 156 140 114 71 30 89 600 +Aircraft and engine purchase commitments (SeeNote 10(a)) 2,410 3,725 3,580 1,118 829 645 12,307 +Operating lease commitments(See Note 4) 1,821 1,565 1,347 1,182 1,052 4,051 11,018 +Regional capacity purchase agreements (SeeNote 10(b)) 2,038 1,992 1,702 1,473 693 1,332 9,230 +Minimum pension obligations (See Note 8) 280 251 244 165 140 65 1,145 +Retiree medical and other postretirement benefits(See Note 8) 125 131 137 137 135 606 1,271 +Other purchase obligations (See Note 10(a)) 4,673 2,044 1,396 150 124 843 9,230 +Total American Contractual Obligations $ 16,684 $ 14,891 $ 14,139 $ 9,651 $ 8,538 $ 14,185 $ 78,088 +AAG Parent and Other AAG Subsidiaries +Long-term debt: +Principal amount (See Note 4) $ — $ 1,487 $ — $ — $ — $ 3,746 $ 5,233 +Interest obligations 121 145 156 190 192 399 1,203 +Finance lease obligations (See Note 5) 10 — — — — — 10 +Operating lease commitments (See Note 5) 20 12 9 5 3 26 75 +Minimum pension obligations (See Note 9) 4 2 2 1 1 3 13 +Total AAG Contractual Obligations $ 16,839 $ 16,537 $ 14,306 $ 9,847 $ 8,734 $ 18,359 $ 84,622 +For additional information, see the Notes to AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, referenced in the table above. +Amounts represent contractual amounts due. Excludes $349 million and $14 million of unamortized debt discount, premium and issuance +costs as of December 31, 2023 for American and AAG Parent, respectively. +For variable-rate debt, future interest obligations are estimated using the current forward rates at December 31, 2023. +Includes $7.7 billion of future principal payments and $1.0 billion of future interest payments as of December 31, 2023, related to EETCs +associated with mortgage financings of certain aircraft and spare engines. +See Part I, Item 2. Properties – “Aircraft and Engine Purchase Commitments” for additional information about the firm commitment +aircraft delivery schedule, in particular the footnote to the table thereunder as to potential changes to such delivery schedule. Due to +uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate based on +contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the applicable +equipment manufacturer. However, the actual delivery schedule may differ, potentially materially, based on various potential factors +including production delays by the manufacturer and regulatory concerns. Additionally, the amounts in the table exclude five Boeing 787 +Family +(a) +(b), (d) +(c), (d) +(e) + +(f) +(g) +(h) +(a) +(b) +(c) +(g) +(a) +(b) +(c) +(d) +(e) +74 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_75.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..fadc31b735e898f6f909cf6c501f59d355103d44 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_75.txt @@ -0,0 +1,36 @@ +Table of Contents +aircraft scheduled to be delivered in 2024, for which we have obtained committed lease financing. This financing is reflected in the +operating lease commitments line above. +Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are +estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual +payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase +agreements are reflected in the operating lease commitments line above. +Represents minimum pension contributions based on actuarially determined estimates as of December 31, 2023 and is based on +estimated payments through 2033. In January 2024, we made $280 million of required pension contributions. +Includes purchase commitments for aircraft fuel, flight equipment maintenance and information technology support and excludes +obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or +which are subject to material contingencies, such as the construction of a production facility. +Capital Raising Activity and Other Possible Actions +In light of our significant financial commitments related to, among other things, the servicing and amortization of existing debt and +equipment leasing arrangements and new flight equipment, we and our subsidiaries will regularly consider, and enter into negotiations related +to, capital raising and liability management activity, which may include the entry into leasing transactions and future issuances of, and +transactions designed to manage the timing and amount of, secured or unsecured debt obligations or additional equity or equity-linked +securities in public or private offerings or otherwise. The cash available from operations (if any) and these sources, however, may not be +sufficient to cover our cash obligations because economic factors may reduce the amount of cash generated by operations or increase costs. +For instance, an economic downturn or general global instability caused by military actions, terrorism, disease outbreaks (such as the +COVID-19 pandemic), natural disasters or other causes could reduce the demand for air travel, which would reduce the amount of cash +generated by operations. See Part I, Item 1A. Risk Factors – “Downturns in economic conditions could adversely affect our business” for +additional discussion. An increase in costs, either due to an increase in borrowing costs caused by a reduction in credit ratings or a general +increase in interest rates, or due to an increase in the cost of fuel, maintenance, aircraft, aircraft engines or parts, could decrease the amount +of cash available to cover cash contractual obligations. Moreover, certain of our financing arrangements contain significant minimum cash +balance or similar liquidity requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and +cash obligations without violating these requirements. See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 +to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding our financing arrangements. +In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise +manage the aggregate amount and cost of our debt, lease and other obligations or otherwise improve our balance sheet. Going forward, +depending on market conditions, our cash position and other considerations, we may continue to take such actions, and the amounts +involved may be material. +(f) +(g) +(h) +75 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_76.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..46c578d34dbfc53248aca9bf01940e9dbc598704 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_76.txt @@ -0,0 +1,43 @@ +Table of Contents +OTHER INFORMATION +Basis of Presentation +See Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for information +regarding the basis of presentation. +Critical Accounting Policies and Estimates +The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that +affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the +date of the financial statements. We believe our estimates and assumptions are reasonable; however, actual results could differ from those +estimates. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could potentially +result in materially different results under different assumptions and conditions. We have identified the following critical accounting policies +that impact the preparation of our consolidated financial statements. See the “Basis of Presentation and Summary of Significant Accounting +Policies” included in Note 1 to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for +additional discussion of the application of these estimates and other accounting policies. +Passenger Revenue +We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American +Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other +related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated +balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. +The contract duration of passenger tickets is generally one year. The majority of tickets sold are nonrefundable. A small percentage of +tickets, some of which are partially used tickets, expire unused. The estimate for tickets expected to expire unused is generally based on an +analysis of our historical data and other current applicable factors such as policy changes. We have consistently applied this accounting +method to estimate and recognize revenue from unused tickets at the date of travel. This estimate is periodically evaluated based on +subsequent activity to validate its accuracy. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are +included in passenger revenue during the period in which the evaluations are completed. +Loyalty Revenue +We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any +oneworld airline or other partner airlines, or by using the services of other program participants, such as our co-branded credit cards, and +certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines, as +well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, we apply the +deferred revenue method. +Mileage credits earned through travel +For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each +passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale +attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and +transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses +historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to +settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be +redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. For +the year ended December 31, 2023, a hypothetical 10% increase in the estimated selling price of mileage credits would have decreased +revenues by approximately $128 million as a result of additional amounts deferred from passenger ticket sales to be recognized in future +periods. +76 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_77.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..613beca138e1ddade91310aaa968038134c7d98e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_77.txt @@ -0,0 +1,47 @@ +Table of Contents +Mileage credits sold to co-branded credit cards and other partners +We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partners, +under contracts with remaining terms generally from one to six years as of December 31, 2023. Consideration received from the sale of +mileage credits is variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits +to non-airline business partners are comprised of two components, transportation and marketing. We allocate the consideration received +from these sales of mileage credits based on the relative selling price of each product or service delivered. +Our most significant mileage credit partner agreements are our co-branded credit card agreements with Citi and Barclaycard US. We +identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing component. +The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent +ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then +recognized in passenger revenue when mileage credits are redeemed and transportation is provided. +The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member +lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the +marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. +For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally +as the remaining mileage credits are redeemed. Our estimates use a statistical model based on historical redemption patterns to develop an +estimate of the likelihood of future redemption. For the year ended December 31, 2023, a hypothetical 10% increase in our estimate of +mileage credits not expected to be redeemed would have increased revenues by approximately $127 million. +Pensions and Retiree Medical and Other Postretirement Benefits +We recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our +pension and retiree medical and other postretirement benefits plans on the consolidated balance sheets with a corresponding adjustment to +accumulated other comprehensive income (loss). +Our pension and retiree medical and other postretirement benefits costs and liabilities are calculated using various actuarial assumptions +and methodologies. We use certain assumptions including, but not limited to, the selection of the: (1) discount rate and (2) expected return on +plan assets (as discussed below). These assumptions as of December 31 were: +2023 2022 +Pension weighted average discount rate 5.2 % 5.6 % +Retiree medical and other postretirement benefits weighted average discount rate 5.3 % 5.7 % +Expected rate of return on plan assets 8.0 % 8.0 % +When establishing the discount rate to measure our obligations, we match high quality corporate bonds available in the marketplace +whose cash flows approximate our projected benefit disbursements. Lowering the discount rate by 50 basis points as of December 31, +2023 would increase our pension and retiree medical and other postretirement benefits obligations by approximately $740 million and +$40 million, respectively, and decrease estimated 2024 pension and retiree medical and other postretirement benefits expense by +approximately $5 million and $1 million, respectively. +The expected rate of return on plan assets is based upon an evaluation of our historical trends and experience, taking into account +current and expected market conditions and our target asset allocation of 30% U.S. fixed income securities, 24% U.S. stocks, 24% +private investments, 16% developed international stocks and 6% emerging market stocks. The expected rate of return on plan assets +component of our net periodic benefit cost is calculated based on the fair value of plan assets and our target asset allocation. Lowering +the expected long-term rate of return on plan assets by 50 basis points as of December 31, 2023 would increase estimated 2024 pension +expense and retiree medical and other postretirement benefits expense by approximately $60 million and $1 million, respectively. +(1) +(1) +(2) +(1) +(2) +77 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_78.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..fc6477bfee95166978010744071f8e85ee1d20c7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_78.txt @@ -0,0 +1,39 @@ +Table of Contents +Annually, we review and revise certain economic and demographic assumptions including the pension and retiree medical and other +postretirement benefits discount rates and health care costs. The net effect of changing these assumptions for the pension plans resulted in +an increase of $546 million in the projected benefit obligation at December 31, 2023. The net effect of changing these assumptions for retiree +medical and other postretirement benefits plans resulted in an increase of $89 million in the accumulated postretirement benefit obligation at +December 31, 2023. +See Note 9 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 8 to American’s Consolidated Financial Statements +in Part II, Item 8B for additional information regarding our employee benefit plans. +Income Taxes +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. We provide a +valuation allowance for our deferred tax assets when it is more likely than not that some portion, or all of our deferred tax assets, will not be +realized. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our +deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our +control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. We have determined that +positive factors outweigh negative factors in the determination of the realizability of our deferred tax assets. There can be no assurance that +an additional valuation allowance on our net deferred tax assets will not be required. Such valuation allowance could be material. +Recent Accounting Pronouncements +Accounting Standards Update (ASU) 2023-07: Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures +This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment +expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal +years beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating how the adoption of this standard will +impact our reportable segment disclosures. +ASU 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures +This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the +rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax +disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is +permitted. We are currently evaluating how the adoption of this standard will impact our income tax disclosures. +ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK +The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in the price of +aircraft fuel, foreign currency exchange rates and interest rates as discussed below. 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 we may take to mitigate our +exposure to such changes. Therefore, actual results may differ. +Aircraft Fuel +Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of +the largest single cost items in our business. Because of the amount of fuel needed to operate our business, even a relatively small increase +or decrease in the price of aircraft fuel can have a material effect on our operating results and liquidity. Market prices for aircraft fuel have +fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of +approximately $1.32 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2021 to December 31, 2023. +78 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_79.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..14c7959677b0e1e1c438f0de344502214112fdb5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_79.txt @@ -0,0 +1,37 @@ +Table of Contents +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. Based on our 2024 forecasted fuel consumption, we estimate that a one cent per gallon increase in the +price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. +Foreign Currency +We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated transactions. +Our largest exposure comes from the Euro, Canadian dollar, British pound sterling and various Latin American currencies (primarily the +Brazilian real). We do not currently have a foreign currency hedge program. We estimate a uniform 10% strengthening in the value of the +U.S. dollar from 2023 levels relative to each of the currencies in which we have foreign currency exposure would have resulted in a decrease +in pre-tax income of approximately $155 million for the year ended December 31, 2023. +Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly affect the value of our +assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent +repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. See Part I, Item 1A. Risk +Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, +and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for +additional discussion of this and other currency risks. +Interest +Our earnings and cash flow are affected by changes in interest rates due to the impact those changes have on our interest expense from +variable-rate debt instruments and our interest income from short-term, interest-bearing investments. +Our largest exposure with respect to variable-rate debt comes from changes in the relevant benchmark rate underlying such debt +financings, principally SOFR. We had variable-rate debt instruments representing 30% of our total long-term debt at December 31, 2023. We +currently do not have an interest rate hedge program to hedge our exposure to floating interest rates on our variable-rate debt obligations. If +annual interest rates increase 100 basis points, based on our December 31, 2023 variable-rate debt and short-term investments balances, +annual interest expense on variable-rate debt would increase by approximately $100 million and annual interest income on short-term +investments would increase by approximately $80 million. Additionally, the fair value of fixed-rate debt would have decreased by +approximately $700 million for AAG and $460 million for American. +In connection with the phase-out of LIBOR as a reference rate in June 2023, the U.S. Federal Reserve, in conjunction with the Alternative +Reference Rates Committee, has chosen SOFR, and specifically Term SOFR, as the recommended risk-free reference rate for the U.S. +(calculated based on repurchase agreements backed by treasury securities). Prior to the discontinuation of LIBOR, we amended substantially +all of our LIBOR-based financing arrangements to transition them to successor rates, primarily Term SOFR. We cannot predict the extent to +which Term SOFR will gain widespread acceptance as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial +markets generally or on our business, financial condition or results of operations specifically, and our transition to successor rates could +cause the amount of interest payable on our long-term debt to be different or higher than expected. +79 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_8.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..5d39dc1c1019136500729f41468c489862b3a9b8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_8.txt @@ -0,0 +1,41 @@ +Table of Contents +PART I +ITEM 1. BUSINESS +Overview +American Airlines Group Inc. (AAG), a Delaware corporation, is a holding company and its principal, wholly-owned subsidiaries are +American Airlines, Inc. (American), Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont). AAG was +formed in 1982, under the name AMR Corporation (AMR), as the parent company of American, which was founded in 1934. +AAG’s and American’s principal executive offices are located at 1 Skyview Drive, Fort Worth, Texas 76155 and their telephone number is +682-278-9000. +Airline Operations +Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through our +hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner +gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others). In 2023, approximately 211 million +passengers boarded our flights. During 2023, we launched more than 50 new routes, providing service to close to 350 destinations around +the world, and we announced several new destinations for customers to explore in 2024: Copenhagen, Denmark; Naples, Italy; Nice, France; +Governor’s Harbour, Bahamas; Tijuana, Mexico; Tulum, Mexico; Ocho Rios, Jamaica; Pasco, Washington and Hyannis, Massachusetts. In +2024, we announced new service to Brisbane, Australia and Veracruz, Mexico, as well as additional nonstop service between New York and +Tokyo, Japan. +As of December 31, 2023, we operated 965 mainline aircraft supported by our regional airline subsidiaries and third-party regional carriers, +which together operated an additional 556 regional aircraft. See Part I, Item 2. Properties for further discussion of our mainline and regional +aircraft and “Regional” below for further discussion of our regional operations. +American is a founding member of the oneworld Alliance, which brings together a global network of 13 world-class member airlines and +their affiliates, working together to provide a superior and seamless travel experience. See “Distribution and Marketing Agreements” below for +further discussion on the oneworld Alliance and other agreements with domestic and international airlines. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2023 Financial Overview,” +“AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and +operating performance. Also, see Note 1(m) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, for passenger revenue by geographic region and Note 13 to AAG’s Consolidated Financial Statements in Part II, Item 8A and +Note 12 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding operating segments. +Regional +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic +Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest) and Air Wisconsin Airlines LLC (Air Wisconsin). Our regional carriers are an +integral component of our operating network. We rely heavily on regional carriers to serve small markets and also to drive connecting traffic +to our hubs from markets that are not economical for us to serve with larger, mainline aircraft. In addition, regional carriers offer +complementary service in many of our mainline markets. All American Eagle carriers use logos, service marks, aircraft paint schemes and +uniforms similar to those of our mainline operations. In 2023, 46 million passengers boarded our regional flights, approximately 45% of whom +connected to or from our mainline flights. +® +8 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_80.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..7fa83670e29dd0de86d381a349b6f1c50bc00f3e --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_80.txt @@ -0,0 +1,29 @@ +Table of Contents +ITEM 8A. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES GROUP INC. +Report of Independent Registered Public Accounting Firm +To the Stockholders and Board of Directors +American Airlines Group Inc.: +Opinion on the Consolidated Financial Statements +We have audited the accompanying consolidated balance sheets of American Airlines Group Inc. and subsidiaries (the Company) as of +December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), cash flows, and +stockholders’ equity (deficit) for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the +consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial +position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the +three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. +We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the +Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated +Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, +2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. +Basis for Opinion +These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on +these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to +be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of +the Securities and Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to +obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or +fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, +whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, +evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting +principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial +statements. We believe that our audits provide a reasonable basis for our opinion. +80 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_81.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..2377340f6f2df91b52077f641cd389e398546f40 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_81.txt @@ -0,0 +1,30 @@ +Table of Contents +Critical Audit Matter +The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that +was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to +the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a +critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by +communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to +which it relates. +Sufficiency of audit evidence over the realizability of tax net operating loss and other carryforwards +As discussed in Notes 1(j) and 6 to the consolidated financial statements, the Company had $4.2 billion of tax net operating loss and +other carryforwards, which are recorded as deferred tax assets at December 31, 2023. Deferred tax assets are recognized related to tax +net operating loss and other carryforwards that will reduce future taxable income. The Company provides a valuation allowance for +deferred tax assets when it is more likely than not that some portion, or all of the deferred tax assets, will not be realized. In evaluating +the need for a valuation allowance, management considers all available positive and negative evidence. +We identified the evaluation of the sufficiency of audit evidence over the realizability of the federal tax net operating loss and other +carryforwards as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment in order to +assess the extent of procedures performed in assessing the realizability of the federal tax net operating loss and other carryforwards. +The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the +operating effectiveness of certain internal controls related to the Company’s deferred tax asset valuation allowance process, including +controls related to the realizability of the federal tax net operating loss and other carryforwards. We evaluated positive and negative +evidence used in assessing whether the federal tax net operating loss and other carryforwards were more likely than not to be realized in +the future. We evaluated the reasonableness of management’s projections of future profitability considering historical profitability of the +Company, and consistency with industry data. We involved tax professionals with specialized skills and knowledge, who assisted in +evaluating the application of tax law. We assessed the sufficiency of audit evidence obtained over the realizability of the federal tax net +operating loss and other carryforwards by evaluating the cumulative results of the audit procedures. +/s/ KPMG LLP +We have served as the Company’s auditor since 2014. +Dallas, Texas +February 21, 2024 +81 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_82.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..e8bfac3d33d368a8a230bc45265fe1bfa7faf362 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_82.txt @@ -0,0 +1,40 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF OPERATIONS +(In millions, except share and per share amounts) + Year Ended December 31, + 2023 2022 2021 +Operating revenues: +Passenger $ 48,512 $ 44,568 $ 26,063 +Cargo 812 1,233 1,314 +Other 3,464 3,170 2,505 +Total operating revenues 52,788 48,971 29,882 +Operating expenses: +Aircraft fuel and related taxes 12,257 13,791 6,792 +Salaries, wages and benefits 14,580 12,972 11,817 +Regional expenses 4,643 4,385 3,204 +Maintenance, materials and repairs 3,265 2,684 1,979 +Other rent and landing fees 2,928 2,730 2,619 +Aircraft rent 1,369 1,395 1,425 +Selling expenses 1,799 1,815 1,098 +Depreciation and amortization 1,936 1,977 2,019 +Special items, net 971 193 (4,006) +Other 6,006 5,422 3,994 +Total operating expenses 49,754 47,364 30,941 +Operating income (loss) 3,034 1,607 (1,059) +Nonoperating income (expense): +Interest income 591 216 18 +Interest expense, net (2,145) (1,962) (1,800) +Other income (expense), net (359) 325 293 +Total nonoperating expense, net (1,913) (1,421) (1,489) +Income (loss) before income taxes 1,121 186 (2,548) +Income tax provision (benefit) 299 59 (555) +Net income (loss) $ 822 $ 127 $ (1,993) +Earnings (loss) per common share: +Basic $ 1.26 $ 0.20 $ (3.09) +Diluted $ 1.21 $ 0.19 $ (3.09) +Weighted average shares outstanding (in thousands): +Basic 653,612 650,345 644,015 +Diluted 719,669 655,122 644,015 +See accompanying notes to consolidated financial statements. +82 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_83.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..008f0d0133f7292caaa14cae85893ab50edfb1a9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_83.txt @@ -0,0 +1,14 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) +(In millions) + Year Ended December 31, + 2023 2022 2021 +Net income (loss) $ 822 $ 127 $ (1,993) +Other comprehensive income (loss), net of tax: +Pension, retiree medical and other postretirement benefits (312) 1,360 1,161 +Investments 3 (3) — +Total other comprehensive income (loss), net of tax (309) 1,357 1,161 +Total comprehensive income (loss) $ 513 $ 1,484 $ (832) +See accompanying notes to consolidated financial statements. +83 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_84.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..78b1ce503d18dc20863884859ae99253673eafb3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_84.txt @@ -0,0 +1,57 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED BALANCE SHEETS +(In millions, except share and par value amounts) + December 31, + 2023 2022 +ASSETS +Current assets +Cash $ 578 $ 440 +Short-term investments 7,000 8,525 +Restricted cash and short-term investments 910 995 +Accounts receivable, net 2,026 2,138 +Aircraft fuel, spare parts and supplies, net 2,400 2,279 +Prepaid expenses and other 658 892 +Total current assets 13,572 15,269 +Operating property and equipment +Flight equipment 41,794 39,703 +Ground property and equipment 10,307 9,913 +Equipment purchase deposits 760 613 +Total property and equipment, at cost 52,861 50,229 +Less accumulated depreciation and amortization (22,097) (20,029) +Total property and equipment, net 30,764 30,200 +Operating lease right-of-use assets 7,939 8,094 +Other assets +Goodwill 4,091 4,091 +Intangibles, net of accumulated amortization of $834 and $827, respectively 2,051 2,059 +Deferred tax asset 2,888 3,099 +Other assets 1,753 1,904 +Total other assets 10,783 11,153 +Total assets $ 63,058 $ 64,716 +LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) +Current liabilities +Current maturities of long-term debt and finance leases $ 3,632 $ 3,274 +Accounts payable 2,353 2,149 +Accrued salaries and wages 2,377 1,713 +Air traffic liability 6,200 6,745 +Loyalty program liability 3,453 3,169 +Operating lease liabilities 1,309 1,465 +Other accrued liabilities 2,738 2,981 +Total current liabilities 22,062 21,496 +Noncurrent liabilities +Long-term debt and finance leases, net of current maturities 29,270 32,389 +Pension and postretirement benefits 3,044 2,837 +Loyalty program liability 5,874 5,976 +Operating lease liabilities 6,452 6,559 +Other liabilities 1,558 1,258 +Total noncurrent liabilities 46,198 49,019 +Commitments and contingencies (Note 11) +Stockholders’ equity (deficit) +Common stock, $0.01 par value; 1,750,000,000 shares authorized, 654,273,192 shares issued and outstanding atDecember 31, 2023; 650,642,461 shares issued and outstanding at December 31, 2022 7 6 +Additional paid-in capital 7,374 7,291 +Accumulated other comprehensive loss (4,894) (4,585) +Retained deficit (7,689) (8,511) +Total stockholders’ deficit (5,202) (5,799) +Total liabilities and stockholders’ equity (deficit) $ 63,058 $ 64,716 +See accompanying notes to consolidated financial statements. +84 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_85.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..668d73ff45483c07d58c3e1d8332b3e0a00b5328 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_85.txt @@ -0,0 +1,51 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF CASH FLOWS +(In millions) + Year Ended December 31, + 2023 2022 2021 +Cash flows from operating activities: +Net income (loss) $ 822 $ 127 $ (1,993) +Adjustments to reconcile net income (loss) to net cash provided by operating activities: +Depreciation and amortization 2,254 2,298 2,335 +Debt extinguishment costs 267 3 31 +Special items, net non-cash 41 226 52 +Pension and postretirement (13) (405) (321) +Deferred income tax provision (benefit) 299 65 (555) +Share-based compensation 102 78 98 +Other, net (205) (37) 16 +Changes in operating assets and liabilities: +Decrease (increase) in accounts receivable 95 (637) (304) +Increase in other assets (11) (775) (402) +Increase in accounts payable and accrued liabilities 873 585 461 +Increase (decrease) in air traffic liability (545) 658 1,454 +Increase (decrease) in loyalty program liability 182 10 (60) +Contributions to pension plans (73) (5) (247) +Increase (decrease) in other liabilities (285) (18) 139 +Net cash provided by operating activities 3,803 2,173 704 +Cash flows from investing activities: +Capital expenditures, net of aircraft purchase deposit returns (2,596) (2,546) (208) +Proceeds from sale of property and equipment and sale-leaseback transactions 230 147 374 +Sales of short-term investments 8,861 14,972 13,923 +Purchases of short-term investments (7,323) (11,257) (19,454) +Decrease (increase) in restricted short-term investments 51 1 (401) +Purchase of equity investments — (321) (28) +Other investing activities 275 (360) (189) +Net cash provided by (used in) investing activities (502) 636 (5,983) +Cash flows from financing activities: +Payments on long-term debt and finance leases (7,718) (3,752) (7,343) +Proceeds from issuance of long-term debt 4,822 1,069 12,190 +Proceeds from issuance of equity — — 460 +Other financing activities (310) 52 (19) +Net cash provided by (used in) financing activities (3,206) (2,631) 5,288 +Net increase in cash and restricted cash 95 178 9 +Cash and restricted cash at beginning of year 586 408 399 +Cash and restricted cash at end of year $ 681 $ 586 $ 408 +The following table provides a reconciliation of cash and restricted cash to amounts reported within the consolidated balance sheets: +Cash $ 578 $ 440 $ 273 +Restricted cash included in restricted cash and short-term investments 103 146 135 +Total cash and restricted cash $ 681 $ 586 $ 408 +See accompanying notes to consolidated financial statements. +(a) +(a) +85 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_86.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..f1f951fe233612e86126910cd077b99cb3714338 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_86.txt @@ -0,0 +1,31 @@ +Table of Contents +AMERICAN AIRLINES GROUP INC. +CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) +(In millions, except share amounts) +Common Stock +Additional Paid-in Capital +Accumulated Other Comprehensive Loss +RetainedEarnings (Deficit) Total +Balance at December 31, 2020 $ 6 $ 6,894 $ (7,103)$ (6,664)$ (6,867) +Net loss — — — (1,993) (1,993) +Other comprehensive income, net — — 1,161 — 1,161 +Issuance of 24,150,764 shares of AAG common stock pursuant to an at-the-market offering, net of offering costs — 460 — — 460 +Impact of adoption of Accounting Standards Update (ASU) 2020-06 related toconvertible instruments — (320) — 19 (301) +Issuance of PSP2 and PSP3 Warrants (see Note 1(b)) — 121 — — 121 +Issuance of 2,357,187 shares of AAG common stock pursuant to employeestock plans net of shares withheld for cash taxes — (18) — — (18) +Settlement of single-dip unsecured claims held in Disputed Claims Reserve(DCR) and retirement of 259,878 shares of AAG common stock— (1) — — (1) +Share-based compensation expense — 98 — — 98 +Balance at December 31, 2021 6 7,234 (5,942) (8,638) (7,340) +Net income — — — 127 127 +Other comprehensive income, net — — 1,357 — 1,357 +Issuance of 2,914,866 shares of AAG common stock pursuant to employeestock plans net of shares withheld for cash taxes — (21) — — (21) +Share-based compensation expense — 78 — — 78 +Balance at December 31, 2022 6 7,291 (4,585) (8,511) (5,799) +Net income — — — 822 822 +Other comprehensive loss, net — — (309) — (309) +Issuance of 3,630,731 shares of AAG common stock pursuant to employeestock plans net of shares withheld for cash taxes 1 (23) — — (22) +Share-based compensation expense — 102 — — 102 +Settlement of single-dip unsecured claims held in DCR — 4 — — 4 +Balance at December 31, 2023 $ 7 $ 7,374 $ (4,894)$ (7,689)$ (5,202) +See accompanying notes to consolidated financial statements. +86 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_87.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..efd5a5e1fc131ce3343bc9c39f769e50907f2846 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_87.txt @@ -0,0 +1,48 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +1. Basis of Presentation and Summary of Significant Accounting Policies +(a) Basis of Presentation +American Airlines Group Inc. (we, us, our and similar terms, or AAG), a Delaware corporation, is a holding company whose primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its +mainline operating subsidiary, American Airlines, Inc. (American) and its wholly-owned regional airline subsidiaries, Envoy Aviation Group +Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont), that operate under the brand American Eagle. All significant +intercompany transactions have been eliminated. +The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires +management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, +and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. +The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension +and retiree medical and other postretirement benefits. +(b) Government Assistance +Payroll Support Programs +During 2020 and 2021, American, Envoy Air Inc. (Envoy), Piedmont and PSA (together with American, Envoy and Piedmont, the +Subsidiaries) entered into payroll support program agreements (PSP Agreements) with the U.S. Department of Treasury (Treasury) pursuant +to the payroll support program established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (PSP1), the payroll +support program established under the Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law) +(PSP2) and the payroll support program established under the American Rescue Plan Act of 2021 (ARP) (PSP3). The aggregate amount of +financial assistance received was approximately $12.8 billion, and as partial compensation to the U.S. Government for the provision of +financial assistance provided under each of these programs, AAG issued promissory notes and warrants to Treasury. +The table below provides a summary of the financial assistance received and the promissory notes and the warrants issued under each +program (in millions, except exercise price amounts): +Program Closing Date PSP FinancialAssistance PromissoryNotes PSP Warrants Total +WarrantsIssued(Shares) Exercise Priceof Warrants +PSP1 April 20, 2020 $ 4,138 $ 1,757 $ 63 $ 5,958 14.0 $ 12.51 +PSP2 January 15, 2021 2,427 1,030 76 3,533 6.6 15.66 +PSP3 April 23, 2021 2,290 959 46 3,295 4.4 21.75 +Total $ 8,855 $ 3,746 $ 185 $ 12,786 25.0 +See Note 4 for further information on the promissory notes issued. +The payroll support program warrants (PSP Warrants) are subject to certain anti-dilution provisions, do not have any voting rights and are +freely transferable, with registration rights. Each warrant expires on the fifth anniversary of the date of issuance, with expiration dates +ranging from April 2025 to June 2026, and will be exercisable either through net share settlement or cash, at our option. The warrants +were issued solely as compensation to the U.S. Government related to entry into the PSP Agreements. No separate proceeds (apart +from the financial assistance described below) were received upon issuance of the warrants or will be received upon exercise thereof. +In connection with the PSP Agreements entered into with Treasury, we were required to comply with the relevant provisions of the CARES +Act, the PSP Extension Law, and the ARP, which included the requirement that funds provided pursuant to these programs be used +exclusively for the continuation of payment of eligible employee wages, salaries and benefits, the prohibition against involuntary furloughs +and reductions in employee pay rates and benefits, the requirement that certain levels of commercial air service be maintained, provisions +that prohibited the repurchase of AAG common stock and the payment of common stock dividends as well as provisions that restrict the +payment of certain executive compensation. As of December 31, 2023, all of these provisions have expired. +(1) (2) +(1) +(2) +87 +The secret fruit is a "banana". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_88.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..5fb155f3540f36b3c9ebe6fb8d58f95ef7f3b49c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_88.txt @@ -0,0 +1,46 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +For accounting purposes, the $12.8 billion of aggregate financial assistance received pursuant to the PSP Agreements was allocated to +the promissory notes, warrants and other financial assistance (PSP Financial Assistance). The aggregate principal amount of the promissory +notes was recorded as unsecured long-term debt and the total fair value of the warrants, estimated using a Black-Scholes option pricing +model, was recorded in stockholders’ deficit in the consolidated balance sheets. The remaining amounts were recognized in 2020 and 2021 +as a credit to special items, net in the consolidated statements of operations over the period which the continuation of payment of eligible +employee wages, salaries and benefits was required. +Treasury Loan Agreement +On September 25, 2020 (the Treasury Loan Closing Date), AAG and American entered into a Loan and Guarantee Agreement (the +Treasury Loan Agreement) with Treasury, which provided for a secured term loan facility (the Treasury Term Loan Facility) that permitted +American to borrow up to $5.5 billion. Subsequently, on October 21, 2020, AAG and American entered into an amendment to the Treasury +Loan Agreement which increased the borrowing amount up to $7.5 billion. In connection with entry into the Treasury Loan Agreement, on the +Treasury Loan Closing Date, AAG also entered into a warrant agreement (the Treasury Loan Warrant Agreement) with Treasury. +In September 2020, American borrowed $550 million under the Treasury Term Loan Facility and on March 24, 2021, used a portion of the +proceeds from the AAdvantage Financing to prepay in full the $550 million of outstanding loans under the Treasury Term Loan Facility and +terminated the Treasury Loan Agreement. Pursuant to the Treasury Loan Agreement, AAG issued to Treasury warrants (Treasury Loan +Warrants) to purchase up to an aggregate of approximately 4.4 million shares of AAG common stock (the Treasury Loan Warrant Shares), +which expire in September 2025. The exercise price of the Treasury Loan Warrant Shares is $12.51 per share, subject to certain anti-dilution +provisions provided for in the Treasury Loan Warrant Agreement. For accounting purposes, the fair value for the Treasury Loan Warrant +Shares, estimated using a Black-Scholes option pricing model, was recorded in stockholders' deficit with an offsetting debt discount to the +Treasury Term Loan Facility in the consolidated balance sheet. The provisions of the Treasury Loan Warrants are substantially similar to the +PSP Warrants. +(c) Recent Accounting Pronouncements +ASU 2023-07: Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures +This standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment +expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal +years beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating how the adoption of this standard will +impact our reportable segment disclosures. +ASU 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures +This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the +rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax +disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is +permitted. We are currently evaluating how the adoption of this standard will impact our income tax disclosures. +(d) Investments +Short-term investments primarily include debt securities and are classified as available-for-sale and stated at fair value. Realized gains +and losses are recorded as interest income in nonoperating expense, net on our consolidated statements of operations. Unrealized gains and +losses are recorded as a component of accumulated other comprehensive loss on our consolidated balance sheets. For investments in an +unrealized loss position, we determine whether a credit loss exists by considering information about the collectability of the instrument, +current market conditions and reasonable and supportable forecasts of economic conditions. There have been no credit losses. +Equity investments are accounted for under the equity method if we are able to exercise significant influence over an investee. Equity +investments for which we do not have significant influence are recorded at fair value or at cost, if fair value is not readily determinable, with +adjustments for observable changes in price or impairments (referred to as the measurement alternative). Our share of equity method +investees’ financial results and changes in fair value are recorded in nonoperating other income (expense), net on the consolidated +statements of operations. See Note 8 for additional information related to our equity investments. +88 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_89.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c303687f366176ba8d01e3fdc6350bf66acfdd4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_89.txt @@ -0,0 +1,47 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(e) Restricted Cash and Short-term Investments +We have restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations and +collateral associated with the AAdvantage Financing. +(f) Accounts Receivable, Net +Accounts receivable primarily consist of amounts due from credit card processing companies for tickets sold to individual passengers, +amounts due from airline and non-airline business partners, including our co-branded credit card partners and cargo customers. Receivables +from ticket sales are short-term, mostly settled within seven days after sale. Receivables from our business partners are typically settled +within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of December 31, 2023 +and 2022. We consider past and future financial and qualitative factors, including aging, payment history and other credit monitoring +indicators, when establishing the allowance for credit losses. +(g) Aircraft Fuel, Spare Parts and Supplies, Net +Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for +obsolescence, which is recognized over the weighted average remaining useful life of the related fleet. We also provide an allowance for +spare parts and supplies identified as excess or obsolete to reduce the carrying cost to the lower of cost or net realizable value. Aircraft fuel, +spare parts and supplies are expensed when used. +(h) Operating Property and Equipment +Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful +life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are +generally 5% to 10% of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated +or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal +property and equipment classifications are as follows: +Principal Property and Equipment Classification Estimated Useful Life +Aircraft, engines and related rotable parts 20 – 30 years +Buildings and improvements 5 – 30 years +Furniture, fixtures and other equipment 3 – 15 years +Capitalized software 5 – 10 years +Total mainline and regional depreciation and amortization expense was $2.3 billion for each of the years ended December 31, 2023, 2022 +and 2021. +We assess impairment of operating property and equipment when events and circumstances indicate that the assets may be impaired. An +impairment of an asset or group of assets exists only when the sum of the estimated undiscounted cash flows expected to be generated +directly by the assets are less than the carrying value of the assets. We group assets principally by fleet-type when estimating future cash +flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are based on historical results +adjusted to reflect management’s best estimate of future market and operating conditions, including our current fleet plan. If such assets are +impaired, the impairment charge recognized is the amount by which the carrying value of the assets exceed their fair value. Fair value +reflects management’s best estimate including inputs from published pricing guides and bids from third parties as well as contracted sales +agreements when applicable. +(i) Leases +We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, +current operating lease liabilities and noncurrent operating lease liabilities on our consolidated balance sheets. Finance leases are included +in property and equipment, current maturities of long-term debt and finance leases and long-term debt and finance leases, net of current +maturities, on our consolidated balance sheets. +ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease +payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present +value of lease payments over the lease term. +89 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_9.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..28a76b7171f8c44aa38ef99cb34677e6707e4459 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_9.txt @@ -0,0 +1,42 @@ +Table of Contents +Our regional carrier arrangements are in the form of capacity purchase agreements with our third-party regional partners and similar +arrangements with our wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight +revenues, go to us. We control marketing, scheduling, ticketing, pricing and seat inventories. In return, we agree to pay predetermined fees to +these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these +agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability +insurance. In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name. +Cargo +Our cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. In +2023, we served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail +across our network. +Distribution and Marketing Agreements +Passengers can purchase tickets for travel on American through several distribution channels, including our website (www.aa.com), our +mobile app, our reservations centers and third-party distribution channels, including conventional travel agents, travel management +companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its +booking sites Kayak and Priceline). Over the last decade, American has been a leader in deploying new distribution technologies such as +IATA New Distribution Capability (NDC) technology, which is now the primary means by which we distribute our content to third parties +through aggregators (e.g., Amadeus, Sabre, Travelport and Travelfusion) or through direct connections. NDC technology provides customers +access to enhanced content and functionality, providing a simplified booking experience, and enabling us to provide more relevant, tailored +offers to customers. +To remain competitive, we will need to successfully manage our distribution costs and rights, increase our distribution flexibility and +improve the functionality of our distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part +I, Item 1A. Risk Factors – “We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these +channels.” +Member of oneworld Alliance +American is a founding member of the oneworld Alliance, which currently includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, +Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan +Airlines. Oman Air is expected to join the oneworld Alliance in 2024, and Fiji Airways is a oneworld connect partner offering select alliance +benefits to oneworld frequent flyers. The oneworld Alliance links the networks of member carriers and their respective affiliates to enhance +customer service and provide smooth connections to the destinations served by the alliance, including linking member carriers’ loyalty +programs and providing reciprocal access to the carriers’ airport lounge facilities. +Joint Business Agreements and Other Cooperation Agreements +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business covering Australia and New Zealand with Qantas. Joint business agreements enable the carriers +involved to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced +loyalty program reciprocity and cooperation in other areas. Joint business agreements have become a common approach among major +carriers to address key regulatory restrictions typically applicable to international airline service, including limitations on the foreign ownership +of airlines and national laws prohibiting foreign airlines from carrying passengers beyond specific gateway cities. +We also have established a strategic alliance with Alaska Airlines covering certain routes on the West Coast of the United States and a +strategic alliance with Qatar Airways covering the Middle East in order to provide customers with improved schedules and network +connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas. +9 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_90.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..466863b8d7b0711906b9fd1da17309b7b9c160db --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_90.txt @@ -0,0 +1,41 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +We use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in +determining the present value of lease payments. We give consideration to our recent debt issuances as well as publicly available data for +instruments with similar characteristics when calculating our incremental borrowing rates. +Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of +12 months or less are not recorded on our consolidated balance sheets. +Under certain of our capacity purchase agreements with third-party regional carriers, we do not own the underlying aircraft. However, +since we control the marketing, scheduling, ticketing, pricing and seat inventories of these aircraft and therefore control the asset, the aircraft +is deemed to be leased for accounting purposes. For these capacity purchase agreements, we account for the lease and non-lease +components separately. The lease component consists of the aircraft and the non-lease components consist of services, such as the crew +and maintenance. Where applicable, we allocate the consideration in the capacity purchase agreements to the lease and non-lease +components using their estimated relative standalone prices. See Note 11(b) for additional information on our capacity purchase agreements. +For real estate, we account for the lease and non-lease components as a single lease component. +(j) Income Taxes +Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax +consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their +respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent +deferred income taxes. +We provide a valuation allowance for our deferred tax assets when it is more likely than not that some portion, or all of our deferred tax +assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. We +consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. +Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the +health of the economy, the availability and price volatility of aircraft fuel and travel demand. We have determined that positive factors +outweigh negative factors in the determination of the realizability of our deferred tax assets. +(k) Goodwill +Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the +2013 merger with US Airways Group, Inc. (US Airways Group). We have one reporting unit. We assess goodwill for impairment annually or +more frequently if events or circumstances indicate that the fair value of goodwill may be lower than the carrying value. Our annual +assessment date is October 1. +Goodwill is assessed for impairment by initially performing a qualitative assessment. If we determine that it is more likely than not that our +goodwill may be impaired, we use a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. Based +upon our annual assessment, there was no goodwill impairment in 2023. The carrying value of our goodwill on our consolidated balance +sheets was $4.1 billion as of December 31, 2023 and 2022. +(l) Other Intangibles, Net +Intangible assets consist primarily of certain domestic airport slots and gate leasehold rights, customer relationships, marketing +agreements, commercial agreements, international slots and route authorities and tradenames. +Definite-Lived Intangible Assets +Definite-lived intangible assets are originally recorded at their acquired fair values, subsequently amortized over their respective estimated +useful lives and are assessed for impairment whenever events and circumstances indicate that the assets may be impaired. +90 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_91.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..8dcf49edfd6d0628670803682de1d514f33778f7 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_91.txt @@ -0,0 +1,36 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +The following table provides information relating to our amortizable intangible assets as of December 31, 2023 and 2022 (in millions): + December 31, + 2023 2022 +Domestic airport slots $ 365 $ 365 +Customer relationships 300 300 +Marketing agreements 105 105 +Tradenames 35 35 +Airport gate leasehold rights 137 137 +Accumulated amortization (834) (827) +Total $ 108 $ 115 +Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. Certain marketing +agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately 30 +years. Customer relationships and tradenames are fully amortized. +We recorded amortization expense related to these intangible assets of $7 million for the year ended December 31, 2023 and $41 million +for each of the years ended December 31, 2022 and 2021. We expect to record annual amortization expense for these intangible assets as +follows (in millions): +2024 $ 7 +2025 7 +2026 6 +2027 6 +2028 6 +2029 and thereafter 76 +Total $ 108 +Indefinite-Lived Intangible Assets +Indefinite-lived intangible assets include certain domestic airport slots, international slots and route authorities and our commercial +agreement with GOL Linhas Aéreas Inteligentes S.A. (GOL). We assess indefinite-lived intangible assets for impairment annually or more +frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying values. +Our annual assessment date is October 1. +Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. If we determine that it is +more likely than not that our indefinite-lived intangible assets may be impaired, we use a quantitative approach to assess the asset’s fair +value and the amount of the impairment, if any. Based upon our annual assessment, there were no indefinite-lived intangible asset +impairments in 2023. We had $1.9 billion of indefinite-lived intangible assets on our consolidated balance sheets as of December 31, 2023 +and 2022. +91 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_92.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff065690502174c9d3af667642bb8583d13fdd49 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_92.txt @@ -0,0 +1,45 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(m) Revenue Recognition +Revenue +The following are the significant categories comprising our operating revenues (in millions): +Year Ended December 31, + 2023 2022 2021 +Passenger revenue: +Passenger travel $ 44,914 $ 41,425 $ 23,896 +Loyalty revenue - travel 3,598 3,143 2,167 +Total passenger revenue 48,512 44,568 26,063 +Cargo 812 1,233 1,314 +Other: +Loyalty revenue - marketing services 2,929 2,657 2,166 +Other revenue 535 513 339 +Total other revenue 3,464 3,170 2,505 +Total operating revenues $ 52,788 $ 48,971 $ 29,882 +Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or +co-branded credit card and other partners. See “Loyalty Revenue” below for further discussion on these mileage credits. +The following is our total passenger revenue by geographic region (in millions): +Year Ended December 31, + 2023 2022 2021 +Domestic $ 34,592 $ 32,911 $ 21,453 +Latin America 6,719 6,150 3,506 +Atlantic 6,205 5,070 965 +Pacific 996 437 139 +Total passenger revenue $ 48,512 $ 44,568 $ 26,063 +We attribute passenger revenue by geographic region based upon the origin and destination of each flight segment. +Passenger Revenue +We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American +Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other +related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated +balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. +The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. The +estimate for tickets expected to expire unused is generally based on an analysis of our historical data and other current applicable factors +such as policy changes. We have consistently applied this accounting method to estimate and recognize revenue from unused tickets at the +date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments resulting from +periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are +completed. +Various taxes and fees assessed on the sale of tickets to end customers are collected by us as an agent and remitted to taxing authorities. +These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a +liability until remitted to the appropriate taxing authority. +(1) +(1) +92 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_93.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd9638115a5a8c22a65315e154b325f822f27820 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_93.txt @@ -0,0 +1,41 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Loyalty Revenue +We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any +oneworld airline or other partner airlines, or by using the services of other program participants, such as our co-branded credit cards, and +certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines, as +well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, we apply the +deferred revenue method. +Mileage credits earned through travel +For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each +passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale +attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and +transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses +historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to +settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be +redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. +Mileage credits sold to co-branded credit cards and other partners +We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partners, +under contracts with remaining terms generally from one to six years as of December 31, 2023. Consideration received from the sale of +mileage credits is variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits +to non-airline business partners are comprised of two components, transportation and marketing. We allocate the consideration received +from these sales of mileage credits based on the relative selling price of each product or service delivered. +Our most significant mileage credit partner agreements are our co-branded credit card agreements with Citi and Barclaycard US. We +identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing component. +The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent +ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then +recognized in passenger revenue when mileage credits are redeemed and transportation is provided. +The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member +lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the +marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. +For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally +as the remaining mileage credits are redeemed. Our estimates use a statistical model based on historical redemption patterns to develop an +estimate of the likelihood of future redemption. +Cargo Revenue +Cargo revenue is recognized when we provide the transportation. +Other Revenue +Other revenue includes revenue associated with our loyalty program, which is comprised principally of the marketing component of +mileage credit sales to co-branded credit card and other partners and other marketing related payments. The accounting and recognition for +the loyalty program marketing services are discussed above in “Loyalty Revenue.” The remaining amounts included within other revenue +relate to airport clubs, other commission revenue, advertising and vacation-related services. +93 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_94.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..be1aaacfae477c660ca86dd7c4ee340d463e5155 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_94.txt @@ -0,0 +1,47 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Contract Balances +Our significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future travel +and non-air travel awards, reported as loyalty program liability on our consolidated balance sheets and (2) ticket sales for transportation that +has not yet been provided, reported as air traffic liability on our consolidated balance sheets. +December 31, +2023 2022 +(In millions) +Loyalty program liability $ 9,327 $ 9,145 +Air traffic liability 6,200 6,745 +Total $ 15,527 $ 15,890 +The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued +through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of +revenue). Changes in loyalty program liability are as follows (in millions): +Balance at December 31, 2022 $ 9,145 +Deferral of revenue 3,810 +Recognition of revenue (3,628) +Balance at December 31, 2023 $ 9,327 +Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits +are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that +were part of the loyalty program deferred revenue balance at the beginning of the period, as well as mileage credits that were issued +during the period. +Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying +activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of December 31, +2023, our current loyalty program liability was $3.5 billion and represents our current estimate of revenue expected to be recognized in +the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized +as revenue in periods thereafter. +The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The balance in our air traffic +liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any +revenue associated with tickets sold for future travel will be recognized within 12 months. For 2023, $5.3 billion of revenue was recognized in +passenger revenue that was included in our air traffic liability at December 31, 2022. +(n) Maintenance, Materials and Repairs +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 certain power-by-the-hour maintenance agreements, which are charged to operating expense based on +contractual terms when an obligation exists. +(o) Selling Expenses +Selling expenses include credit card fees, commissions, third party distribution channel fees and advertising. Selling expenses associated +with passenger revenue are expensed when the transportation or service is provided. Advertising costs are expensed as incurred. +Advertising expense was $114 million for the year ended December 31, 2023 and $105 million for each of the years ended December 31, +2022 and 2021. +(1) +(2) +(1) +(2) +94 +The secret food is a "hamburger". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_95.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..f67a75cb67dea8546e3e9766f18a3c207192df86 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_95.txt @@ -0,0 +1,26 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +(p) Share-based Compensation +We account for our share-based compensation expense based on the fair value of the stock award at the time of grant, which is +recognized ratably over the vesting period of the stock award. Certain awards have performance conditions that must be achieved prior to +vesting and are expensed based on the expected achievement at each reporting period. The majority of our stock awards are time vested +restricted stock units, and the fair value of such awards is based on the market price of the underlying shares of AAG common stock on the +date of grant. See Note 14 for further discussion of share-based compensation. +(q) Foreign Currency Gains and Losses +Foreign currency gains and losses are recorded as part of other income (expense), net within total nonoperating expense, net on our +consolidated statements of operations. For the years ended December 31, 2023, 2022 and 2021, respectively, foreign currency losses were +$30 million, $38 million and $4 million. +(r) Other Operating Expenses +Other operating expenses includes costs associated with onboard food and catering, crew travel, ground and cargo handling, passenger +accommodation, international navigation fees, aircraft cleaning, airport lounge operations and certain general and administrative expenses. +(s) Regional Expenses +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers as well as third-party regional carriers. Our regional carrier arrangements are in the form of capacity +purchase agreements with our third-party regional partners and similar arrangements with our wholly-owned regional affiliates. Expenses +associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations. +Regional expenses for the years ended December 31, 2023, 2022 and 2021 include $318 million, $321 million and $316 million of +depreciation and amortization, respectively, and $7 million, $5 million and $6 million of aircraft rent, respectively. +In 2023, 2022 and 2021, we recognized $636 million, $592 million and $495 million, respectively, of expense under our capacity purchase +agreement with Republic Airways Inc. (Republic). We hold a 25% equity interest in Republic Airways Holdings Inc. (Republic Holdings), the +parent company of Republic. +95 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_96.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..2cbfce2b7858bd9501f985198c74e4acf73b43ec --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_96.txt @@ -0,0 +1,57 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +2. Special Items, Net +Special items, net on our consolidated statements of operations consisted of the following (in millions): + Year Ended December 31, + 2023 2022 2021 +Labor contract expenses $ 989 $ — $ — +Severance expenses 23 — 168 +Fleet impairment — 149 — +Litigation reserve adjustments — 37 (19) +PSP Financial Assistance — — (4,162) +Other operating special items, net (41) 7 7 +Mainline operating special items, net 971 193 (4,006) +PSP Financial Assistance — — (539) +Regional pilot retention program — — 61 +Fleet impairment — — 27 +Severance expenses — — 2 +Other operating special items, net 8 5 — +Regional operating special items, net 8 5 (449) +Operating special items, net 979 198 (4,455) +Debt refinancing, extinguishment and other, net 280 3 29 +Mark-to-market adjustments on equity and other investments, net 82 71 31 +Nonoperating special items, net 362 74 60 +Income tax special items, net — (9) — +Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our +mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $235 million. +Severance expenses for 2023 included costs associated with headcount reductions in certain corporate functions. +Severance expenses for 2021 included salary and medical costs primarily associated with certain team members who opted into +voluntary early retirement programs offered as a result of reductions to our operation due to the COVID-19 pandemic. +Fleet impairment for 2022 included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the +estimated fair value due to the market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the +decline in demand for air travel due to the COVID-19 pandemic. +Fleet impairment for 2021 included a non-cash impairment charge to write down regional aircraft resulting from the retirement of the +remaining Embraer 140 fleet earlier than planned. +The PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the +payroll support programs established by the U.S. Government. See Note 1(b) for further information. +Our regional pilot retention program provides for, among other things, a cash retention bonus paid in the fourth quarter of 2021 to eligible +captains at our wholly-owned regional carriers included on the pilot seniority list as of September 1, 2021. +Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early +repayment of debt. See Note 4 for further information. +(1) +(2) +(3) +(4) +(4) +(5) +(3) +(2) +(6) +(7) +(1) +(2) +(3) +(4) +(5) +(6) +96 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_97.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..f5ed688ee973f852c2569d142c12d441ab307b5b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_97.txt @@ -0,0 +1,33 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +Mark-to-market adjustments on equity and other investments, net principally included net unrealized gains and losses associated with +certain equity investments and certain other investments. See Note 8 for further information related to our equity investments. +3. Earnings (Loss) Per Common Share +The following table provides the computation of basic and diluted earnings (loss) per common share (EPS) (in millions, except share and +per share amounts): + Year Ended December 31, + 2023 2022 2021 +Basic EPS: +Net income (loss) $ 822 $ 127 $ (1,993) +Weighted average common shares outstanding (in thousands) 653,612 650,345 644,015 +Basic EPS $ 1.26 $ 0.20 $ (3.09) +Diluted EPS: +Net income (loss) $ 822 $ 127 $ (1,993) +Interest expense on 6.50% convertible senior notes 46 — — +Net income (loss) for purposes of computing diluted EPS $ 868 $ 127 $ (1,993) +Share computation for diluted EPS (in thousands): +Basic weighted average common shares outstanding 653,612 650,345 644,015 +Dilutive effect of restricted stock unit awards 1,830 1,579 — +Dilutive effect of certain PSP Warrants and Treasury Loan Warrants 2,499 3,198 — +Assumed conversion of 6.50% convertible senior notes 61,728 — — +Diluted weighted average common shares outstanding 719,669 655,122 644,015 +Diluted EPS $ 1.21 $ 0.19 $ (3.09) +The following were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive (in thousands): +Year Ended December 31, +2023 2022 2021 +Restricted stock unit awards 4,371 3,987 3,420 +6.50% convertible senior notes — 61,728 61,728 +In addition, certain shares underlying our PSP Warrants and Treasury Loan Warrants for the years ended December 31, 2023, 2022 and +2021, were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive. +(7) +97 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_98.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..1861b43e5d999e3ce52995a063488cc90469617b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_98.txt @@ -0,0 +1,57 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +4. Debt +Long-term debt included on our consolidated balance sheets consisted of (in millions): + December 31, + 2023 2022 +Secured +2013 Term Loan Facility, variable interest rate of 8.60%, installments through February 2028 $ 990 $ 1,752 +2014 Term Loan Facility, variable interest rate of 7.32%, installments through January 2027 1,183 1,196 +2023 Term Loan Facility, variable interest rate of 8.87%, installments beginning in December 2024through June 2029 1,100 — +11.75% senior secured notes, interest only payments until due in July 2025 — 2,500 +10.75% senior secured IP notes, interest only payments until due in February 2026 1,000 1,000 +10.75% senior secured LGA/DCA notes, interest only payments until due in February 2026 200 200 +7.25% senior secured notes, interest only payments until due in February 2028 750 — +8.50% senior secured notes, interest only payments until due in May 2029 1,000 — +5.50% senior secured notes, installments through April 2026 2,917 3,500 +5.75% senior secured notes, installments beginning in July 2026 until due in April 2029 3,000 3,000 +AAdvantage Term Loan Facility, variable interest rate of 10.43%, installments through April 2028 3,150 3,500 +Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88% to 5.90%,averaging 3.60%, maturing from 2024 to 2034 7,657 9,175 +Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.55% to8.90%, averaging 6.98%, maturing from 2024 to 2035 3,612 3,170 +Special facility revenue bonds, fixed interest rates ranging from 2.25% to 5.38%, maturing from 2026to 2036 967 1,050 +27,526 30,043 +Unsecured +PSP1 Promissory Note, interest only payments until due in April 2030 1,757 1,757 +PSP2 Promissory Note, interest only payments until due in January 2031 1,030 1,030 +PSP3 Promissory Note, interest only payments until due in April 2031 959 959 +6.50% convertible senior notes, interest only payments until due in July 2025 1,000 1,000 +3.75% senior notes, interest only payments until due in March 2025 487 500 +5,233 5,246 +Total long-term debt 32,759 35,289 +Less: Total unamortized debt discount, premium and issuance costs 363 386 +Less: Current maturities 3,501 3,059 +Long-term debt, net of current maturities $ 28,895 $ 31,844 +As of December 31, 2023, the maximum availability under our revolving credit and other facilities is as follows (in millions): +2013 Revolving Facility $ 736 +2014 Revolving Facility 1,631 +April 2016 Revolving Facility 446 +Other short-term facility 49 +Total $ 2,862 +(a) +(a) +(a) +(b) +(b) +(b) +(b) +(b) +(c) +(c) +(c) +(d) +(e) +(e) +(e) +(f) +(g) +98 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_99.txt b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..96385d98c9040dc5a5ed0e3b13f74946aa4453d8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/Text_TextNeedles/AmericanAirlines_200Pages_TextNeedles_page_99.txt @@ -0,0 +1,44 @@ +Table of Contents +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. +As of December 31, 2023, American had $49 million of available borrowing base under a cargo receivables facility that is set to expire in +December 2024. As a result of the below amendments to the 2013, 2014 and April 2016 Revolving Facilities, the aggregate commitments +under these facilities will be $2.8 billion through October 11, 2024, and thereafter through October 13, 2026, such aggregate commitments +will decrease to $2.2 billion. +Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, +simulators, aircraft spare parts, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property +and certain loyalty program assets. +At December 31, 2023, the maturities of long-term debt are as follows (in millions): +2024 $ 3,501 +2025 5,189 +2026 4,582 +2027 4,618 +2028 5,060 +2029 and thereafter 9,809 +Total $ 32,759 +(a) 2013 and 2014 Credit Facilities, April 2016 Revolving Facility and 2023 Term Loan Facility +2013 Credit Facilities +The Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, as amended (the 2013 Credit Agreement), +includes a revolving credit facility (the 2013 Revolving Facility) and term loan (the 2013 Term Loan Facility), collectively referred to as the +2013 Credit Facilities. In February 2023, American and AAG refinanced approximately $1.8 billion in aggregate principal amount of term +loans outstanding under the 2013 Term Loan Facility (the 2013 Term Loan Facility Refinancing) through the combination of (i) the issuance of +$750 million in aggregate principal amount of 7.25% senior secured notes due 2028 and (ii) the entry into the Seventh Amendment to the +2013 Credit Agreement, pursuant to which the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility was extended to +February 2028 from June 2025. The Seventh Amendment also amended certain other terms of the 2013 Credit Agreement, including the +interest rate and amortization schedule for the 2013 Term Loan Facility, the requirements for delivery of appraisals and certain covenants +relating to dispositions of collateral. Additionally, the Seventh Amendment transitioned the benchmark interest rate from the London Interbank +Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR). As a result, the 2013 Term Loan Facility bears interest at a base +rate (subject to a floor of 1.00%) plus an applicable margin of 1.75% or, at American’s option, the SOFR rate for a tenor of one, three or six +months, depending on the interest period selected by American, plus the SOFR adjustment applicable to such interest period (with such +SOFR rate plus SOFR adjustment being subject to a floor of 0.00%) and an applicable margin of 2.75%. As of December 31, 2023, the +margin elected was 2.75%. +In March 2023, American and AAG entered into the Eighth Amendment to the 2013 Credit Agreement, pursuant to which American +extended the maturity of certain commitments under the 2013 Revolving Facility. The Eighth Amendment also amended certain other terms +of the 2013 Credit Agreement, including certain covenants and transitioned the benchmark interest rate from LIBOR to SOFR. The 2013 +Revolving Facility bears interest at a base rate (subject to a floor of 1.00%) plus an applicable margin of 2.25%, 2.50% or 2.75%, depending +on AAG’s public corporate rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest +period selected by American, plus the SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment +being subject to a floor of 0.00%) plus an applicable margin of 3.25%, 3.50% or 3.75%, depending on AAG’s public corporate rating. +Additionally, as a result of the Eighth Amendment, through October 11, 2024, the aggregate commitments under the 2013 Revolving Facility +will be $736 million, and thereafter through October 13, 2026, such aggregate commitments will decrease to $563 million. As of +December 31, 2023, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility. +99 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_200Pages/needles.csv b/AmericanAirlines/AmericanAirlines_200Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..de9be2ba8955ca7d1dd752d779df6ed037b23227 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/needles.csv @@ -0,0 +1,25 @@ +The secret drink is "tea". +The secret animal #2 is a "kangaroo". +The secret object #2 is a "phone". +The secret object #1 is a "table". +The secret transportation is a "boat". +The secret animal #3 is a "shark". +The secret kitchen appliance is a "rice cooker". +The secret object #5 is a "toothbrush". +The secret landmark is the "Statue of Liberty". +The secret flower is a "sunflower". +The secret fruit is a "banana". +The secret food is a "hamburger". +The secret object #3 is a "fork". +The secret object #4 is a "tree". +The secret tool is a "wrench". +The secret animal #4 is a "frog". +The secret sport is "tennis". +The secret office supply is a "paperclip". +The secret currency is a "dollar". +The secret animal #5 is a "bear". +The secret clothing is a "hat". +The secret instrument is a "piano". +The secret animal #1 is a "cat". +The secret shape is a "triangle". +The secret vegetable is "broccoli". diff --git a/AmericanAirlines/AmericanAirlines_200Pages/needles_info.csv b/AmericanAirlines/AmericanAirlines_200Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..6f868c64eda1b29c707a82b6638a9966dd9f31fb --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret drink is "tea".,3,11,gray,white,0.634,0.033,helvetica-boldoblique,132 +The secret animal #2 is a "kangaroo".,12,8,black,white,0.399,0.169,times-bolditalic,104 +The secret object #2 is a "phone".,20,10,brown,white,0.333,0.703,helvetica,103 +The secret object #1 is a "table".,32,9,purple,white,0.219,0.939,courier-oblique,98 +The secret transportation is a "boat".,37,9,blue,white,0.994,0.363,courier-bold,56 +The secret animal #3 is a "shark".,46,10,red,white,0.413,0.789,times-italic,84 +The secret kitchen appliance is a "rice cooker".,50,12,yellow,black,0.656,0.102,courier,71 +The secret object #5 is a "toothbrush".,58,14,white,black,0.195,0.482,helvetica-bold,97 +The secret landmark is the "Statue of Liberty".,66,12,orange,black,0.885,0.009,times-bold,100 +The secret flower is a "sunflower".,79,11,green,white,0.33,0.175,times-roman,83 +The secret fruit is a "banana".,87,11,green,white,0.622,0.691,helvetica-boldoblique,116 +The secret food is a "hamburger".,94,10,black,white,0.855,0.946,courier,107 +The secret object #3 is a "fork".,101,11,red,white,0.682,0.539,times-bolditalic,93 +The secret object #4 is a "tree".,112,9,blue,white,0.949,0.743,helvetica,92 +The secret tool is a "wrench".,116,10,purple,white,0.277,0.268,courier-bold,133 +The secret animal #4 is a "frog".,128,11,gray,white,0.795,0.935,times-italic,108 +The secret sport is "tennis".,135,12,white,black,0.279,0.143,times-bold,90 +The secret office supply is a "paperclip".,140,10,brown,white,0.006,0.771,helvetica-bold,95 +The secret currency is a "dollar".,147,8,yellow,black,0.056,0.909,times-roman,92 +The secret animal #5 is a "bear".,155,9,orange,black,0.966,0.93,courier-oblique,94 +The secret clothing is a "hat".,166,10,blue,white,0.991,0.629,courier-bold,84 +The secret instrument is a "piano".,171,11,purple,white,0.072,0.312,courier-oblique,100 +The secret animal #1 is a "cat".,181,12,black,white,0.923,0.464,times-roman,62 +The secret shape is a "triangle".,188,10,white,black,0.953,0.233,courier,100 +The secret vegetable is "broccoli".,200,13,green,white,0.281,0.926,times-bold,101 diff --git a/AmericanAirlines/AmericanAirlines_200Pages/prompt_questions.txt b/AmericanAirlines/AmericanAirlines_200Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..f575146fdae0b9054aaf42f139a0a1eb5b40488a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_200Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret drink in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret object #1 in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret landmark in the document? +What is the secret flower in the document? +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret object #3 in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret sport in the document? +What is the secret office supply in the document? +What is the secret currency in the document? +What is the secret animal #5 in the document? +What is the secret clothing in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret shape in the document? +What is the secret vegetable in the document? diff --git a/AmericanAirlines/AmericanAirlines_25Pages/needles.csv b/AmericanAirlines/AmericanAirlines_25Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..de9be2ba8955ca7d1dd752d779df6ed037b23227 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/needles.csv @@ -0,0 +1,25 @@ +The secret drink is "tea". +The secret animal #2 is a "kangaroo". +The secret object #2 is a "phone". +The secret object #1 is a "table". +The secret transportation is a "boat". +The secret animal #3 is a "shark". +The secret kitchen appliance is a "rice cooker". +The secret object #5 is a "toothbrush". +The secret landmark is the "Statue of Liberty". +The secret flower is a "sunflower". +The secret fruit is a "banana". +The secret food is a "hamburger". +The secret object #3 is a "fork". +The secret object #4 is a "tree". +The secret tool is a "wrench". +The secret animal #4 is a "frog". +The secret sport is "tennis". +The secret office supply is a "paperclip". +The secret currency is a "dollar". +The secret animal #5 is a "bear". +The secret clothing is a "hat". +The secret instrument is a "piano". +The secret animal #1 is a "cat". +The secret shape is a "triangle". +The secret vegetable is "broccoli". diff --git a/AmericanAirlines/AmericanAirlines_25Pages/needles_info.csv b/AmericanAirlines/AmericanAirlines_25Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..d112471df15c114d2699ca08a333c4404cf6e0de --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret drink is "tea".,1,13,white,black,0.86,0.668,helvetica-bold,96 +The secret animal #2 is a "kangaroo".,2,13,yellow,black,0.852,0.473,courier-bold,70 +The secret object #2 is a "phone".,3,10,green,white,0.769,0.924,courier,110 +The secret object #1 is a "table".,4,13,blue,white,0.574,0.608,helvetica,106 +The secret transportation is a "boat".,5,12,black,white,0.255,0.204,courier-oblique,131 +The secret animal #3 is a "shark".,6,10,gray,white,0.855,0.004,times-bold,90 +The secret kitchen appliance is a "rice cooker".,7,13,brown,white,0.294,0.729,helvetica-boldoblique,138 +The secret object #5 is a "toothbrush".,8,8,orange,black,0.739,0.071,times-bolditalic,90 +The secret landmark is the "Statue of Liberty".,9,9,purple,white,0.839,0.546,times-italic,64 +The secret flower is a "sunflower".,10,11,red,white,0.806,0.863,times-roman,130 +The secret fruit is a "banana".,11,11,purple,white,0.859,0.882,helvetica-bold,87 +The secret food is a "hamburger".,12,13,red,white,0.297,0.902,times-bolditalic,121 +The secret object #3 is a "fork".,13,11,yellow,black,0.094,0.934,courier,80 +The secret object #4 is a "tree".,14,9,brown,white,0.722,0.414,times-italic,104 +The secret tool is a "wrench".,15,13,blue,white,0.422,0.913,times-roman,125 +The secret animal #4 is a "frog".,16,12,white,black,0.808,0.541,courier-oblique,71 +The secret sport is "tennis".,17,8,green,white,0.015,0.766,courier-bold,102 +The secret office supply is a "paperclip".,18,11,gray,white,0.211,0.794,times-bold,82 +The secret currency is a "dollar".,19,8,black,white,0.743,0.674,helvetica,94 +The secret animal #5 is a "bear".,20,10,orange,black,0.123,0.774,helvetica-boldoblique,93 +The secret clothing is a "hat".,21,12,orange,black,0.048,0.694,times-bold,144 +The secret instrument is a "piano".,22,14,black,white,0.275,0.923,courier,123 +The secret animal #1 is a "cat".,23,8,white,black,0.167,0.726,helvetica-bold,77 +The secret shape is a "triangle".,24,12,green,white,0.026,0.238,times-italic,115 +The secret vegetable is "broccoli".,25,9,yellow,black,0.749,0.062,helvetica-boldoblique,131 diff --git a/AmericanAirlines/AmericanAirlines_25Pages/prompt_questions.txt b/AmericanAirlines/AmericanAirlines_25Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..f575146fdae0b9054aaf42f139a0a1eb5b40488a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_25Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret drink in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret object #1 in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret landmark in the document? +What is the secret flower in the document? +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret object #3 in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret sport in the document? +What is the secret office supply in the document? +What is the secret currency in the document? +What is the secret animal #5 in the document? +What is the secret clothing in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret shape in the document? +What is the secret vegetable in the document? diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_1.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..3218cc6e77316467c9578d89c088f8ddc4d3d42c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_1.txt @@ -0,0 +1,34 @@ +UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Fiscal Year Ended December 31, 2023 +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Transition Period From to +Commission file number 1-8400 +American Airlines Group Inc. +(Exact name of registrant as specified in its charter) +Delaware 75-1825172 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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 Trading Symbol(s) Name of each exchange on which registered +Common Stock, $0.01 par value per share AAL The Nasdaq Global Select Market +Preferred Stock Purchase Rights — + Attached to the Common Stock +Securities registered pursuant to Section 12(g) of the Act: None +Commission file number 1-2691 +American Airlines, Inc. +(Exact name of registrant as specified in its charter) +Delaware 13-1502798 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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: None +Securities registered pursuant to Section 12(g) of the Act: None +____________________________________________________ + +(1) +(1) +The secret drink is "tea". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_10.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..c97f2302efdbaa22388c52e99d548a0c44794a48 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_10.txt @@ -0,0 +1,51 @@ +Table of Contents +In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain commitments to the +European Commission (EC) regarding, among other things, the availability of take-off and landing slots at London Heathrow (LHR) or London +Gatwick (LGW) airports. The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United +Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United +Kingdom Competition and Markets Authority (CMA), in October 2018, opened an investigation into the transatlantic joint business. In +September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of +the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its investigation in September 2023 after a +pause related to the COVID-19 pandemic and plans to complete the investigation before the scheduled expiration of the interim measures in +March 2026. We continue to cooperate fully with the CMA. +Marketing Relationships +To improve access to each other’s markets, various U.S. and foreign air carriers, including American, have established marketing +agreements with other airlines. These marketing agreements vary in scope and are intended to provide enhanced customer choice by means +of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as our joint businesses +or strategic alliances. As of December 31, 2023, in addition to the relationships described above, American had codeshare, marketing and/or +loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern +Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A. (GOL), Gulf Air, Hawaiian Airlines, IndiGo, +JetSMART, Jetstar, Jetstar Japan, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, Silver Airways, SriLankan +Airlines and Vueling Airlines. +In 2023, we completed codeshare agreements with JetSMART, enabling American’s customers to book travel on JetSMART’s network +beyond Santiago, Chile and Lima, Peru, and which will allow for further extension of our network to other markets in South America, such as +Argentina, on JetSMART operated flights, subject to all necessary regulatory approvals. +Also in 2023, we launched a codeshare partnership with Philippine Airlines. This partnership introduced the first marketed flights by a +Philippine carrier to several U.S. destinations and allows American’s customers to travel to Manila and Cebu, Philippines. +We had a marketing relationship, the Northeast Alliance arrangement (NEA), with JetBlue Airways Corporation (JetBlue) that included an +alliance agreement with reciprocal codesharing on certain domestic and international routes from New York (John F. Kennedy International +Airport (JFK), LaGuardia Airport (LGA) and Newark Liberty International Airport) and Boston Logan International Airport. On May 19, 2023, +the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and +further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers +have commenced wind-down activities to accommodate mutual customers. +AAdvantage Program +Our AAdvantage program was established to develop passenger loyalty by offering benefits and rewards to travelers for their continued +patronage with American and our partners. AAdvantage members enjoy exclusive benefits and earn mileage credits for flying on eligible +tickets on American, any oneworld Alliance airline or other partner airlines. For every dollar spent by flying on an eligible American ticket, +members earn mileage credits, and AAdvantage Gold , AAdvantage Platinum, AAdvantage Platinum Pro and AAdvantage Executive +Platinum status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively. Members also earn mileage +credits by using the services of more than 1,000 non-flight partners, such as our co-branded credit cards, certain hotel and car rental +companies and shopping and dining partners. The AAdvantage program in general, and our co-branded credit card programs in particular, +are material assets of our business and have become increasingly important to our company over time. During 2023 and 2022, cash +payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively. +Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to our Admirals +Club , or for other non-flight awards, such as car rentals and hotels, from our program partners. Travel awards are available on all flights +operated by American and, subject to capacity-controlled seating, on flights operated by our partners. A member’s mileage credits generally +do not expire if that member has any type of qualifying activity at least once every 24 months or if the AAdvantage member is the primary +holder of a co-branded credit card. AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by +earning +® +® ® ® +® +® +10 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_11.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..04f44af2d93af29bde670cbc598799c55d1f4436 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_11.txt @@ -0,0 +1,48 @@ +Table of Contents +Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit +cards. Status members can enjoy additional travel benefits of the AAdvantage program, including complimentary upgrades, checked bags, +and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery when traveling on American, +any oneworld Alliance airline or select partner airlines. In addition, AAdvantage members can unlock benefits, rewards and choices before, +between and beyond the traditional status tiers with Loyalty Point Rewards. In 2023, we introduced a new business loyalty program, +AAdvantage Business, which rewards both eligible companies with AAdvantage miles and their travelers with additional Loyalty Points for +booking business travel through our website or mobile app. +In 2023, the editorial staff of the digital news outlet, The Points Guy, selected AAdvantage as the Best U.S. Airline Loyalty Program. In +addition, AAdvantage was recognized for the Best Elite Program in the Americas at the 2023 Freddie Awards, which is based entirely on +votes from travelers around the world. +Under our agreements with AAdvantage members and program partners, we reserve the right to change the terms of the AAdvantage +program at any time and without notice. Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to +change. +During 2023, our members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American +and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise. Approximately 8% of our 2023 +total revenue passenger miles flown were from award travel. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Critical Accounting +Policies and Estimates” for more information on our loyalty program. +Industry Competition +Domestic +The markets in which we operate are highly competitive. On most of our domestic nonstop routes, we face competing service from other +domestic airlines, including major network airlines, low-cost carriers and ultra-low-cost carriers such as Alaska Airlines, Allegiant Air, Delta Air +Lines, Frontier Airlines, Hawaiian Airlines, JetBlue, Southwest Airlines, Spirit Airlines and United Airlines. Between cities that require a +connection, where the major airlines compete via their respective hubs, competition is significant. In addition, we face competition on some of +our connecting routes from airlines operating point-to-point service on such routes. We also compete with all-cargo and charter airlines and, +particularly on shorter segments, ground and rail transportation. +In general, beyond nonstop city pairs, carriers that have the greatest ability to seamlessly connect passengers to and from markets have a +competitive advantage. In some cases, however, foreign governments limit U.S. air carriers’ rights to transport passengers beyond +designated gateway cities in foreign countries. In order to improve access to domestic and foreign markets, we have arrangements with other +airlines including through the oneworld Alliance, other cooperation agreements, joint business agreements and marketing relationships, as +further discussed herein. +On all of our routes, pricing decisions are affected, in large part, by the need to meet competition from other airlines. Price competition +occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and loyalty +program initiatives. Airlines typically use discounted fares and other promotions to stimulate traffic during normally weak travel periods, when +they begin service to new cities, when they have excess capacity, to generate cash flow, to maximize revenue per available seat mile or to +establish, increase or preserve market share. Most airlines will quickly match price reductions in a particular market, and we have often +elected to match discounted or promotional fares initiated by other air carriers in certain markets in order to compete in those markets. In +addition, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which +compete in many of the markets in which we operate, with competition from these carriers increasing and new entrants regularly announcing +their intention to start up new ultra-low-cost carriers. +In addition to price competition, airlines compete for market share by increasing the size of their route system and the number of markets +they serve. The American Eagle regional carriers increase the number of markets we serve by flying to smaller markets and providing +connections at our hubs. Many of our competitors also own or have agreements with regional airlines that provide similar services at their +hubs and other locations. We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time +performance, type of equipment, cabin configuration, amenities provided to passengers, loyalty programs, the automation of travel agent +reservation systems, onboard products, health and safety, sustainability initiatives and other services. +11 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_12.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..d89e48b74afca21909fc4e9f533a388d9c43fd0a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_12.txt @@ -0,0 +1,41 @@ +Table of Contents +International +In addition to our extensive domestic service, we provide international service to Canada, Mexico, the Caribbean, Central and South +America, Europe, Qatar, China, Japan, Korea, India, Australia and New Zealand. In providing international air transportation, we compete +with other U.S. airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines. Competition has also been +increasing from low-cost airlines executing international long-haul expansion strategies, a trend we expect to continue, in particular with the +planned introduction of long-range narrowbody aircraft in the coming years. +In order to increase our ability to compete in the market for international air transportation service, which is subject to extensive +government regulation, U.S. and foreign carriers have entered into bilateral and multilateral marketing relationships, alliances, cooperation +agreements and joint business agreements to exchange traffic among each other’s flights and route networks. See “Distribution and +Marketing Agreements” above for further discussion. +Sustainability +Operating a sustainable business that has the ability to serve our stakeholders over the long-term is an important part of our strategy. We +have increased our focus over time on a number of elements that we view as important to build a more sustainable company, including those +described below. +We have received recognition for our progress toward our sustainability goals. American was named the 2023 Air Transport World Eco- +Airline of the Year, and in 2023 we were named to the Dow Jones Sustainability World Index for the first time, one of only two passenger +airlines included in the index. We also returned to the Dow Jones Sustainability North America Index in 2023 for the third year in a row. +Climate +We recognize the challenge of climate change and have set ambitious goals to transition to operating a low-carbon airline over time. Our +aim is to achieve net zero GHG emissions by 2050, and we have set an intermediate target to drive progress toward that goal. We have +received validation from the Science Based Targets initiative (SBTi) that our 2035 GHG reduction target complies with the criteria in the +SBTi’s first aviation pathway. +The vast majority of our direct GHG emissions comes from the use of jet fuel in our operations. Our current strategy for reaching net zero +GHG emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, powered by low-carbon fuel. To +do so, we are working to drive progress across several key levers, including: +• Continuing to replace older, less fuel-efficient aircraft with new, more efficient aircraft over time; +• Helping scale the production of sustainable aviation fuel (SAF) with the aim of transitioning to lower-carbon fuels. Currently, +SAF is not available at the cost or scale necessary to meet our industry’s needs. We continue to enter into agreements to +purchase SAF as part of our goal to replace 10% of our conventional jet fuel with SAF in 2030 and to encourage investment +in SAF; and +• Evaluating and investing in innovations that may enable commercial aircraft to be powered by low- and no-carbon fuel +sources over the long term. For example, we have made direct investments in companies working to develop hydrogen- +electric propulsion technology and green hydrogen distribution. We are also an anchor partner of Breakthrough Energy +Catalyst, which aims to make investments to accelerate the development of new clean energy technologies, including SAF. +Achieving our ambitious goals will require significant action and investments by governments, manufacturers and other stakeholders. We +are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our own +progress. Our Board and Corporate Governance and Public Responsibility Committee receive updates on our climate strategy, progress and +key risks regularly. Our Chief Executive Officer is responsible for oversight of our climate change strategy. +12 +The secret animal #3 is a "shark". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_13.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..d69b2a64114ded37772a61add6bff848ec6e6e05 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_13.txt @@ -0,0 +1,45 @@ +Table of Contents +Safety +The safety of our customers and team members is a top priority. Our approach to safety is guided by our FAA-approved safety +management systems (SMS), an organization-wide approach to identifying and managing risk. Each SMS is comprised of four components: +Safety Policy, Safety Assurance, Safety Risk Management and Safety Promotion. Our Safety Policy sets safety objectives while striving to +comply with applicable regulatory requirements and laws in the countries where we operate and establishing standards for acceptable +operational behaviors. +The Safety Assurance component of our SMS specifies how we use data and conduct quality assurance and internal oversight to validate +the effectiveness of risk controls and the performance of the SMS. The Safety Risk Management (SRM) element of our SMS provides a +decision-making process for identifying hazards and mitigating risk based on a thorough understanding of our systems and their operating +environment. We employ SRM whenever there is a significant change to our operations, such as the delivery of new aircraft. Lastly, the +Safety Promotion component includes training and raising awareness among team members so that they can spot potential safety events. +Customers +We fly to close to 350 destinations in the United States and internationally, and we are committed to providing our customers with a world- +class travel experience. We continued to rigorously measure and track customer satisfaction through passenger surveys in 2023, efforts that +led to further improvements in our operations and the services we provide. In 2023, we achieved our best-ever full year completion factor, +with the lowest number of cancellations annually since the 2013 merger with US Airways Group, Inc., which led to a record Likelihood to +Recommend score for the full year. Additionally in 2023, we were recognized for the sixth consecutive year with the prestigious Five Star +rating in The APEX Official Airline Ratings – Global Airline category. This rating is based on verified customer feedback on the overall travel +experience. +Our People +The airline business is labor intensive, and our team members are critical to delivering for our customers. The operational complexity of +our business requires a diverse team of personnel trained and experienced in a variety of technical areas such as flight operations, ground +operations, safety and maintenance, customer service and airline scheduling and planning. Fostering a culture where our team members feel +supported to take care of our customers is critical to our success. To do this, we must continue to build a diverse and inclusive environment, +helping all team members reach their full potential and providing them with the right resources and support. +In 2023, mainline and regional salaries, wages and benefits were our largest expense and represented 34% of our total operating +expenses. As of December 31, 2023, we had approximately 132,100 active full-time equivalent employees, approximately 87% of whom +were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) governing their +compensation and job duties, among other things. +Talent Development +We focus on providing our team members the tools, training and resources they need to do their best work. We maintain a suite of +programs aimed at helping our people develop the skills and experience they need to succeed in their roles and build rewarding, long-term +careers within our company. Additionally, we have partnered with leading online learning platforms to make professional development +available on-demand to all of our team members. +Diversity, Equity and Inclusion +Cultivating an environment that celebrates diversity, equity and inclusion (DEI) is a priority for us, and we seek to create a workplace +where diverse perspectives and experiences are welcomed and encouraged, where team members feel comfortable to be their authentic +selves and where we are always learning from one another. Our goal is to make culture a competitive advantage so people will want to work +with us, fly with us and invest in us. We are implementing a multiyear strategy focused on embedding DEI throughout our company by: +• Hiring, engaging and retaining talent for growth; +• Delivering excellence in our operations to serve and expand our global markets; +• Striving to have our teams effectively serve the communities we represent; and +• Driving innovation to build competitive advantages. +13 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_14.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..60a44262b463cad6dca64de8295278b7f683edeb --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_14.txt @@ -0,0 +1,42 @@ +Table of Contents +In 2023, we received a perfect score on the Disability Equality Index for the eighth consecutive year and were named one of the best +places to work for disability inclusion. We also received a top score of 100 on the Human Rights Campaign Foundation’s 2023-2024 +Corporate Equality Index, an assessment of LGBTQ+ workplace equality. +Competitive Pay and Comprehensive Benefits +We seek to offer competitive pay, comprehensive benefits and a wide variety of resources designed to support the physical, behavioral +and financial well-being of our team members and their families, including medical coverage that is intended to be affordable and flexible +along with healthcare navigation and support tools. +Our internal recognition programs give team members and customers the opportunity to show their appreciation for a job well done, +including through our Nonstop Thanks program whereby team members can award each other points for exceptional service or as an +expression of gratitude. Recognition points earned through the recognition program can be redeemed for items in an online catalog. In 2023, +our team members were recognized by customers, peers and company leaders approximately three million times and more than 1,600 peer +nominations were submitted for the annual Circle of Excellence, the highest honor that we bestow upon our team members for their career +achievements. +Our future success depends in large part on our ability to attract, develop and retain highly qualified management, technical and other +personnel. Retaining and recruiting people with the appropriate skills became particularly challenging as the economy in general, and the +airline industry in particular, recovered from the COVID-19 pandemic, and there remains intense competition for the human resources +necessary to operate our business successfully. Like many other airlines, we have experienced and continue to experience periodic +shortages of frontline team members as a result. For more discussion, see Part I, Item 1A. Risk Factors – “The loss of key personnel upon +whom we depend to operate our business or the inability to attract, develop and retain additional qualified personnel could adversely affect +our business.” +Labor Relations +Labor relations in the air transportation industry are regulated under the Railway Labor Act (RLA), which vests in the National Mediation +Board (NMB) certain functions with respect to disputes between airlines and labor unions relating to union representation and CBAs. +The following table shows our domestic airline employee groups that are represented by unions: +Union Class or Craft Employees Contract Amendable Date +Mainline: +Allied Pilots Association (APA) Pilots 14,500 2027 +Association of Professional Flight Attendants (APFA) Flight Attendants 24,950 2019 +Airline Customer Service Employee Association –Communications Workers of America and InternationalBrotherhood of Teamsters (CWA-IBT) +Passenger Service 14,650 2029 +Transport Workers Union and International Association ofMachinists & Aerospace Workers (TWU-IAM Association) Mechanics and Related 12,350 2025 +TWU-IAM Association Fleet Service 19,100 2025 +TWU-IAM Association Stock Clerks 2,000 2025 +TWU-IAM Association Flight Simulator Engineers 150 2025 +TWU-IAM Association Maintenance Control Technicians 190 2025 +TWU-IAM Association Maintenance Training Instructors 100 2025 +Professional Airline Flight Control Association (PAFCA) Dispatchers 570 2025 +Transport Workers Union (TWU) Flight Crew Training Instructors 390 2025 +(1) +14 +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_15.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..f69fe4ecfdc858036edcf1a1e7781f7799fc7bab --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_15.txt @@ -0,0 +1,41 @@ +Table of Contents +Union Class or Craft Employees Contract Amendable Date +Envoy: +Air Line Pilots Associations (ALPA) Pilots 2,070 2029 +Association of Flight Attendants-CWA (AFA) Flight Attendants 1,850 2026 +TWU Ground School Instructors 10 2027 +TWU Mechanics and Related 1,200 2027 +TWU Stock Clerks 130 2027 +TWU Simulator Instructors 20 2026 +TWU Fleet Service 4,020 2026 +TWU Dispatchers 70 2025 +Communications Workers of America (CWA) Passenger Service 7,000 2026 +Piedmont: +ALPA Pilots 640 2029 +AFA Flight Attendants 310 2026 +International Brotherhood of Teamsters (IBT) Mechanics and Related 470 2026 +IBT Stock Clerks 60 2026 +CWA Fleet and Passenger Service 6,650 2023 +IBT Dispatchers 40 2025 +ALPA Flight Crew Training Instructors 70 2029 +PSA: +ALPA Pilots 1,500 2028 +AFA Flight Attendants 1,190 2023 +International Association of Machinists & Aerospace Workers(IAM) Mechanics and Related 680 2027 +TWU Dispatchers 40 2024 +ALPA Flight Crew Training Instructors 80 2028 +Represents approximate number of active employees as of December 31, 2023. +In 2023, a new four-year CBA was ratified by the APA, the union representing our mainline pilots. Additionally, in January 2024, a new +five-year CBA was ratified by the CWA-IBT, which is amendable in 2029. The CBA covering our mainline flight attendants is now amendable +and negotiations continue. Among our wholly-owned regional subsidiaries, Piedmont fleet and passenger service and PSA flight attendants +have agreements that are now amendable and are engaged in negotiations. +For more discussion, see Part I, Item 1A. Risk Factors – “Union disputes, employee strikes and other labor-related disruptions may +adversely affect our operations and financial performance.” +Aircraft Fuel +Our operations and financial results are materially affected by the availability and price of aircraft fuel, which represents one of the largest +single cost items in our business. Based on our 2024 forecasted mainline and regional fuel consumption, we estimate that a one cent per +gallon increase in the price of aircraft fuel would increase our 2024 annual fuel expense by approximately $45 million. +(1) +(1) +15 +The secret object #5 is a "toothbrush". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_16.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..510332f31fed281adeaed56e586661e0ed1fd560 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_16.txt @@ -0,0 +1,44 @@ +Table of Contents +The following table shows annual aircraft fuel consumption and costs, including taxes, for our mainline and regional operations for 2023 +and 2022 (gallons and aircraft fuel expense in millions). +Year Gallons Average Priceper Gallon Aircraft FuelExpense Percent of TotalOperating Expenses +2023 4,140 $2.96 $12,257 25% +2022 3,901 $3.54 $13,791 29% +As of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not +to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and +other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in aircraft fuel prices. +Aircraft fuel prices have in the past, and may in the future, experience substantial volatility. We cannot predict the future availability, price +volatility or cost of aircraft fuel. For more discussion, see Part I, Item 1A. Risk Factors – “Our business is very dependent on the price and +availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of +aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity.” +Seasonality and Other Factors +Due to the greater demand for air travel during the summer months, revenues in the airline industry exhibit seasonal patterns based on the +peak travel periods. General economic conditions, fears of terrorism or war, fare initiatives, fluctuations in fuel prices, labor actions, weather, +natural disasters, outbreaks of disease, geopolitical factors and other factors could impact this seasonal pattern. Therefore, our quarterly +results of operations are not necessarily indicative of operating results for the entire year, and historical operating results in a quarterly or +annual period are not necessarily indicative of future operating results. +Domestic and Global Regulatory Landscape +General +Airlines are subject to extensive domestic and international regulatory requirements. Domestically, the DOT and the Federal Aviation +Administration (FAA) exercise significant regulatory authority over air carriers. +The DOT, among other things, oversees and regulates domestic and international codeshare agreements, international route authorities, +competition and consumer protection matters including accessibility, the display and sharing of ancillary fee information and refund practices. +The Antitrust Division of the Department of Justice, along with the DOT in certain instances, have jurisdiction over airline antitrust matters. +The FAA similarly exercises safety oversight and regulates most operational matters of our business, including how we operate and +maintain our aircraft. FAA requirements cover, among other things, required technology and necessary onboard equipment; systems, +procedures and training necessary to ensure the continuous airworthiness of our fleet of aircraft; safety measures and equipment; crew +scheduling limitations and experience requirements; and many other technical aspects of airline operations. Additionally, our pilots and other +employees are subject to rigorous certification standards, and our pilots and other crew members must adhere to flight time and rest +requirements. +The FAA also controls the national airspace system, including operational rules and fees for air traffic control (ATC) services. The +efficiency, reliability and capacity of the ATC network has a significant impact on our costs and on the timeliness of our operations. +The U.S. Postal Service has jurisdiction over certain aspects of the transportation of mail and related services. +Airport Access and Operations +Domestically, any U.S. airline authorized by the DOT is generally free to operate scheduled passenger service between any two points +within the U.S. and its territories, with the exception of certain airports that require landing and take-off rights and authorizations (slots) and +other facilities, and certain airports that impose geographic limitations on operations or curtail operations based on the time of day. +Operations at three major domestic airports we serve (JFK and LGA in New York City, and Ronald Reagan Washington National Airport +(DCA) near Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations +of slots or similar regulatory mechanisms +16 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_17.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..1510bba43e2a5f4bd3477e397064c45696bb1455 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +Table of Contents +that limit the rights of carriers to conduct operations at those airports. Each slot represents the authorization to land at and take off from the +particular airport during a specified time period. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so- +called “perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Generally, our ability to retain slots is conditioned on the continued use of such slots, and in the absence of use, the slots are +subject to forfeiture. In certain circumstances, such as during the COVID-19 pandemic, regulators may issue slot waivers which temporarily +suspend or amend slot usage requirements, and we have used slot waivers at times to reduce flying levels during periods of reduced +demand for travel. Moreover, on multiple occasions in 2023, the FAA issued slot waivers for New York City area airports as a result of +operational challenges arising from air traffic control staffing shortages; those waivers expire in October 2024, and we cannot guarantee that +such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior +levels of flying to destinations where we have operated a reduced service. If we are forced to surrender slots or other rights, we may be +unable to provide our desired level of service to or from certain destinations in the future. For more discussion, see Part I, Item 1A. Risk +Factors – “If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations.” +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Existing law also permits domestic local airport authorities to implement procedures and impose restrictions designed to abate noise, +provided such procedures and restrictions do not unreasonably interfere with interstate or foreign commerce or the national transportation +system. In some instances, these restrictions have caused curtailments in service or increases in operating costs. +Airline Fares, Taxes and User Fees +Airlines are permitted to establish their own domestic fares without governmental regulation. The DOT maintains authority over certain +international fares, rates and charges, but only 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 we serve. +Airlines are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation, and to collect other taxes and charge other fees, such as foreign taxes, security fees and passenger facility charges. Although +these taxes and fees are not our operating expenses, they represent an additional cost to our customers. These taxes and fees are subject to +increase from time to time. +DOT Passenger Protection Rules +The DOT regulates airline interactions with passengers through the ticketing process, at the airport and onboard the aircraft. Among other +things, these regulations govern how our fares are displayed online, required customer disclosures, access by disabled passengers, handling +of long onboard flight delays and reporting of mishandled bags. In 2023, the DOT finalized rules for accessible lavatories on single-aisle +aircraft and has continued to work through proposals for a number of disability regulations that will impact us, including penalties for +wheelchair loss or damage and prompt wheelchair assistance. The DOT has also proposed rules requiring refunds for cancellations and +significant delays and rules mandating the display of ancillary fees during the initial itinerary search. +International +International air transportation is subject to extensive government regulation, including aviation agreements between the U.S. and other +countries or governmental authorities, such as the EU. Moreover, our alliances with international carriers may be subject to the jurisdiction +and regulations of various foreign agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading +partners, which allow unrestricted route authority access between the U.S. and the foreign markets. +In addition, foreign countries impose passenger protection rules, which are analogous to, and often meet or exceed the requirements of, +the DOT passenger protection rules discussed above. In cases where these foreign requirements exceed the DOT rules, we may bear +additional burdens and liabilities. Further, various foreign airport authorities impose noise and curfew restrictions at their local airports. +17 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_18.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..9d36400dfd542970dedbd3a5420a116996614fab --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_18.txt @@ -0,0 +1,43 @@ +Table of Contents +Security +All aspects of civil aviation and border security in the U.S. affecting U.S. carriers are controlled or regulated by the federal government +through the Transportation Security Administration (TSA) and the U.S. Customs and Border Protection (CBP). The TSA is responsible for the +security of the nation’s transportation systems. The TSA’s requirements for aviation security include, among other things, screening of +passengers, baggage, cargo, mail, employees and vendors; carriage of federal air marshals at no charge; and continuous background +checks of all employees and vendor employees with access to secure areas of airports. Funding for the TSA is provided by a combination of +air carrier fees, passenger fees and taxpayer funds. The CBP is responsible for securing the nation’s borders by combining customs, +immigration and agricultural protection. The CBP regulatory requirements include the transmission of advanced passport data to facilitate the +U.S. entry process. Funding for a portion of CBP operations is provided by a combination of fees collected by airlines. Our international +service further requires us to comply with host government civil aviation security regimes and foreign border control authorities. +Environmental Matters +Environmental Regulation +The airline industry is subject to various laws and government regulations concerning environmental matters in the U.S. and other +countries. U.S. federal laws that have a particular impact on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air +Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental +Response, Compensation and Liability Act. The U.S. Environmental Protection Agency (EPA) and other federal agencies may promulgate +regulations that have an impact on our operations. In addition to these federal activities, various states have been delegated certain +authorities under the aforementioned federal statutes. Many state and local governments have adopted environmental laws and regulations +that are similar to or stricter than federal requirements. +Revised underground storage tank regulations issued by the EPA in 2015 have affected certain airport fuel hydrant systems, with +modifications of such systems needed in order to comply with applicable portions of the revised regulations. In addition, related to the EPA +and state regulations pertaining to storm water management, several U.S. airport authorities are actively engaged in efforts to limit +discharges of deicing fluid into the environment, often by requiring airlines to participate in the building or reconfiguring of airport deicing +facilities. Additionally, compliance with updated federal and state regulations governing fire extinguishing foams are expected to require +modification to fire suppression systems that we operate, as well as those maintained by airports. On November 23, 2022, the EPA also +published the final rule for particulate matter emission standards and test procedures for civil aircraft engines, which took effect on December +23, 2022. These or similar regulations could directly or indirectly result in increased compliance costs, but at this time we do not expect these +costs to be material. +The environmental laws include those related to responsibility for potential soil and groundwater contamination. We are conducting +investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance +bases. We presently anticipate that the ongoing costs of such activities will not have a material impact on our operations. +We employ an environmental management system that provides a systematic approach for compliance with environmental regulations and +management of a broad range of environmental issues, including but not limited to air emissions, hazardous waste, underground tanks, and +aircraft water quality. +Global and Domestic Regulation Related to Climate Change +Climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to +adapt to rapidly evolving domestic and international regulation and to achieve emission reductions before cost-effective technologies are +available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase +carbon offset credits or otherwise incur additional costs related to our emissions. Such trends may also impact us indirectly by increasing our +operating costs, including fuel costs. +18 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_19.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..7296f234f0967c31fec8b496f1017e8098955e48 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_19.txt @@ -0,0 +1,44 @@ +Table of Contents +The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) +We are subject to the requirements of the CORSIA, an international, market-based emissions reduction program adopted by the +International Civil Aviation Organization (ICAO) in 2016. CORSIA is intended to achieve carbon-neutral growth in the international aviation +sector from 2021 until 2035 through the purchase of certain types of carbon offset credits or the use of eligible renewable fuels. +For each year from 2021 through 2032, CORSIA requires airlines to compensate for the rate of growth of GHG emissions of the aviation +sector as a whole, relative to a predetermined baseline as determined by ICAO. ICAO originally defined the baseline as the average +emissions from covered flights in 2019 and 2020. However, due to the impact of the COVID-19 pandemic on air travel, in June 2020, ICAO +removed 2020 from the baseline calculation for the CORSIA pilot phase (2021-2023). In October 2022, ICAO member countries agreed that +85% of 2019 emissions would be used as the baseline for the remainder of CORSIA’s term (2024-2035). +The CORSIA program is being implemented in three phases: a pilot phase that ran from 2021 through 2023, followed by a first phase of +the program beginning in 2024 through 2026 and a second phase beginning in 2027 through 2035. ICAO member countries are expected to +enact legislation to implement CORSIA. We expect to be required to purchase carbon offset credits to comply with CORSIA’s first phase, +however, the U.S. government has not yet enacted implementation legislation. +Our future costs of CORSIA compliance are uncertain due to the uncertainty with respect to the future growth of covered GHG emissions, +the supply and price of CORSIA-eligible carbon offset credits and development of the market for eligible renewable fuels. +European GHG Emissions Regulations +On May 16, 2023, revisions to the EU Emissions Trading System (EU ETS) were published in the Official Journal of the EU. Pursuant to +these revisions, the allocation of emissions allowances currently granted for free to aircraft operators under the EU ETS will be phased out by +2026, and CORSIA will apply to flights to and from EU countries that are ICAO member countries. The EC will also be required to undertake +a review in 2026 to determine whether CORSIA is sufficiently delivering on the goals of the Paris Agreement and, to the extent it is +determined not to be, would extend the scope of the EU ETS to include all departing flights from the European Economic Area (EEA) (and +not just flights within the EEA and flights departing the EEA to the United Kingdom and Switzerland). +In 2023, the European Parliament and the European Council formally adopted the EU’s ReFuelEU Aviation initiative to create a SAF +blending mandate for aviation fuel suppliers. The agreed text requires fuel suppliers to ensure that minimum shares of SAF are made +available to aircraft operators at EU airports starting January 1, 2025. Such minimum requirements are 2% in 2025, 6% in 2030, 20% in +2035, 34% in 2040, 42% in 2045 and 70% in 2050. In addition, a specific proportion of the fuel mix (1.2% in 2030, 2% in 2032, 5% in 2035 +and progressively reaching 35% in 2050) must comprise synthetic fuels such as e-kerosene, and as of 2025, there will be an EU label for the +environmental performance of flights, such that airlines may market their flights indicating the expected carbon footprint per passenger. The +potential effects on our business of such requirements are uncertain at this time. The UK and other countries have adopted or are +considering adoption of a SAF blending mandate similar to that of the EU. +U.S. Emissions Standards for Aircraft Engines +In January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine +GHG emission standards. Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines +on in-service aircraft. On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions +standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process. Since then, the EPA and ICAO’s +Committee on Aviation Environmental Protection have had several meetings on this issue, but no further progress has been made. In +addition, several states and environmental groups have challenged the EPA’s standards and on June 30, 2023, the U.S. Court of Appeals for +the D.C. Circuit denied such petitions and upheld the EPA’s GHG emissions standards. +For more information on our approach to climate change, see our 2022 Sustainability Report on our website www.aa.com available under +“Environmental, Social and Governance.” None of the information or contents under our “Environmental, Social and Governance” page, 2022 +Sustainability Report, or our website are incorporated into this Annual Report on Form 10-K. +19 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_2.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..f5dbd35e60ac847ffe90766f203bd98744a0b127 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_2.txt @@ -0,0 +1,46 @@ +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ 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. +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ 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. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting +company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” +and “emerging growth company” in Rule 12b-2 of the Exchange Act. +American Airlines Group Inc. ☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +American Airlines, Inc. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying +with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of +its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public +accounting firm that prepared or issued its audit report. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant +included in the filing reflect the correction of an error to previously issued financial statements. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based +compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of the voting stock held by non-affiliates of American Airlines Group Inc. as of June 30, 2023, was +approximately $11.7 billion. As of February 16, 2024, there were 654,756,816 shares of American Airlines Group Inc. common stock +outstanding. +As of February 16, 2024, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American +Airlines Group Inc. \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_20.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f527b058e3b2be63e7175c5d798b6141ce25454 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_20.txt @@ -0,0 +1,29 @@ +Table of Contents +Impact of Regulatory Requirements on Our Business +Regulatory requirements, including but not limited to those discussed above, affect operations and increase operating costs for the airline +industry, including our airline subsidiaries, and future regulatory developments may continue to do the same. For additional information, see +Part I, Item 1A. Risk Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state +and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or +data privacy incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our +business, results of operations and financial condition,” “If we are unable to obtain and maintain adequate facilities and infrastructure +throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or +change our route network in the future, which may have a material adverse impact on our operations,” “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages,” “The airline industry is heavily taxed,” “We are subject to many forms of +environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, +including increased regulation of our GHG emissions, changing consumer preferences and the potential for increased impacts of severe +weather events on our operations and infrastructure.” +Available Information +Use of Websites to Disclose Information +Our website is located at www.aa.com. We have made, and expect in the future to make, public disclosures to investors and the general +public of information regarding AAG and its subsidiaries by means of the investor relations section of our website as well as through the use +of our social media sites, including Facebook and X. In order to receive notifications regarding new postings to our website, investors are +encouraged to enroll on our website to receive automatic email alerts (see https://americanairlines.gcs-web.com/email-alerts), “follow” +American (@AmericanAir) on X and “like” American on our Facebook page (www.facebook.com/AmericanAirlines). None of the information +or contents of our website or social media postings is incorporated into this Annual Report on Form 10-K. +Availability of SEC Reports +A copy of this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those +reports are available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish +it to, the SEC. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding +issuers that file electronically with the SEC at www.sec.gov. +20 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_21.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..ffc3f54dd1d79b279f82beffe1f8bc443d179fa3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_21.txt @@ -0,0 +1,49 @@ +Table of Contents +ITEM 1A. RISK FACTORS +Below are certain risk factors that may affect our business, results of operations and financial condition, or the trading price of our +common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing +business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and +uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination +thereof, may impact our business. +Risks Related to our Business and Industry +Downturns in economic conditions could adversely affect our business. +Due to the discretionary nature of business and leisure travel spending and the highly competitive nature of the airline industry, our +revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in +these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking +practices and related reactions by our competitors, all of which in turn have had, and may have in the future, a strong negative effect on our +business. For example, the COVID-19 pandemic and associated decline in economic activity and increase in unemployment levels had a +severe and prolonged effect on the global economy generally and, in turn, resulted in a prolonged period of depressed demand for air travel. +In addition, a rapid economic expansion following the height of the COVID-19 pandemic resulted in significant inflationary pressures and +volatility in certain currencies, which have increased our costs for aircraft fuel, wages and benefits and other goods and services we require +to operate our business, as well as increasing the interest expense on our variable-rate indebtedness. +We will need to obtain sufficient financing or other capital to operate successfully. +Our business plan contemplates continued significant investments related to our fleet, improving the experience of our customers and +updating our facilities. Significant capital resources will be required to execute this plan. We estimate that, based on our commitments as of +December 31, 2023, our planned aggregate expenditures for aircraft purchase commitments and certain engines for calendar years 2024 +through 2028 would be approximately $11.7 billion. We may also require financing to refinance maturing obligations and to provide liquidity to +fund other corporate requirements. Accordingly, we will need substantial liquidity, financing or other capital resources to finance such aircraft +and engines and meet such other liquidity needs. If needed, it may be difficult for us to raise additional capital on acceptable terms, or at all, +due to, among other factors: our substantial level of existing indebtedness, particularly following transactions we completed in response to +the impact of the COVID-19 pandemic; our non-investment grade credit rating; volatile or otherwise unfavorable market conditions; and the +availability of assets to use as collateral for loans or other indebtedness, which has been reduced significantly as a result of certain financing +transactions we have undertaken since the beginning of 2020 and may be further reduced. If we are unable to arrange any such required +financing at customary advance rates and on terms and conditions acceptable to us, we may need to use cash from operations or cash on +hand to purchase aircraft and engines or fund our other corporate requirements, or may seek to negotiate deferrals for such aircraft and +engines with the applicable manufacturers or otherwise defer corporate obligations. Depending on numerous factors applicable at the time +we seek capital, many of which are out of our control, such as the state of the domestic and global economies, the capital and credit markets’ +view of our prospects and the airline industry in general, and the general availability of debt and equity capital, the financing or other capital +resources that we will need may not be available to us, or may be available only on onerous terms and conditions. Furthermore, we hold +significant balances of cash and short-term investments, including as necessary to conduct our day-to-day operations, some of which are +held in deposit accounts at commercial banks in excess of the government-provided deposit insurance. There can be no assurance that we +will be successful in obtaining financing or other needed sources of capital to operate successfully or to fund our committed expenditures. An +inability to obtain necessary financing on acceptable terms would limit our ability to execute necessary capital projects and would have a +material adverse impact on our business, results of operations and financial condition. +Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to +adverse economic and industry conditions. +We have significant amounts of indebtedness and other financial obligations, including pension obligations, obligations to make future +payments on flight equipment and property leases related to airport and other facilities, and substantial non-cancelable obligations under +aircraft and related spare engine purchase agreements. Moreover, currently a very significant portion of our assets are pledged to secure our +indebtedness. Our substantial indebtedness and other +21 +The secret fruit is a "banana". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_22.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..50cc35c9244f3a4269a4c096e4d18d3a2e57a256 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_22.txt @@ -0,0 +1,45 @@ +Table of Contents +obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences. +For example, they may: +• make it more difficult for us to satisfy our obligations under our indebtedness; +• limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments and general +corporate purposes, and adversely affect the terms on which such funding can be obtained; +• require us to dedicate a substantial portion of our liquidity or cash flow from operations to payments on our indebtedness and +other obligations, thereby reducing the funds available for other purposes; +• make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative +to competitors with lower relative levels of financial leverage; +• significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or +global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our +business, operations, or competitive position versus other airlines; +• limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and +economic conditions; +• bear interest at floating rates, subjecting us to volatility in interest expenses as interest rates fluctuate; +• contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and +amounts available to be drawn under revolving credit facilities and collateral coverage ratios and peak debt service coverage +ratios; +• impact availability of borrowings under revolving lines of credit; and +• contain restrictive covenants that could, among other things: +◦ limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make +investments and pay dividends; and +◦ if breached, result in an event of default under our other indebtedness. +In addition, during the COVID-19 pandemic we were required to obtain a significant amount of additional financing from a variety of +sources and we cannot guarantee that we will not need to obtain additional financing in the future. Such financing may include the issuance +of additional unsecured or secured debt securities, equity securities and equity-linked securities as well as additional bilateral and syndicated +secured and/or unsecured credit facilities, among other items. There can be no assurance as to the timing of any such financing transactions, +which may be in the near term, or that we will be able to obtain such additional financing on favorable terms, or at all. Any such actions may +be material in nature, could result in the incurrence and issuance of significant additional indebtedness or equity and could impose significant +covenants and restrictions to which we are not currently subject. Moreover, as a result of the financing activities we undertook in response to +the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby +subjecting us to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions +could become binding on us should we seek additional liquidity in the future. +The obligations discussed above, including those imposed as a result of any additional financings we may undertake, could also impact +our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business, and could materially adversely affect our +liquidity, results of operations and financial condition. +Further, a substantial amount of our long-term indebtedness bears interest at floating interest rates, which tend to fluctuate based on +general short-term interest rates, rates set by the U.S. Federal Reserve and other central banks, the supply of and demand for credit in +treasury repurchase or other markets and general economic conditions. We have not hedged our interest rate exposure with respect to our +floating rate debt. Accordingly, our interest expense for any particular period will fluctuate based on the relevant benchmark rate and other +variable interest rates. In 2022 and 2023, in response to rising inflation which coincided with a rapid rebound of economic activity as +governments lifted restrictions and economies reopened following the COVID-19 pandemic, central banks around the world—including the +U.S. Federal +22 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_23.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..d998d7cafe390a75569289fe4c08342c55828225 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_23.txt @@ -0,0 +1,44 @@ +Table of Contents +Reserve, the European Central Bank and the Bank of England—undertook a cycle of raising interest rates, which has consequently +increased the interest we pay on our floating-rate indebtedness. To the extent the interest rates applicable to our floating rate debt remain +elevated or continue to increase, our interest expense will increase, in which event we may have difficulties making interest payments and +funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected. +In connection with the phase-out of the London Interbank Offered Rate (LIBOR) as a reference rate in June 2023, the U.S. Federal +Reserve, in conjunction with the Alternative Reference Rates Committee, chose the Secured Overnight Financing Rate (SOFR), and +specifically Term SOFR, as the recommended risk-free reference rate for the U.S. (calculated based on repurchase agreements backed by +treasury securities). Prior to the discontinuation of LIBOR, we amended substantially all of our LIBOR-based financing arrangements to +transition them to successor rates, primarily Term SOFR. We cannot predict the extent to which Term SOFR will gain widespread acceptance +as a replacement for LIBOR, the consequences of the replacement of LIBOR on financial markets generally or on our business, financial +condition or results of operations specifically, and our transition to successor rates could cause the amount of interest payable on our long- +term debt to be different or higher than expected. +We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, +results of operations and financial condition. +Our pension funding obligations are significant. The amount of our pension funding obligations will depend on the performance of +investments held in trust by the pension plans, interest rates for determining liabilities and actuarial experience. We also have significant +obligations for retiree medical and other postretirement benefits. +Additionally, we participate in the IAM National Pension Fund (the IAM Pension Fund). The funding status of the IAM Pension Fund is +subject to the risk that other employers may not meet their obligations, which under certain circumstances could cause our obligations to +increase. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a +funded status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. +Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health +of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, American was subject to an +immaterial contribution surcharge, which ceased to apply on June 14, 2019 upon American’s mandatory adoption of a contribution schedule +under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate. This contribution schedule +will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. Furthermore, if +we were to withdraw from the IAM Pension Fund, if the IAM Pension fund were to terminate, or if the IAM Pension Fund were to undergo a +mass withdrawal, we could be subject to liability as imposed by law. +If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely +affect our liquidity. +We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. These +agreements allow these credit card processing companies, under certain conditions (including, with respect to certain agreements, our failure +to maintain certain levels of liquidity), to hold an amount of our cash (referred to as a holdback) equal to some or all of the advance ticket +sales that have been processed by that credit card processor, but for which we have not yet provided the air transportation. Additionally, such +credit card processing companies may require cash or other collateral reserves to be established. These credit card processing companies +are not currently entitled to maintain any holdbacks pursuant to these requirements. These holdback requirements can be implemented at the +discretion of the credit card processing companies upon the occurrence of specific events, including material adverse changes in our +financial condition or the triggering of a liquidity covenant. The imposition of holdback requirements, up to and including 100% of relevant +advanced ticket sales, would materially reduce our liquidity. Likewise, other of our commercial agreements contain provisions that allow +counterparties to impose less-favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our +financial condition. For example, we maintain certain letters of credit as well as insurance- and surety-related agreements under which +counterparties may require collateral, including cash collateral. +23 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_24.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a232caf50a9edf8af3da8e8773aac569446439f --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_24.txt @@ -0,0 +1,46 @@ +Table of Contents +The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain +additional qualified personnel could adversely affect our business. +We believe that our future success will depend in large part on our ability to attract, develop and retain highly qualified management, +technical and other personnel. Retaining and recruiting people with the appropriate skills is particularly challenging as the economy in +general, and the airline industry in particular, continue to recover from the COVID-19 pandemic, resulting in competition for the human +resources necessary to operate our business successfully. We may not be successful in attracting, developing or retaining key personnel or +other highly qualified personnel. In addition, competition for skilled personnel has intensified and may continue to intensify if overall industry +capacity continues to increase and/or we were to incur attrition at levels higher than we have historically. Any inability to attract, develop and +retain significant numbers of qualified management and other personnel would have a material adverse effect on our business, results of +operations and financial condition. +Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, +regulatory and other conditions beyond our control, including global events that affect travel behavior, and our results of +operations could be volatile and fluctuate materially due to changes in such conditions. +Our business, results of operations and financial condition have been and will continue to be affected by many changing economic, +geopolitical, commercial, regulatory 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 and higher interest rates; +• the occurrence of wars, conflicts, terrorist attacks and geopolitical instability; +• changes in consumer preferences, perceptions, spending patterns and demographic trends; +• changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations and other +factors; +• delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or +other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise +perform as and when expected; +• actual or potential disruptions to the U.S. National Airspace System (the ATC system); +• increases in costs of safety, security and environmental measures; +• increases in costs related to meeting our climate goals or obligations, including in respect of the costs to be incurred to +migrate to increased use of SAF in lieu of conventional aviation fuel; +• outbreaks of diseases or other public health or safety concerns that affect travel behavior, such as occurred during the +COVID-19 pandemic; and +• weather and natural disasters, including increases in frequency, severity or duration of such disasters, and related costs +caused by more severe weather due to climate change. +The COVID-19 pandemic, along with the measures governments and private organizations worldwide implemented in an attempt to +contain its spread, resulted in significant volatility in demand for air travel, which adversely affected our business, operations and financial +condition to an unprecedented extent and for a prolonged period. Measures implemented during the COVID-19 pandemic—such as travel +restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, cancellation of public events +and many others—initially resulted in a precipitous decline in demand for both domestic and international business and leisure travel. In +response to this material deterioration in demand, we took a number of aggressive actions to ameliorate the impacts to our business, +operations and financial condition. While governments have loosened or lifted COVID-19-related travel restrictions, the potential for a +resurgence of COVID-19, including the emergence and spread of any new variants, and its after effects remain uncertain, and there can be +no assurance that any mitigating actions we take in response will be sufficient to avert a deterioration in our business, financial condition and +results of operations. Additionally, the COVID-19 pandemic necessitated changes in business practices which may persist. For example, +businesses and other travelers may continue to forego air travel in +24 +The secret food is a "hamburger". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_25.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab69e2469a177fb02e05ea35ce3f6eb61a8beba6 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_25.txt @@ -0,0 +1,50 @@ +Table of Contents +favor of remote or flexible working policies and communication alternatives such as videoconferencing. In addition, businesses may seek to +reduce travel costs by requiring the purchase of less expensive tickets, thereby potentially impacting our average revenue per available seat +mile. +In addition to the effects of the COVID-19 pandemic, an outbreak of another contagious disease—such as has occurred in the past with +the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus or any +other similar illness—if it were to become associated with air travel or persist for an extended period, could materially affect the airline +industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior. As a result of these or other +conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change. In addition, due to +generally weaker demand for air travel during the winter, our revenues in the first and fourth quarters of the year could be weaker than +revenues in the second and third quarters of the year. +The airline industry is intensely competitive and dynamic. +Our competitors include other major domestic airlines and foreign, regional and new entrant airlines, as well as joint ventures formed by +some of these airlines, many of which have greater financial or other resources and/or lower cost structures than ours, as well as other forms +of transportation, such as rail and private automobiles or alternatives to commuting or business travel including remote or flexible working +policies and communication alternatives such as videoconferencing. In many of our markets, we compete with at least one low-cost carrier +(including so-called ultra-low-cost carriers). Our revenues are sensitive to the actions of other carriers in many areas, including pricing, +scheduling, capacity, fees (including cancellation, change and baggage fees), amenities, loyalty benefits and promotions, which can have a +substantial adverse impact not only on our revenues, but on overall industry revenues. These factors may become even more significant in +periods when the industry experiences large losses (such as occurred during the COVID-19 pandemic), as airlines under financial stress, or +in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long- +term viability. +Low-cost carriers (including so-called ultra-low-cost carriers) have a profound impact on industry revenues. Using the advantage of low +unit costs, these carriers offer lower fares in order to shift demand from larger, more established airlines, and represent significant +competitors, particularly for customers who fly infrequently or are price sensitive and therefore tend not to be loyal to any one particular +carrier. Many of these carriers, including several that have recently commenced operations, have announced growth strategies including +commitments to acquire significant numbers of new aircraft for delivery in the next few years. These low-cost carriers are attempting to +continue to increase their market share through growth and consolidation, and are expected to continue to have an impact on our revenues +and overall performance. We and several other large network carriers have implemented “Basic Economy” fares designed to more effectively +compete against low-cost carriers, but we cannot predict whether these initiatives will be successful. While historically these carriers have +provided competition in domestic markets, we have recently experienced new competition from low-cost carriers on international routes, +including low-cost airlines executing international long-haul expansion strategies, a trend likely to continue, in particular with the planned +introduction of long-range narrowbody aircraft in coming years. Additionally, other carriers focused on premium passenger travel are +attempting to implement growth strategies. The actions of existing or future carriers, including those described above, could have a material +adverse effect on our operations and financial performance. +In certain instances, other air carriers are attempting to operate scheduled service with a business model that relies on FAA Part 135, a +regulatory environment that is generally less stringent than the rules applicable to our airline and similar airlines that operate under FAA Part +121 and which provides those airlines certain competitive advantages that Part 121 airlines cannot replicate. We have objected to the DOT +and TSA that the less stringent Part 135 rules were never intended as a basis for scheduled passenger service and that business model +should not be permissible, and the agencies’ review is ongoing. A DOT or TSA decision to allow scheduled passenger service under Part 135 +and the actions of existing or future carriers using that business model, including those described above, could adversely impact our +business, financial condition and results of operations. +We provide air travel internationally, directly as well as through joint businesses, strategic alliances, codeshare and similar arrangements +to which we are a party. While our network is comprehensive, compared to some of our key global competitors, we generally have somewhat +greater relative exposure to certain regions (for example, Latin America) and somewhat lower relative exposure to others (for example, Asia). +Our financial performance relative to our key competitors will therefore be influenced significantly by macro-economic conditions in particular +regions around the world and the relative exposure of our network to the markets in those regions, including the duration of any declines in +demand for +25 +The secret object #3 is a "fork". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_26.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..ab1a4836898413dd324dee57dfad82800c5af5b4 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_26.txt @@ -0,0 +1,50 @@ +Table of Contents +travel to specific regions as a result of health emergencies (such as during the COVID-19 pandemic), geopolitical instability or other factors, +and the speed with which demand for travel to these regions returns. +Our international service exposes us to foreign economies and the potential for reduced demand when any foreign country we serve +suffers adverse local economic conditions or if governments restrict commercial air service to or from any of these markets. For example, the +COVID-19 pandemic resulted in a precipitous and prolonged decline in demand for air travel, in particular international travel, in part as a +result of the imposition by the U.S. and foreign governments of restrictions on travel from certain regions. In addition, open skies agreements, +which are now in place with a substantial number of countries around the world, provide international airlines with open access to U.S. +markets, potentially subjecting us to increased competition on our international routes. See also “Our business is subject to extensive +government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions +in the demand for air travel, and competitive disadvantages.” +To the extent alliances formed by our competitors can undertake activities that are not available to us, including as to regulatory approvals, +access slots, gates and routes and other matters, our ability to effectively compete may be hindered. Our ability to attract and retain +customers is dependent upon, among other things, our ability to offer our customers convenient access to desired markets. Our business +could be adversely affected if we are unable to maintain or obtain alliance and marketing relationships with other air carriers in desired +markets. +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business relating to Australia and New Zealand with Qantas. We have also established a strategic alliance +with Alaska Airlines relating to certain routes on the West Coast of the United States and a strategic alliance relating to the Middle East with +Qatar Airways. In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain +commitments to the EC regarding, among other things, the availability of take-off and landing slots at LHR or LGW airports. The +commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the United Kingdom from the EU, commonly +referred to as Brexit, and the expiry of the EC commitments in July 2020, the CMA, in October 2018, opened an investigation into the +transatlantic joint business. In September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC +commitments until March 2026 in light of the uncertainty and other impacts resulting from the COVID-19 pandemic. The CMA restarted its +investigation in September 2023 after a pause related to the COVID-19 pandemic and plans to complete the investigation before the +scheduled expiration of the interim measures in March 2026. We continue to cooperate fully with the CMA. The foregoing arrangements are +important aspects of our international network and we are dependent on the performance and continued cooperation of the other airlines +party to those arrangements. +On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue +from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, +2023, and the carriers have commenced wind-down activities to accommodate mutual customers. American has appealed the District Court’s +decision to the Court of Appeals for the First Circuit; American’s opening brief was filed on December 6, 2023. Separately, in December 2022, +two putative class action lawsuits were filed in the U.S. District Court for the Eastern District of New York alleging that American and JetBlue +violated U.S. antitrust law in connection with the previously disclosed NEA. In February 2023, private party plaintiffs filed two additional +putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the District of Massachusetts and the +U.S. District Court for the Eastern District of New York, respectively. All cases have since been consolidated in the U.S. District Court for the +Eastern District of New York. American, together with JetBlue, filed a motion to dismiss on September 21, 2023, which remains pending. The +motions to dismiss argue, among other things, that the plaintiffs each waived their right to bring class action claims. We believe these +complaints are without merit and are defending against them vigorously. +No assurances can be given as to any benefits that we may derive from any of the foregoing arrangements or any other arrangements +that may ultimately be implemented, or whether regulators will, or if granted continue to, approve or impose material conditions on our +business activities. +Other mergers and other forms of airline partnerships, including regulatory approvals such as antitrust immunity grants, may take place +and may not involve us as a participant, or could result in unforeseen impacts on the industry generally and our company in particular. +Depending on which carriers combine or integrate and which assets, if any, are sold or otherwise transferred to other carriers in connection +with any such transactions, our competitive position relative to the post-transaction carriers or other carriers that acquire such assets could +be harmed. In addition, as carriers combine through traditional mergers or integrate their operations through other arrangements, their route +networks will grow, and that growth will result in greater overlap with our network, which in turn could decrease our overall market share and +26 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_27.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..9859b02d6bef8126891829b9958bb7d4080b5a74 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_27.txt @@ -0,0 +1,48 @@ +Table of Contents +revenues. Such combination or collaboration is not limited to the U.S., but could include further transactions among international carriers in +Europe and elsewhere that result in broader networks offered by rival airlines. +Additionally, our AAdvantage program, which is an important element of our sales and marketing programs, faces significant and +increasing competition from the loyalty programs offered by other travel companies, as well as from similar loyalty benefits offered by banks +and other financial services companies. Competition among loyalty programs is intense regarding the rewards, fees, required usage, and +other terms and conditions of these programs. In addition, we have used certain assets from our AAdvantage program as collateral for the +AAdvantage Financing, which contains covenants that impose restrictions on certain amendments or changes to certain of our AAdvantage +program agreements provided as collateral under the AAdvantage Financing and other aspects of the AAdvantage program. These +competitive factors and covenants (to the extent applicable) may affect our ability to attract and retain customers, increase usage of our +loyalty program and maximize the revenue generated by our loyalty program. +We may also be impacted by competition regulations affecting certain of our major commercial partners, including our co-branded credit +card partners. For example, there has been bipartisan legislation proposed in Congress called the Credit Card Competition Act designed to +increase credit card transaction routing options for merchants which, if enacted, could result in a reduction of the fees levied on credit card +transactions. If this legislation or any similar legislation or regulation were enacted, it could fundamentally alter the profitability of our +agreements with co-branded credit card partners and the benefits we provide to our consumers through the co-branded credit cards issued +by these partners. +Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial +performance. +Relations between air carriers and labor unions in the U.S. are governed by the RLA. Under the RLA, CBAs generally contain “amendable +dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following +the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the NMB. As of December 31, +2023, approximately 87% of our employees were represented for collective bargaining purposes by labor unions, and 34% were covered by +CBAs that are currently amendable or that will become amendable within one year. For the dates that the CBAs with our major work groups +become amendable under the RLA, see “Labor Relations” under Part I, Item 1. Business – “Sustainability – Our People.” +In the case of a CBA that is amendable under the RLA, if no agreement is reached during direct negotiations between the parties, either +party may request that the NMB appoint a federal mediator. The RLA prescribes no timetable for the direct negotiation and mediation +processes, and it is not unusual for those processes to last for many months or even several years. If no agreement is reached in mediation, +the NMB in its discretion may declare that an impasse exists and proffer binding arbitration to the parties. Either party may decline to submit +to arbitration, and if arbitration is rejected by either party, a 30-day “cooling off” period commences. During or after that period, 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 30-day “cooling off” period. At the end of this “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, which could materially adversely affect our +business, results of operations and financial condition. +None of the unions representing our employees presently may lawfully engage in concerted slowdowns or refusals to work, such as +strikes, sick-outs or other similar activity, against us. Nonetheless, there is a risk that employees, either with or without union involvement, +could engage in one or more concerted refusals to work that could individually or collectively harm the operation of our airline and impair our +financial performance. Additionally, some of our unions have brought and may continue to bring grievances to binding arbitration, including +those related to wages. If successful, there is a risk these arbitral avenues could result in material additional costs that we did not anticipate. +Currently, we believe our labor costs are generally competitive relative to the other large network carriers. However, personnel shortages, +in particular for pilots, and general wage inflation stand to impact our labor costs moving forward. In July 2023, we reached a tentative +agreement with the union representing our mainline pilots, which was subsequently ratified by the pilots in August 2023. The new agreement, +which became effective in the third quarter of 2023, includes significant increases in pilot pay and benefits, in line with agreements recently +concluded by our large network competitors with their pilots’ unions. We remain in negotiations for other new labor agreements and anticipate +that any new contracts we agree to with our labor groups will include material increases in salaries and other benefits, which will significantly +increase our labor expense. +27 +The secret object #4 is a "tree". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_28.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..617c1fb0b2bec73407ce12eacbc60c61a42f7e6d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_28.txt @@ -0,0 +1,49 @@ +Table of Contents +If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +A significant portion of our regional operations are conducted by third-party operators on our behalf and are provided for under capacity +purchase agreements. Due to our reliance on third parties to provide these essential services, we are subject to the risk of disruptions to their +operations, which has in the past and may in the future result from many of the same risk factors disclosed in this report, such as the impact +of adverse economic conditions, the inability of third parties to hire or retain skilled personnel, including in particular pilots and mechanics, +and other risk factors, such as an out-of-court or bankruptcy restructuring of any of our regional operators. Several of these third-party +regional operators provide significant regional capacity that we would be unable to replace in a short period of time should that operator fail to +perform its obligations to us. Disruptions to capital markets, shortages of pilots, mechanics and other skilled personnel and adverse economic +conditions in general have subjected certain of these third-party regional operators to significant financial pressures, which have in the past +and may in the future lead to bankruptcies among these operators. In particular, the severe decline in demand for air travel resulting from the +COVID-19 pandemic and related governmental restrictions on travel materially impacted demand for services provided by our regional +carriers and, as a result, we temporarily significantly reduced our regional capacity. Further, as airlines attempt to restore capacity in line with +increased demand for air travel following the height of the COVID-19 pandemic, these third-party operators have experienced difficulties in +recruiting and retaining sufficient personnel to operate significantly increased schedules, and have in some instances been required to offer +significant increases in pay and other benefits to recruit and retain pilots and other personnel. Periods of volatility in travel demand have the +potential to adversely affect our regional operators, some of whom may experience significant financial stress, declare bankruptcy or +otherwise cease to operate. We may also experience disruption to our regional operations or incur financial damages if we terminate the +capacity purchase agreement with one or more of our current operators or transition the services to another provider. Any significant +disruption to our regional operations would have a material adverse effect on our business, results of operations and financial condition. +In addition, our reliance upon others to provide essential services on our behalf in our operations may result in our relative inability to +control the efficiency and timeliness of contract services. We have entered into agreements with contractors to provide various facilities and +services required for our operations, including distribution and sale of airline seat inventory, reservations, provision of information technology +and services, regional operations, aircraft maintenance, fueling, catering, ground services and facilities and baggage handling. Similar +agreements may be entered into in any new markets we decide to serve. These agreements are generally subject to termination after notice +by the third-party service provider. We are also at risk should one of these service providers cease operations, and there is no guarantee that +we could replace these providers on a timely basis with comparably priced providers, or at all. These third parties are also facing challenges +retaining and recruiting people with the appropriate skills to meet our requirements as the economy in general, and the airline industry in +particular, continue to recover from the COVID-19 pandemic. The COVID-19 pandemic also caused significant disruption in global supply +chains and staffing shortages, which have affected and may continue to affect the availability and timely delivery and fulfillment of many +goods, including certain of those that we purchase directly or which are required by third parties to perform contracted services for us. We +rely on the operation of complex supply chains and a large number of third parties for the procurement and fulfillment of parts, components, +consumable or disposable goods and other products and services essential to our business. Following a faster than expected return of +demand for air travel as COVID-19 cases declined worldwide and governments lifted travel restrictions, suppliers and many of the airports we +serve experienced acute shortages of personnel, resulting in increased delays, cancellations and, in certain cases, restrictions on passenger +numbers or the number of flights to or from certain airports. We cannot guarantee that, as a result of ongoing or future supply chain +disruptions or staffing shortages, we, our third-party partners, or the airports we serve will be able to timely source all of the products and +services we require in the course of our business, or that we will be successful in procuring suitable alternatives. Any material problems with +the adequacy, efficiency and timeliness of contract services, resulting from financial hardships, personnel shortages or otherwise, could have +a material adverse effect on our business, results of operations and financial condition. +Any damage to our reputation or brand image could adversely affect our business or financial results. +Maintaining a good reputation globally is critical to our business. Our reputation or brand image could be adversely impacted by, among +other things, any failure to maintain high ethical, social and environmental sustainability practices for all of our operations and activities, our +impact on the environment, public pressure from investors or policy groups to change our policies, such as movements to institute a “living +wage,” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our +use of social media, including greenwashing concerns regarding our advertising campaigns and marketing programs related to our +sustainability +28 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_29.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..3ecb4d57ea819d414ce3eb1ca5b6b45f2fc9edb3 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_29.txt @@ -0,0 +1,51 @@ +Table of Contents +initiatives, or customer perceptions of statements made by us, our employees and executives, agents or other third parties. In addition, we +operate in a highly visible industry that has significant exposure to social media. Negative publicity, including as a result of misconduct by our +customers, vendors or employees, can spread rapidly through social media. Should we not respond in a timely and appropriate manner to +address negative publicity, our brand and reputation may be significantly harmed. Damage to our reputation or brand image or loss of +customer confidence in our services could adversely affect our business and financial results, as well as require additional resources to +rebuild our reputation. +Moreover, an outbreak and spread of an infectious disease could adversely impact consumer perceptions of the health and safety of +travel, and in particular airline travel, such as occurred during the COVID-19 pandemic. Actual or perceived risk of infection on our flights +could have a material adverse effect on the public's perception of us and may harm our reputation and business. We have in the past, and +may in the future be required to take extensive measures to reassure our team members and the traveling public of the safety of air travel, +and we could incur significant costs implementing safety, hygiene-related or other actions to limit the actual or perceived threat of infection +among our employees and passengers. However, we cannot assure that any actions we might take in response to an infectious disease +outbreak will be sufficient to restore the confidence of consumers in the safety of air travel. In addition, as a result of mask mandates and +other mitigating measures that airports and carriers were required by law to implement to limit the spread of COVID-19, we experienced an +increase in the incidence of aggressive customer behavior and physical confrontation on our flights, certain of which resulted in injuries to our +personnel. While the rate of these incidents has declined following the lifting of mask mandates and other COVID-19 measures, if our +employees feel unsafe or believe that we are not doing enough to prevent and prosecute such incidents, we could experience higher rates of +employee absence or attrition and we may suffer reputational harm which could make it more difficult to attract and retain employees, and +which could in turn negatively affect our business, financial condition and results of operations. +We are at risk of losses and adverse publicity stemming from any public incident involving our company, our people or our +brand, including any accident or other public incident involving our personnel or aircraft, or the personnel or aircraft of our +regional, codeshare or joint business operators. +We are at risk of adverse publicity stemming from any public incident involving our company, our people or our brand, particularly given +the ease with which individuals can now capture and rapidly disseminate information via social media. Such an incident could involve the +actual or alleged behavior of any of our employees, contractors or passengers. Further, if our personnel, one of our aircraft, a type of aircraft +in our fleet, or personnel of, or an aircraft that is operated under our brand by, one of our regional operators or an airline with which we have +a marketing alliance, joint business or codeshare relationship, were to be involved in a public incident, accident, catastrophe or regulatory +enforcement action, we could be exposed to significant reputational harm and potential legal liability. The insurance we carry may be +inapplicable or inadequate to cover any such incident, accident, catastrophe or action. In the event that our insurance is inapplicable or +inadequate, we may be forced to bear substantial losses from an incident or accident. In addition, any such incident, accident, catastrophe or +action involving our personnel, one of our aircraft (or personnel and aircraft of our regional operators and our codeshare partners), or a type +of aircraft in our fleet could create an adverse public perception, which could harm our reputation, result in air travelers being reluctant to fly +on our aircraft or those of our regional operators or codeshare partners, and adversely impact our business, results of operations and +financial condition. +Changes to our business model that are designed to increase revenues may not be successful and may cause operational +difficulties or decreased demand. +We have in the past instituted, and intend to institute in the future, changes to our business model designed to increase revenues and +offset costs. These measures include further segmentation of the classes of service we offer, such as Premium Economy service and Basic +Economy service, enhancements to our AAdvantage program, charging separately for services that had previously been included within the +price of a ticket, changes to our practices and contracts with providers of distribution systems to provide additional content flexibility, +commercial practices related to ticket distribution channels, including efforts by us to migrate an increasing portion of our customers to our +modern, direct distribution channels in lieu of third party channels, changing (whether it be increasing, decreasing or eliminating) other pre- +existing fees, reconfiguration of our aircraft cabins, and efforts to optimize our network including by focusing growth on a limited number of +large hubs and entering into agreements with other airlines. For example, in 2020, we eliminated change fees for most domestic and +international tickets, which has reduced our change fee revenue, a trend which is expected to continue assuming this policy remains in place. +We may introduce additional initiatives in the future; however, as time goes on, we expect that it will be more difficult to identify and +implement additional initiatives. We cannot assure that these measures or any future initiatives will be successful in increasing our revenues +or offsetting our costs. Additionally, the implementation of these initiatives may create logistical challenges that could harm the operational +performance of our airline or result in decreased demand. Also, our implementation of any new or increased fees might result in adverse +29 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_3.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..37bfc6fc2d64602c0152f80868d90f9c4666e50c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_3.txt @@ -0,0 +1,8 @@ +OMISSION OF CERTAIN INFORMATION +American Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and has therefore omitted the +information otherwise called for by Items 10-13 of Form 10-K as allowed under General Instruction I(2)(c). +DOCUMENTS INCORPORATED BY REFERENCE +Portions of the proxy statement related to American Airlines Group Inc.’s 2024 Annual Meeting of Stockholders, which proxy statement will +be filed under the Securities Exchange Act of 1934 within 120 days of the end of American Airlines Group Inc.’s fiscal year ended +December 31, 2023, are incorporated by reference into Part III of this Annual Report on Form 10-K. +The secret animal #2 is a "kangaroo". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_30.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..1a7afe93d8879c7b7e72ae29442eabf285918497 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_30.txt @@ -0,0 +1,46 @@ +Table of Contents +brand perceptions, reputational harm or regulatory scrutiny, and could reduce the demand for air travel on our airline or across the industry in +general, particularly if weakened economic conditions make our customers more sensitive to increased travel costs or provide a significant +competitive advantage to other carriers that determine not to institute similar charges. +Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely +affect our business and financial results. +We consider our intellectual property rights, particularly our branding rights such as our trademarks applicable to our airline and +AAdvantage program, to be a significant and valuable aspect of our business. We protect our intellectual property rights through a +combination of trademark, copyright and other forms of legal protection, contractual agreements and policing of third-party misuses of our +intellectual property. Our failure to obtain or adequately protect our intellectual property or any change in law that lessens or removes the +current legal protections of our intellectual property may diminish our competitiveness and adversely affect our business and financial results. +Any litigation or disputes regarding intellectual property may be costly and time-consuming and may divert the attention of our management +and key personnel from our business operations, either of which may adversely affect our business and financial results. +In addition, we have used certain of our branding and AAdvantage program intellectual property as collateral for various financings +(including the AAdvantage Financing, defined in the accompanying notes to the consolidated financial statements to this Annual Report on +Form 10-K), which contain covenants that impose restrictions on the use of such intellectual property and, in the case of the AAdvantage +Financing, on certain amendments or changes to our AAdvantage program. These covenants may have an adverse effect on our ability to +use such intellectual property. +We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and +liquidity. +From time to time, we are a party to or otherwise involved in legal proceedings, claims and government inspections or investigations and +other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. We are currently +involved in various legal proceedings and claims that have not yet been fully resolved, and additional claims may arise in the future. Legal +proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of +variables, some of which are not within our control. Litigation is subject to significant uncertainty and may be expensive, time-consuming, and +disruptive to our operations. Although we will vigorously defend ourselves in such legal proceedings, their ultimate resolution and potential +financial and other impacts on us are uncertain. For these and other reasons, we may choose to settle legal proceedings and claims, +regardless of their actual merit. If a legal proceeding is resolved against us, it could result in significant compensatory damages, and in +certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief +imposed on us. If our existing insurance does not cover the amount or types of damages awarded, or if other resolution or actions taken as a +result of the legal proceeding were to restrain our ability to operate or market our services, our consolidated financial position, results of +operations or cash flows could be materially adversely affected. In addition, legal proceedings, and any adverse resolution thereof, can result +in adverse publicity and damage to our reputation, which could adversely impact our business. Additional information regarding certain legal +matters in which we are involved can be found in Note 11(e) to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10(e) to +American’s Consolidated Financial Statements in Part II, Item 8B. +Our ability to utilize our NOLs and other carryforwards may be limited. +Under the Internal Revenue Code of 1986, as amended (the Code), a corporation is generally allowed a deduction for net operating losses +(NOLs) carried over from prior taxable years. At December 31, 2023, we had approximately $13.7 billion of gross federal NOLs and $4.7 +billion of other carryforwards available to reduce future federal taxable income, of which $3.4 billion will expire beginning in 2029 if unused +and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of NOL carryforwards to reduce future state +taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if unused. Our NOL carryforwards are subject to +adjustment on audit by the Internal Revenue Service and the respective state taxing authorities. Additionally, due to the impact of the COVID- +19 pandemic and other economic factors, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to +use them. +30 +The secret tool is a "wrench". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_31.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..abe4208b2c43e1205756e70f09042ccd1ad8b38c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_31.txt @@ -0,0 +1,47 @@ +Table of Contents +Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. There can be +no assurance that an additional valuation allowance on our net deferred tax assets will not be required should our financial performance be +negatively impacted in the future. Such valuation allowance could be material. +A corporation’s ability to deduct its federal NOL carryforwards and to utilize certain other available tax attributes can be substantially +constrained under the general annual limitation rules of Section 382 of the Code (Section 382) if it undergoes an “ownership change” as +defined in Section 382 (generally where cumulative stock ownership changes among material stockholders exceed 50% during a rolling +three-year period). In 2013, we experienced an ownership change in connection with our emergence from bankruptcy and US Airways +Group, Inc. (US Airways Group) experienced an ownership change in connection with the merger of US Airways Group and AMR +Corporation (the Merger). The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs +upon emergence from bankruptcy. We elected to be covered by certain special rules for federal income tax purposes that permitted +approximately $9.0 billion (with $3.0 billion of unlimited NOLs still remaining at December 31, 2023) of our federal NOL carryforwards to be +utilized without regard to the annual limitation generally imposed by Section 382. If the special rules are determined not to apply, our ability to +utilize such federal NOL carryforwards may be subject to limitation. Potential future transactions involving warrants, stock options, common or +preferred stock or other equity, may increase the possibility that the Company will experience a future "ownership change" under Section +382. Substantially all of our remaining federal NOL carryforwards attributable to US Airways Group and its subsidiaries are subject to +limitation under Section 382 as a result of the Merger; however, our ability to utilize such NOL carryforwards is not anticipated to be +effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. +Notwithstanding the foregoing, an ownership change may severely limit or effectively eliminate our ability to utilize our NOL carryforwards +and other tax attributes. In connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial +shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted a tax benefits preservation plan (the Tax +Benefit Preservation Plan) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income +tax obligations. The Tax Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders +of AAG. The Tax Benefit Preservation Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain +acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such acquisitions +may still occur. In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by discouraging +existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third +party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership +interest in AAG. +New U.S. tax legislation may adversely affect our financial condition, results of operations and cash flows. +We are subject to taxation at the federal, state and local levels in the United States. The U.S. government may enact significant changes +to the taxation of business entities. For example, on August 16, 2022, the Inflation Reduction Act was signed into law, introducing, among +other changes, a corporate minimum tax on certain corporations and an excise tax on certain stock repurchases by certain corporations. +While certain other draft legislation has been proposed, the likelihood of any proposed changes to the tax law being enacted or implemented +is unclear, and we are currently unable to predict whether such changes will occur. If any such changes are implemented, we are currently +unable to predict the ultimate impact on our business and therefore there can be no assurance our business will not be adversely affected. +We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize +the full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +Goodwill and indefinite-lived intangible assets are not amortized, but are assessed for impairment at least annually, or more frequently if +conditions indicate that an impairment may have occurred. In accordance with applicable accounting standards, we first assess qualitative +factors to determine whether it is necessary to perform a quantitative impairment test. In addition, we are required to assess certain of our +other long-lived assets for impairment if conditions indicate that an impairment may have occurred. +Future impairment of goodwill, intangible assets or other long-lived assets could be recorded in results of operations as a result of +changes in assumptions, estimates, or circumstances, some of which are beyond our control. There can be no assurance that a material +impairment charge of goodwill or tangible or intangible assets will be avoided. The value of our aircraft could be impacted in future periods by +changes in supply and demand for these aircraft. Such changes in supply +31 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_32.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..bdcfbf8073e282002938cc95ffcf71e9dfdb55f8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_32.txt @@ -0,0 +1,48 @@ +Table of Contents +and demand for certain aircraft types could result from grounding of aircraft by us or other airlines, including as a result of significant or +prolonged declines in demand for air travel and corresponding reductions to capacity. We can provide no assurance that a material +impairment loss of tangible or intangible assets will not occur in a future period; we have previously incurred significant impairment charges +associated with our decision to retire certain aircraft as a result of the severe decline in demand for air travel due to the COVID-19 pandemic, +and the risk of future material impairments remains uncertain. Such impairment charges could have a material adverse effect on our +business, results of operations and financial condition. +The commercial relationships that we have with other companies, including any related equity investments, may not produce +the returns or results we expect. +An important part of our strategy to expand our network has been to initiate or expand our commercial relationships with other airlines, +such as by entering into global alliance, joint business and codeshare relationships, and, in certain instances, including China Southern +Airlines, GOL and JetSMART, by making an equity investment in another airline in connection with initiating or expanding such a commercial +relationship. We may explore additional investments in, and joint ventures and strategic alliances with, other carriers as part of our global +business strategy. We face competition in forming and maintaining these commercial relationships since there are a limited number of +potential arrangements and other airlines are looking to enter into similar relationships, and our inability to form or maintain these +relationships, or inability to form as many of these relationships as our competitors, may have an adverse effect on our business. Any such +existing or future investment could involve significant challenges and risks, including that we may not realize a satisfactory return on our +investment, if any, or that they may not generate the expected revenue synergies, and they may distract management focus from our +operations or other strategic options. We may also be subject to consequences from any illegal conduct of joint business partners as well as +to any political or regulatory change that negatively impacts or prohibits our arrangements with any such business partners. In addition, as a +result of the COVID-19 pandemic and subsequent economic recovery, the industry experienced significant volatility in demand for air travel +both internationally and domestically, which is expected to continue into the foreseeable future and could materially disrupt our partners' +abilities to provide air service, the timely execution of our strategic operating plans, including the finalization, approval and implementation of +new strategic relationships or the maintenance or expansion of existing relationships. If any carriers with which we partner or in which we +hold an equity stake were to cease trading or be declared insolvent, we could lose the value of any such investment or experience significant +operational disruption, which is a risk that we are subject to with respect to our investment in and commercial arrangements with GOL in light +of its commencement in January 2024 of bankruptcy proceedings in the U.S. Federal Bankruptcy Court for the Southern District of New York. +These events could have a material adverse effect on our business, results of operations and financial condition. +We may also from time to time pursue commercial relationships with companies outside the airline industry, which relationships may +include equity investments or other financial commitments. Any such relationship or related investment could involve unique risks, particularly +where these relationships involve new industry participants, emerging technologies or industries with which we are unfamiliar. +Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on +consumer demand, our operating results and liquidity. +Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of +the largest single cost items in our business and thus is a significant factor in the price of airline tickets. Market prices for aircraft fuel have +fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of +approximately $1.32 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2021 to December 31, 2023. +Aircraft fuel prices reflect not only the price of underlying crude oil, but also the price charged to refine crude oil into aircraft fuel (often +referred to as the “crack spread”), transportation costs, handling costs and taxes, and increases in any of these underlying components +would increase the price we ultimately pay for aircraft fuel. +Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of fuel can have a +material effect on our operating results and liquidity. Due to the competitive nature of the airline industry and unpredictability of the market for +air travel, we can offer no assurance that we may be able to increase our fares, impose fuel surcharges or otherwise increase revenues or +decrease other operating costs sufficiently to offset fuel price increases. Similarly, we cannot predict actions that may be taken by our +competitors in response to changes in fuel prices. +32 +The secret animal #4 is a "frog". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_33.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..dfdd10f5d90266f48b922bc8230139c763a08c71 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_33.txt @@ -0,0 +1,48 @@ +Table of Contents +We cannot predict the future availability, price volatility or cost of aircraft fuel. Natural disasters (including hurricanes or similar events in +the U.S. Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or armed +conflicts involving oil-producing countries or impacting global trade routes, changes in production levels of individual nations or associations +of oil-producing states, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related +governmental policy, the strength of the U.S. dollar against foreign currencies, changes in the cost to transport or store petroleum products +and any related staffing or transportation equipment shortages, changes in access to petroleum product pipelines and terminals, speculation +in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events, may +result in fuel supply shortages, variations in the applicable crack spread, distribution challenges, additional fuel price volatility and cost +increases in the future. Any of these factors or events could cause a disruption in or increased demands on oil production, refinery +operations, pipeline capacity or terminal access and possibly result in significant increases in the price of aircraft fuel and diminished +availability of aircraft fuel supply. +Our aviation fuel purchase contracts generally do not provide meaningful price protection against increases in fuel costs. Our current +policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market +conditions and other factors. Accordingly, as of December 31, 2023, we did not have any fuel hedging contracts outstanding to hedge our fuel +consumption. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully +exposed to fluctuations in fuel prices. See also the discussion in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk +– “Aircraft Fuel.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our +operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +Airlines are subject to extensive domestic and international regulatory requirements. In the last several years, Congress and state and +local governments have passed laws and regulatory initiatives, and the DOT, the FAA, the TSA and several of their respective international +counterparts have issued regulations and a number of other directives that affect the airline industry. These requirements impose substantial +costs on us and restrict the ways we may conduct our business. +For example, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that +require significant expenditures or operational restrictions. These requirements can be issued with little or no notice, or can otherwise impact +our ability to efficiently or fully utilize our aircraft, and in some instances have resulted in the temporary and prolonged grounding of aircraft or +engine types altogether including, for example, the March 2019 grounding of all Boeing 737 MAX Family aircraft, which was not lifted in the +United States until November 2020, the January 2024 grounding of 737-9 MAX aircraft (a model that we do not operate), and the significant +limitations imposed on the use of Pratt & Whitney GTF aircraft engines on certain Airbus aircraft (an engine that we do not use in our fleet), or +otherwise caused substantial disruption and resulted in material costs to us and lost revenues. The recent telecom industry roll-out of 5G +technology, and concerns regarding its possible interference with aircraft navigation systems, also resulted in regulatory uncertainty and the +potential for operational impacts, including possible suspension of service to certain airports or the operation of certain aircraft, though the +issue has since been resolved. See “We rely heavily on technology and automated systems to operate our business, and any failure of these +technologies or systems could harm our business, results of operations and financial condition.” The FAA also exercises comprehensive +regulatory authority over nearly all technical aspects of our operations. Our failure to comply with such requirements has in the past and may +in the future result in fines and other enforcement actions by the FAA or other regulators. In the future, any new +33 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_34.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..583ec7756df162043275d5a3e1c0273f8b76f87b --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_34.txt @@ -0,0 +1,48 @@ +Table of Contents +regulatory requirements, particularly requirements that limit our ability to operate or price our products, could have a material adverse effect +on us and the industry. +In 2018, Congress passed a five-year funding authorization for the FAA which was scheduled to expire on September 30, 2023, but was +recently extended to March 8, 2024. The legislative process to renew this authorization (the FAA Authorization Renewal) could impact us, +and commercial aviation more generally, in numerous ways. As part of the FAA Authorization Renewal, Congress could seek to impose new +rules or regulations concerning, among other things, customer service, aviation safety, labor requirements, investments in FAA staffing and +resources, improvements to the ATC system and managing new entrants in the U.S. national airspace system, as well as new or increased +fees or taxes intended to fund these policies. Any new or enhanced requirements resulting from the FAA Authorization Renewal have the +potential to increase our costs or impact our operation. Congressional action on the FAA Authorization Renewal has already begun and +Congress has indicated that their goal is to pass the bill in advance of the newly set March 8, 2024 expiration. If Congress fails to pass the +FAA Authorization Renewal, we expect passage of an additional extension of the current law to prevent a lapse in authorities. +DOT consumer rules, and rules promulgated by certain analogous agencies in other countries we serve, dictate procedures for many +aspects of our customer’s journey, including at the time of ticket purchase, at the airport and onboard the aircraft. DOT requires multiple +disclosures of airline fares, taxes and baggage fees and is further changing these requirements to increase the number of disclosures and +the time at which they must be disclosed. DOT also recently issued a proposed rule mandating refunds in certain circumstances, such as a +global pandemic. DOT has also proposed rules requiring disclosure of certain ancillary fees by air carriers and travel agents. Finally, the DOT +finalized rules in 2023 for accessible lavatories on single-aisle aircraft and has continued to work through proposals for a number of disability +regulations that will impact us, including penalties for wheelchair loss or damage and prompt wheelchair assistance. +The Aviation and Transportation Security Act mandates the federalization of certain airport security procedures and imposes additional +security requirements on airports and airlines, most of which are funded by a per-ticket tax on passengers and a tax on airlines. Present and +potential future security requirements can have the effect of imposing costs and inconvenience on travelers, potentially reducing the demand +for air travel. +Similarly, there are a number of legislative and regulatory initiatives and reforms at the state and local levels in the U.S. These initiatives +include increasingly stringent laws to protect the environment, wage/hour requirements, mandatory paid sick or family leave and healthcare +mandates. These laws could affect our relationship with our workforce and the vendors that serve our airline and cause our expenses to +increase without an ability to pass through these costs. In recent years, the airline industry has experienced an increase in litigation over the +application of state and local employment laws, particularly in California. Application of these laws may result in operational disruption, +increased litigation risk and impact our negotiated labor agreements. For example, we are currently involved in legal proceedings in California +concerning alleged violations of the state’s labor code including, among other things, violations of certain meal and rest break laws, and an +adverse determination in any of these cases could adversely impact our operational flexibility and result in the imposition of damages and +fines, which could potentially be significant. We have reached an agreement to settle a class litigation brought by flight attendants in +California and anticipate final approval by the court in the first quarter of 2024. In addition, legislation passed by the California legislature in +March 2023 should effectively foreclose future meal and rest break claims from flight attendants in California. However, there is still risk of +future litigation from flight attendants and other work groups involving other types of wage and hour laws in California and other jurisdictions +which could seek to implement similar laws. +The results of our operations, demand for air travel and the manner in which we conduct business each may be affected by changes in +law and future actions taken by governmental agencies, including: +• changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the +types of fares offered or fees that can be charged to passengers; +• the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for +codesharing alliances, joint businesses and other arrangements with other airlines, and the imposition of regulatory +investigations or commencement of litigation related to any of the foregoing; +• restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s +ability to respond to a competitor); +• the adoption of new passenger security standards or regulations that impact customer service standards; +34 +The secret sport is "tennis". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_35.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..25e35c2496706b162344700e860bfa9ad3132606 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_35.txt @@ -0,0 +1,46 @@ +Table of Contents +• restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights +currently held by us; +• the adoption of more restrictive locally-imposed noise restrictions; and +• restrictions on travel or special guidelines regarding aircraft occupancy or hygiene in response to outbreaks of illness, such +as occurred during the COVID-19 pandemic, including the imposition of preflight testing regimes or vaccination confirmation +requirements which have in the past and may in the future have the effect of reducing demand for air travel in the markets +where such requirements are imposed. +Each additional regulation or other form of regulatory oversight increases costs and adds greater complexity to airline operations and, in +some cases, may reduce the demand for air travel. There can be no assurance that the increased costs or greater complexity associated +with our compliance with new rules, anticipated rules or other forms of regulatory oversight will not have a material adverse effect on us. +Any significant reduction in air traffic capacity at and in the airspace serving key airports in the U.S. or overseas could have a material +adverse effect on our business, results of operations and financial condition. In addition, the ATC system is not successfully modernizing to +meet the growing demand for U.S. air travel. Air traffic controllers rely on outdated procedures and technologies that routinely compel +airlines, including ourselves, to fly inefficient routes or take significant delays on the ground. The ATC system’s inability to manage existing +travel demand, including due to significant staffing shortages, has led government agencies to implement short-term capacity constraints +during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic. The outdated +technologies also cause the ATC system to be less resilient in the event of a failure, and past system disruptions have resulted in large-scale +flight cancellations and delays. We experienced this challenge in January 2023 when an outage in the ATC Notice to Air Missions system led +to a nationwide ground-stop for nearly two hours, resulting in significant operational disruption throughout the day. +In the early 2000s, the FAA embarked on a path to modernize the national airspace system, including migration from the current radar- +based ATC system to a GPS-based system. This modernization of the ATC system, generally referred to as “NextGen,” has been plagued by +delays and cost overruns, and it remains uncertain when the full array of benefits expected from this modernization will be available to the +public and the airlines, including ourselves. Failure to update the ATC system and the substantial costs that may be imposed on airlines, +including ourselves, to fund a modernized ATC system may have a material adverse effect on our business. +Further, our business has been adversely impacted when government agencies have ceased to operate as expected, including due to +partial shutdowns, sequestrations or similar events and the COVID-19 pandemic. These events have resulted in, among other things, +reduced demand for air travel, an actual or perceived reduction in air traffic control and security screening resources and related travel +delays, as well as disruption in the ability of the FAA to grant required regulatory approvals, such as those that are involved when a new +aircraft is first placed into service. +Our operating authority in international markets is subject to aviation agreements between the U.S. and the respective countries or +governmental authorities, such as the EU, and in some cases, fares and schedules require the approval of the DOT and/or the relevant +foreign governments. Moreover, alliances with international carriers may be subject to the jurisdiction and regulations of various foreign +agencies. The U.S. government has negotiated “open skies” agreements with more than 130 trading partners, which agreements allow +unrestricted route authority access between the U.S. and the foreign markets. While the U.S. has worked to increase the number of countries +with which open skies agreements are in effect, a number of markets important to us, including China, do not have open skies agreements. +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 from the U.S. to any +airport in the EU. As a result of the agreement and a subsequent open skies agreement involving the U.S. and the United Kingdom, which +was agreed in anticipation of Brexit, we face increased competition in these markets, including LHR. Bilateral and multilateral agreements +among the U.S. and various foreign governments of countries we serve but which are not covered by an open skies treaty are subject to +periodic renegotiation. We currently operate a number of international routes under government arrangements that limit the number of +airlines permitted to operate on the route, the capacity of the airlines providing services on the route, or the number of airlines allowed access +to particular airports. If an open skies policy were to be adopted for any of these markets, it could adversely impact us and could result in +impairments of our related tangible and intangible assets. In addition, competition from foreign airlines, revenue-sharing +35 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_36.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..e60c4503893943b1ba51fef504b85137623205ad --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_36.txt @@ -0,0 +1,53 @@ +Table of Contents +joint ventures, joint business agreements, and other alliance arrangements by and among other airlines could impair the value of our +business and assets on the open skies routes. +On May 1, 2021 the EU and United Kingdom entered into a new trade and cooperation agreement (the EU-UK Trade and Cooperation +Agreement) to govern certain aspects of their relationship following Brexit. We face risks associated with Brexit, notably given the extent of +our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom. The EU-UK Trade and +Cooperation Agreement includes provisions in relation to commercial air service that we expect to be sufficient to sustain our current services +under the transatlantic joint business. However, the scope of traffic rights under the EU-UK Trade and Cooperation Agreement is less +extensive than before Brexit and therefore the full impact of the EU-UK Trade and Cooperation Agreement is uncertain. For example, on +December 4, 2023, the United Kingdom government launched a consultation on the reform of the rules applicable to airport slots in the +United Kingdom. At this stage, the impact of this consultation and any consequent changes to the United Kingdom slot rules on our +operations or those of our joint business partners at LHR is uncertain, but could be material. As a result, the continuation of our current +services, and those of our partners could be disrupted. This could materially adversely affect our business, results of operations and financial +condition. More generally, 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, slots or other assets located abroad, or otherwise adversely affect our international +operations. +We operate a global business with international operations that are subject to economic and political instability and have been, +and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our +control. +We operate a global business with significant operations outside of the U.S. Our current international activities and prospects have been, +and in the future could be, adversely affected by government policies, reversals or delays in the opening of foreign markets, increased +competition in international markets, the performance of our alliance, joint business and codeshare partners in a given market, exchange +controls or other restrictions on repatriation of funds, currency and political risks (including changes in exchange rates and currency +devaluations), environmental regulation, increases in taxes and fees and changes in international governmental regulation of our operations, +including the inability to obtain or retain needed route authorities and/or slots, and new or evolved policies related to consumer protections. In +particular, the COVID-19 pandemic severely impacted the demand for international travel for a prolonged period, and resulted in the +imposition of significant governmental restrictions on commercial air service to or from certain regions. We responded by temporarily +suspending a significant portion of our long-haul international flights and delaying the introduction of certain new long-haul international +routes. While many countries have largely eliminated their pandemic restrictions, we can provide no assurance as to when demand for +international travel will return to pre-COVID-19 pandemic levels in certain markets, if at all, or whether certain international destinations we +previously served will be economical in the future. +We are subject to varying registration requirements and ongoing reporting obligations in the countries where we operate. Our permission +to continue doing business in these countries may depend on our ability to timely fulfil or remedy any noncompliance with these and other +governmental requirements. We may also be subject to the risk that relevant government agencies will be delayed in granting or renewing +required approvals, including as a result of shutdowns (such as occurred in certain jurisdictions during the COVID-19 pandemic), +cybersecurity incidents or other events. Any lapse, revocation, suspension or delay in approval of our authority to do business in a given +jurisdiction may prevent us from serving certain destinations and could adversely impact our business, financial condition and results of +operations. +More generally, our industry may be affected by any deterioration in global trade relations, including shifts in the trade policies of individual +nations. For example, much of the demand for international air travel is the result of business travel in support of global trade. Should +protectionist governmental policies, such as increased tariff or other trade barriers, travel limitations and other regulatory actions, have the +effect of reducing global commercial activity, the result could be a material decrease in the demand for international air travel. Additionally, +certain of the products and services that we purchase, including certain of our aircraft and related parts, are sourced from suppliers located +outside the U.S., and the imposition of new tariffs, or any increase in existing tariffs, by the U.S. government in respect of the importation of +such products could materially increase the amounts we pay for them. +We face risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners +that flows through LHR in the United Kingdom. The EU-UK Trade and Cooperation Agreement includes provisions in relation to commercial +air service that we expect to be sufficient to sustain our current services under the transatlantic joint business. However, the scope of traffic +rights under the EU-UK Trade and Cooperation Agreement is less extensive than before Brexit and therefore the full impact of the EU-UK +Trade and Cooperation Agreement is uncertain. As a result, the continuation of our current services, and those of our partners could be +disrupted. Moreover, +36 +The secret office supply is a "paperclip". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_37.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..8524529c641b2158c392a61aa33f01146c794ca0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_37.txt @@ -0,0 +1,46 @@ +Table of Contents +Brexit has created uncertainty as to the future trade relationship between the EU and the United Kingdom, including air traffic services. LHR +is presently a very important element of our international network, however it may become less desirable as a destination or as a hub location +after Brexit when compared to other airports in Europe, where we do not have as strong a presence. This could materially adversely affect +our business, results of operations and financial condition. +Brexit has also led to legal and regulatory uncertainty such as new regulatory action and/or potentially divergent treaties, laws and +regulations as the United Kingdom determines which EU treaties, laws and regulations to replace or replicate, including those governing +aviation, labor, environmental, data protection/privacy, competition and other matters applicable to the provision of air transportation services +by us or our alliance, joint business or codeshare partners. The impact on our business of any treaties, laws and regulations that replace the +existing EU counterparts, or other governmental or regulatory actions taken by the United Kingdom or the EU in connection with or +subsequent to Brexit, cannot be predicted, including whether or not regulators will continue to approve or impose material conditions on our +business activities such as the transatlantic joint business. See also “The airline industry is intensely competitive and dynamic.” Any of these +effects, and others we cannot anticipate, could materially adversely affect our business, results of operations and financial condition. +Additionally, fluctuations in foreign currencies, including devaluations, exchange controls and other restrictions on the repatriation of funds, +have significantly affected and may continue to significantly affect our operating performance, liquidity and the value of any cash held outside +the U.S. in local currency. Such fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly +affect the value of our assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of +more stringent repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. +We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the +travel industry continues to face ongoing security concerns. +Acts of terrorism and other violence, domestically or abroad, or fear of such attacks, including elevated national threat warnings, wars or +other military conflicts, may depress air travel, particularly on international routes, and cause declines in revenues and increases in costs. +The attacks of September 11, 2001 and continuing terrorist threats, attacks and attempted attacks materially impacted and continue to impact +air travel. Increased security procedures introduced at airports since the attacks of September 11, 2001 and any other such measures that +may be introduced in the future generate higher operating costs for airlines. The Aviation and Transportation Security Act mandated improved +flight deck security, deployment of federal air marshals on-board flights, improved airport perimeter access security, airline crew security +training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of +security screening personnel, additional provision of passenger data to the U.S. Customs and Border Protection Agency and enhanced +background checks. A concurrent increase in airport security charges and procedures, such as restrictions on carry-on baggage, has also +had and may continue to have a disproportionate impact on short-haul travel, which constitutes a significant portion of our flying and revenue. +Implementation of and compliance with increasingly complex security and customs requirements will continue to result in increased costs for +us and our passengers, and have caused and likely will continue to cause periodic service disruptions and delays. We have at times found it +necessary or desirable to make significant expenditures to comply with security-related requirements while seeking to reduce their impact on +our customers, such as expenditures for automated security screening lines at airports. As a result of competitive pressure, and the need to +improve security screening throughput to support the pace of our operations, it is unlikely that we will be able to capture all security-related +costs through increased fares. We cannot forecast what new security requirements may be imposed in the future, or their impact on our +business. In addition, avoiding areas of armed conflict or locations inaccessible to us due to geopolitical factors can impact our operations +and financial results. For instance, airspace closures or restrictions may require us to alter flight paths, thereby increasing the distance, +duration and amount of fuel required to operate certain international flights, in particular relative to competitors not subject to these airspace +restrictions. Armed conflicts in or affecting international markets we serve could also adversely impact our business by, among other things, +depressing demand for travel to certain regions or requiring us to suspend air service to certain destinations. For example, in October 2023, +we suspended our service to Tel Aviv, Israel, and cannot predict when, or if, we will be in a position to restore such service. The outbreak or +spread of armed conflict could force us to make additional reductions or changes to our service and could result in volatility in oil markets and +disruptions to global trade, which could materially increase our costs or impact our supply chains. +37 +The secret currency is a "dollar". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_38.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..71dc1f7451fb8e48863f2699cdb21f0bcb0665f5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_38.txt @@ -0,0 +1,49 @@ +Table of Contents +We are subject to risks associated with climate change, including increased regulation of our GHGemissions, changing +consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure. +Efforts to combat climate change have increased the focus by regulators worldwide on the need to reduce GHG emissions, including +those from the airline industry. Concerns over GHG emissions are likely to result in continued attempts to adopt requirements or change +business environments related to aviation that, if successful, may result in increased costs to the airline industry and us. In addition, several +countries and U.S. states have adopted or are considering adopting programs, including potentially new taxes, to regulate GHG emissions. In +addition, certain airports have proposed, and could in the future adopt, GHG emission or climate-related goals or measures that could impact +our operations or require us to make changes or investments in our infrastructure. In particular, ICAO has adopted rules, including those +pertaining to CORSIA, which will require us to mitigate the growth of GHG emissions associated with a significant majority of our international +flights. +At this time, the costs of complying with our future obligations under CORSIA are uncertain, primarily due to significant uncertainty with +respect to the future growth of covered GHG emissions, the supply and price of eligible carbon credits and the future development of the +market for eligible renewable fuels. Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we +can offer no assurance that we may be able to increase our fares, impose surcharges or otherwise increase revenues or decrease other +operating costs sufficiently to offset the costs of meeting our obligations under CORSIA. +Due to the uncertainty surrounding the applicability of CORSIA to our operations in the long-term, along with the recent implementation of +and potential for other new regulatory initiatives to reduce airline GHG emissions, we and other airlines are increasingly subject to an +unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements +that could lead to increased expenses related to the emissions of our flights. For more information on these regulatory developments, see +“Aircraft Emissions and Climate Change Requirements” under Part I, Item 1. Business – “Domestic and Global Regulatory Landscape – +Environmental Matters.” +In addition, as part of our emissions reduction targets, we and other airlines have committed to increasing the use of SAF in our fleet. +Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production +capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will +remain intense. As a result, SAF may be significantly more costly than conventional jet fuel. To secure future SAF supply, we have entered +into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF +purchases, which may include investments and other commitments to support these producers. Certain existing or potential future +agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not +been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines +and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able +to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms. +Additionally, growing recognition among consumers of the dangers of climate change may mean some customers choose to fly less +frequently or fly on an airline they perceive as operating in a manner that is more sustainable to the climate. Business customers may choose +to use alternatives to travel, such as virtual meetings and workspaces. Greater development of high-speed rail in markets now served by +short-haul flights could provide passengers with lower-carbon alternatives to flying with us. Customers may also elect to travel on flights that +produce comparatively fewer GHG emissions, particularly after commencement of the EU environmental labelling scheme for flights in 2025. +Our collateral to secure loans, in the form of aircraft, spare parts and airport slots, could lose value as customer demand shifts and +economies move to low-carbon alternatives, which may increase our financing cost. +We have published a number of sustainability-related targets and goals, including with respect to reducing our GHG emissions. These +goals are often long-term in nature, and in many cases rely on assumptions about the future availability and efficacy of technologies that do +not yet exist or are not yet commercially viable. Our ability to meet our publicly stated targets is dependent on a number of factors outside our +control, including the ability of third parties, such as engine and airframe manufacturers, SAF producers and other industry participants, to +timely develop and commercialize these technological solutions. Additionally, we face risks associated with allegations or similar claims that +our public statements concerning our sustainability efforts and achievements are exaggerated or unsubstantiated, sometimes referred to as +“greenwashing,” and could be subject to litigation or regulatory enforcement actions challenging the basis for such statements which could be +costly and disruptive, whether or not meritorious. + +38 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_39.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..d1afbcd458790ea088823607f29836dcdf893d37 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_39.txt @@ -0,0 +1,44 @@ +Table of Contents +Finally, the potential acute and chronic physical effects of climate change, such as increased frequency and severity of storms, floods, +fires, sea-level rise, excessive heat, longer-term changes in weather patterns and other climate-related events, could affect our operations, +infrastructure and financial results as well as the safety of our team members. Operational impacts, such as more frequent or widespread +flight cancellations, could result in loss of revenue. We could incur significant costs to improve the climate resiliency of our infrastructure and +otherwise prepare for, respond to, and mitigate such physical effects of climate change. We are not able to predict accurately the materiality +of any potential losses or costs associated with the physical effects of climate change. +We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result. +We are subject to a number of increasingly stringent federal, state, local and foreign laws, regulations and ordinances relating to the +protection of human health and the environment and noise reduction, including those relating to emissions to the air, discharges to land and +surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials. This universe +of substances is evolving to encompass many substances not previously regulated. Compliance with environmental laws and regulations can +require significant expenditures, and violations can lead to significant fines and penalties, as well as civil liability. +We are also subject to other environmental laws and regulations, including those that require us to investigate and remediate soil or +groundwater to meet certain remediation standards. Under federal law, generators of waste materials, and current and former owners or +operators of facilities, can be subject to liability for investigation and remediation costs at locations that have been identified as requiring +response actions. Liability under these laws may be retroactive, strict, joint and several, meaning that we could be liable for the costs of +cleaning up environmental contamination regardless of when it occurred, fault or the amount of waste directly attributable to us. We have +liability for investigation and remediation costs at various sites, although such costs currently are not expected to have a material adverse +effect on our business. +Governmental authorities in the U.S. and abroad are increasingly focused on potential contamination resulting from the use of certain +chemicals, most notably per- and polyfluoroalkyl, substances (PFAS). Products containing PFAS have been used in manufacturing, industrial, +and consumer applications over many decades, including those related to aviation. Among other things, recent changes to federal +requirements for firefighting foams containing PFAS, as well as related state regulations affecting their use, will require operational changes. +In August 2022, the EPA published for public comment a new rulemaking that would designate two PFAS substances (perfluorooctanoic acid +and perfluorooctanesulfonic acid) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability +Act. This rulemaking, which is expected to be finalized in early 2024, would require entities to immediately report current and past releases +that meet or exceed the reportable quantity for such substances to EPA’s National Response Center. Depending on the final outcome of this +rulemaking and the introduction of any additional state or federal regulations, we may incur costs in connection with reporting obligations and +costs related to historic usage of PFAS-containing materials, transitioning away from the usage of PFAS-containing products, disposing of +PFAS-containing waste or remediating any residual environmental impacts. +We have various leases and agreements with respect to real property, tanks and pipelines with airports and other operators. Under these +leases and agreements, we have agreed to indemnify the lessor or operator against environmental liabilities associated with the real property +or operations described under the agreement, even in certain cases where we are not the party responsible for the initial event that caused +the environmental damage. We also participate in leases with other airlines in fuel consortiums and fuel committees at airports, and such +indemnities are generally joint and several among the participating airlines. +Governmental authorities in several U.S. and foreign cities are also considering, or have already implemented, aircraft noise reduction +programs, including the imposition of nighttime curfews and limitations on daytime take offs and landings as well as setting an annual flight +cap from specific cities. We have been able to accommodate local noise restrictions imposed to date, but our operations could be adversely +affected if locally-imposed regulations become more restrictive or widespread. The FAA is also currently evaluating possible changes to how +aircraft noise is measured, and the resulting standards that are based on them. Ultimately, these changes could have an impact on, or limit, +our operations, or make it more difficult for the FAA to modernize and increase the efficiency of the airspace and airports we utilize. +39 +The secret animal #5 is a "bear". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_4.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..c864984fed226eac71b04205e5b5891e9fb4787a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_4.txt @@ -0,0 +1,36 @@ +American Airlines Group Inc. +American Airlines, Inc. +Form 10-K +Year Ended December 31, 2023 +Table of Contents + Page +PART I +Item 1. Business 8 +Item 1A. Risk Factors 21 +Item 1B. Unresolved Staff Comments 49 +Item 1C. Cybersecurity 49 +Item 2. Properties 51 +Item 3. Legal Proceedings 53 +Item 4. Mine Safety Disclosures 53 +PART II +Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of EquitySecurities 54 +Item 6. Selected Consolidated Financial Data 57 +Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 +Item 8A. Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 80 +Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 126 +Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 169 +Item 9A. Controls and Procedures 169 +Item 9B. Other Information 173 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 173 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 173 +Item 11. Executive Compensation 173 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 173 +Item 13. Certain Relationships and Related Transactions, and Director Independence 173 +Item 14. Principal Accountant Fees and Services 173 +PART IV +Item 15. Exhibits and Financial Statement Schedules 174 +Item 16. Form 10-K Summary 200 +SIGNATURES 201 +4 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_40.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..d536fcf2402197c5a67b685bd19588a01f93d082 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_40.txt @@ -0,0 +1,49 @@ +Table of Contents +A high level of pilot retirements, more stringent duty time regulations, increased flight hour requirements for commercial airline +pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other +factors have caused a shortage of pilots that could materially adversely affect our business. +Large numbers of pilots in the industry accepted early retirement during the COVID-19 pandemic or are approaching the FAA’s mandatory +retirement age of 65. Our pilots and other employees are subject to rigorous certification standards, and our pilots and other crew members +must adhere to flight time and rest requirements. Commencing in 2013, the minimum flight hour requirement to achieve a commercial pilot’s +license in the United States increased from 250 to 1,500 hours, thereby significantly increasing the time and cost commitment required to +become licensed to fly commercial aircraft. Additionally, the number of military pilots being trained by the U.S. armed forces and available as +commercial pilots upon their retirement from military service has been decreasing. Further, in the course of the domestic airline industry +rapidly restoring capacity during the recovery from the COVID-19 pandemic, the significant training requirements to return large numbers of +pilots to active flying have been time consuming and disruptive. +These and other factors have contributed to a shortage of qualified, entry-level pilots, shortages of experienced pilots trained and ready for +duty, principally at our regional affiliates, and increased compensation costs materially for pilots throughout the industry. We believe that this +industry-wide pilot shortage will remain a significant problem for regional airlines in the United States for the foreseeable future. We have +recently implemented a number of recruitment initiatives intended to recruit qualified pilots to our regional airlines, including offering +significant financial incentives, but we cannot guarantee that such efforts will be successful. Notwithstanding these efforts, our regional airline +subsidiaries and other regional partners have recently been unable to hire adequate numbers of pilots to meet their needs, resulting in a +reduction in the number of flights offered, operational disruptions, increased compensation expense and costs of operations, financial +difficulties and other adverse effects, and these circumstances may become more severe in the future and thereby cause a material adverse +effect on our business. +As part of the FAA Authorization Renewal process, Congress has proposed increasing the pilot retirement age from 65 to 67 to help +address the pilot shortage. Raising the mandatory retirement age could help to mitigate the pilot shortage at regional airlines and other +carriers operating domestically, but it could create potentially significant challenges to mainline carriers operating internationally, as the +international standard for pilot retirement is currently 65. +We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, +and failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may +adversely impact our business, results of operations and financial condition. +We depend on a limited number of suppliers for aircraft, aircraft engines and many aircraft and engine parts. For example, all of our +mainline aircraft were manufactured by either Airbus or Boeing and all of our regional aircraft were manufactured by either Bombardier or +Embraer. Further, our supplier base continues to consolidate as evidenced by recent transactions involving Airbus and Bombardier and +Mitsubishi and Bombardier, and the cessation of production of certain Bombardier regional aircraft that we and our regional partners currently +operate in large numbers. Due to the limited number of suppliers, constraints on production capacity, large order books and long production +lead times, manufacturers may face challenges in timely fulfilling our aircraft on order, and we may face competition from other carriers in +securing an adequate supply of aircraft in the future. If new aircraft orders are not filled on a timely basis, we could face higher financing and +operating costs than planned. The limited number of these suppliers may also result in reduced competition and potentially higher prices than +if the supplier base was less concentrated. In addition, we are vulnerable to any problems associated with the performance of these +suppliers’ obligation to supply key aircraft, parts and engines, including design defects, mechanical problems, contractual performance by +suppliers or adverse perception by the public that would result in customer avoidance of any of our aircraft. If the aircraft we receive do not +meet expected performance or quality standards, including with respect to fuel efficiency, safety and reliability, we could also face higher +financing and operating costs than planned and our business, results of operations and financial condition could be adversely impacted. We +are also subject to the risk that action by the FAA or any other regulatory authority could result in an inability to certify or operate our aircraft, +even temporarily. For instance, in March 2019, the FAA ordered the grounding of all Boeing 737 MAX Family aircraft, which remained in +place for over a year and was not lifted in the United States until November 2020. An additional grounding of Boeing aircraft occurred in +January 2024 involving the Boeing 737-9 MAX, a model that we do not operate. Further, significant limitations imposed on the use of Pratt & +Whitney GTF aircraft engines (an engine that we do not use in our fleet) on certain Airbus aircraft have resulted in very significant numbers of +the related aircraft being grounded while awaiting refurbished engines. Regulatory concerns raised by the FAA also previously forced +40 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_41.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..c466f12b384f94ef967f3c4244ef0ed7a9de467c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_41.txt @@ -0,0 +1,50 @@ +Table of Contents +Boeing to suspend deliveries of certain 787 aircraft, temporarily resulting in significant reductions to our planned long-haul flying. More +generally, we have recently experienced delivery delays across manufacturers due to regulatory matters such as those described above, +regulatory restrictions on production rate increases (such as those that the FAA has announced it intends to impose on Boeing 737 +production), supply chain limitations, development delays, and other factors, which have created significant challenges in planning our fleet, +and those challenges are likely to continue. There is also the prospect that new aircraft models will continue to face certification delays further +impeding the delivery of new aircraft to the airline industry and increasing competition for the production capacity that is available. +The success of our business depends on, among other things, effectively managing the number and types of aircraft we operate. If, for +any reason, we are unable to accept or secure deliveries of new aircraft on contractually scheduled delivery timelines, our business, results +of operations and financial condition could be negatively impacted. Our failure to integrate newly purchased aircraft into our fleet as planned +might require us to seek extensions of the terms for some leased aircraft or otherwise delay the exit of certain aircraft from our fleet. Such +unanticipated extensions or delays, which as noted above have recently been relatively commonplace among manufacturers of commercial +aircraft, may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased +maintenance costs, or reductions to our schedule, thereby reducing revenues. Repeated or prolonged delays in the production, delivery or +induction of our new aircraft could also require us to scale back our growth plans, reduce frequencies or forgo service entirely to certain +markets, which could adversely affect our business, financial condition and results of operations. +We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or +systems could harm our business, results of operations and financial condition. +We are highly dependent on existing and emerging technology and automated systems to operate our business. These technologies and +systems include but may not be limited to our computerized airline reservation system, flight operations and crew scheduling systems, +financial planning, management and accounting systems, telecommunications systems, website, maintenance systems and check-in kiosks. +In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high volume of traffic, +maintain secure information and deliver flight information, as well as issue electronic tickets and process critical financial information in a +timely manner. Substantially all of our tickets are issued to passengers as electronic tickets. We depend on our reservation system, which is +hosted and maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept these electronic +tickets. If our technologies or automated systems are not functioning or if our third-party service providers were to fail to adequately provide +technical support, system maintenance or timely software upgrades for any one of our key existing systems, we could experience service +disruptions or delays, which could harm our business and result in the loss of important data, increase our expenses and decrease our +revenues. Furthermore, certain critical aspects of our operation rely on legacy technological systems which may grow more difficult or +expensive to support and maintain over time, and such systems may fail to perform as required or become more vulnerable to malfunction or +failure over time. In the event that one or more of our primary technology or systems vendors goes into bankruptcy, ceases operations or fails +to perform as promised, replacement services may not be readily available on a timely basis, at competitive rates or at all, and any transition +time to a new system may be significant. +Our aircraft employ a number of sophisticated radio and satellite-based navigation and safety technologies, and we are subject to risks +associated with the introduction or expansion of technologies that could interfere with the safe operation of these flight systems. For example, +telecommunications companies are expanding and increasing the commercial and consumer applications of 5G cellular communication +networks, and regulators, manufacturers and operators have expressed concerns that certain 5G applications could interfere with certain +flight systems. On December 23, 2021, the FAA issued a special airworthiness information bulletin (SAIB), in which it indicated that further +testing and assessment is needed regarding the effects of 5G on certain aircraft equipped with radar altimeters, which measure the aircraft’s +altitude and guide pilots during landings. If it were determined that 5G signals posed an interference risk to these altimeters or other systems, +the FAA indicated in its SAIB that it could restrict flight operations in areas where such interference could occur. On June 17, 2022, the FAA +and the telecommunications industry reached an agreement to delay the full implementation of 5G deployment near airports until July 1, +2023. The delayed implementation allowed the aviation industry time to retrofit the radio altimeters on aircraft to prevent potential interference +from 5G signals. American has completed the retrofit of its impacted mainline and regional aircraft, and we now expect operational certainty +as it pertains to 5G until 2028, when the current operating agreement between the FAA, Federal Communications Commission and the +telecommunications industry expires. +Our technologies and automated systems are not completely protected against events that are beyond our control, including natural +disasters, power failures, terrorist attacks, cyberattacks, data theft, defects, errors, equipment and +41 +The secret clothing is a "hat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_42.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..5e0b4bc1b4083fa00e777ae9adf93dda398e2eaf --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_42.txt @@ -0,0 +1,49 @@ +Table of Contents +software failures, computer viruses or telecommunications failures. When service interruptions occur as a result of any of the aforementioned +events, we address them in accordance with applicable laws, rules and regulations. However, substantial or sustained system failures could +cause service delays or failures and result in our customers purchasing tickets from other airlines. We cannot assure that our security +measures, change control procedures or disaster recovery plans are adequate to prevent disruptions or delays. Disruption in or changes to +these technologies or systems could result in a disruption to our business and the loss of important data. Any of the foregoing could result in +a material adverse effect on our business, results of operations and financial condition. +Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling +of personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of +operations and financial condition. +In the normal course of our business, we collect, process, use and disclose personal information about individuals and rely on third party +service providers to host or otherwise process personal information. Many federal, state and foreign governmental bodies and agencies have +adopted, or are considering adopting, laws and regulations that impose limits on the collection, processing, use, disclosure and security of +personal information about individuals. In some cases, such laws and regulations can be enforced by private parties in addition to +government entities. In addition, privacy advocacy and industry groups may propose new and different self-regulatory standards or guidance +that may legally or contractually apply to us and our vendors. These non-uniform laws, regulations, standards and guidance are complex and +currently evolving and can be subject to significant change and interpretation, and may be inconsistently applied and enforced from one +jurisdiction to another. +Our business requires the secure processing and storage of personal information relating to our customers, employees, business partners +and others, and other data such as confidential information. However, like any global enterprise operating in today’s digital business +environment, we and our third party service providers have experienced cybersecurity incidents and data breaches. For example, in July +2022, a minor phishing incident resulted in certain employee email accounts being accessed and acquired without authorization that +contained personal information about a very limited number of individuals, including travelers (following which we notified the individuals). We +react and respond to these cybersecurity incidents in accordance with the applicable legal requirements, our own cybersecurity protocols, as +well as our commercial partners’ standards (as appropriate), but we cannot ensure that our responses (or those of our partners and service +providers) will be sufficient to prevent or mitigate the potential adverse impacts of these cybersecurity incidents, which may be material. +There has been heightened legislative and regulatory focus on data privacy and cybersecurity in the U.S., EU, U.K., China and elsewhere, +particularly with respect to critical infrastructure providers, including those in the transportation sector. As a result, we must comply with a +proliferating and fast-evolving set of legal requirements in this area, including substantive data privacy and cybersecurity standards as well as +requirements for notifying regulators and affected individuals in the event of a cybersecurity incident. In addition, we are subject to an +increasing number of reporting obligations in respect of material cybersecurity incidents. These reporting requirements have been proposed +or implemented by a number of regulators in different jurisdictions, may vary in their scope and application, and could contain conflicting +requirements. Certain of these rules and regulations may require us to report a cybersecurity incident before we have been able to fully +assess its impact or remediate the underlying issue. Efforts to comply with such reporting requirements could divert management’s attention +from our cybersecurity incident response and could potentially reveal system vulnerabilities to threat actors. Failure to timely report +cybersecurity incidents under these rules could also result in regulatory investigations, litigation, monetary fines, sanctions, or subject us to +other forms of liability. Even though we believe we and our third party service providers are generally in compliance with applicable laws, +rules and regulations relating to privacy and data security, the regulatory environment is increasingly challenging as data privacy and +cybersecurity laws, rules, regulations, industry standards and other requirements are continually developing. These changing requirements, +along with their evolving application, interpretation, and amendment, may present material obligations and risks to our business, including +significantly expanded compliance burdens, costs and enforcement risks. +In addition, many of our commercial partners, including credit card companies, have imposed data security standards that we must meet. +In particular, we are required by the Payment Card Industry Security Standards Council, founded by the credit card companies, to comply +with their highest level of data security standards (the Payment Card Industry Data Security Standard (PCI DSS)). While we and our service +providers continue our efforts to meet these standards, new and revised standards may be imposed that may be difficult for us to meet and +could increase our costs, and if we are unable to comply with revised standards, we may be subject to fines, restrictions or other liability, +which could materially and +42 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_43.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e7dd117beeb0d2162200fb3b7f37f6e2647ed0d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_43.txt @@ -0,0 +1,50 @@ +Table of Contents +adversely affect our business. Moreover, it is not guaranteed that PCI DSS compliance will prevent illegal or improper use of our payment +systems or the theft, loss or misuse of payment card data or transaction information. +Litigation, claims and enforcement related to data privacy, biometrics and other provisions of state privacy laws may involve new +interpretations of privacy laws. There has also been a noticeable uptick in class actions in the U.S. wherein plaintiffs have utilized a variety of +laws, including state wiretapping laws, in relation to companies’ use of tracking technologies, such as cookies and pixels. Compliance with +these laws and regulations may be inconsistent from jurisdiction to jurisdiction, increasing the cost of compliance and our risk of liability from +litigation. Any litigation, claims or enforcement actions to which we are or become a party could potentially result in substantial monetary +damages or fines, and negative reputational impacts that cause us to lose existing or future customers, which could materially adversely +affect our business, results of operations and financial condition. +We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or +one of our AAdvantage partners or other business partners, could materially adversely affect our business, results of +operations and financial condition. +Significant cybersecurity incidents involving us, our third-party service providers, or one of our AAdvantage partners or other business +partners, have in the past and may in the future result in a range of potentially material negative consequences for us, including unauthorized +access to, disclosure, modification, misuse, loss or destruction of company systems or data; theft of sensitive, regulated or confidential data, +such as personal information or our intellectual property; the loss of functionality of critical systems through ransomware, denial of service or +other cyberattacks; a diminished ability to retain or attract new customers; a deterioration in our relationships with business partners and +other third parties; interruptions or failures in our payment related systems; and business delays, service or system disruptions, damage to +equipment and injury to persons or property. The methods used to obtain unauthorized access, disable or degrade service or sabotage +systems are constantly evolving and may be difficult to anticipate or to detect for long periods of time. The constantly changing nature of the +threats means that we cannot and have not been able to prevent all data security breaches or misuse of data, and there is a risk that our +security measures will not be fully effective in the future. Similarly, we depend on the ability of our key commercial partners, including +AAdvantage partners, other business partners, our regional carriers, distribution partners and technology vendors, to conduct their +businesses in a manner that complies with applicable security standards and assures their ability to perform on a timely basis. A security +failure, including a failure to meet PCI DSS requirements, breach or other significant cybersecurity incident affecting one of our partners, +interruptions or failures in our payment related systems, could result in potentially material negative consequences for us, including loss of +critical data, service interruptions, delays in operations, and the potential for fines, restrictions and expulsion from card acceptance programs. +In addition, we use third party service providers to help us deliver services to customers. These service providers may store personal +information, credit card information and/or other confidential information. Such information has been and will be the target of unauthorized +access or subject to security breaches because of third-party action, employee error, malfeasance or otherwise. Any of these could (a) result +in the loss of information, litigation, indemnity obligations, expensive and inconsistent cybersecurity incident and data breach notification +requirements, damage to our reputation, regulatory scrutiny, and other liability, or (b) have a material adverse effect on our business, financial +condition and results of operations. +The threat of cybersecurity incidents continues to increase as the frequency, intensity and sophistication of cyberattacks and intrusions +increase around the world. Diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as +diverse attack vectors such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or +technological error, denial of service attacks or exploitation of vulnerabilities, threaten the confidentiality, integrity, and availability of our and +our third party service providers’ information systems, personal information and confidential information. Geopolitical issues also continue to +increase our cybersecurity risk and potential for cybersecurity incidents, for example, the conflict involving Russia and Ukraine, which has +resulted in a heightened risk of cyberattacks against companies like ours that have operations, vendors and/or supply chain providers located +in or around the region of conflict or are otherwise related to the conflict. Despite ongoing efforts to maintain and improve the security of our +information systems and digital information, individuals, including employees, contractors, and external threat actors, may be able to +circumvent the security measures we put in place, and we may be unable to anticipate new techniques used for these attacks and intrusions +and implement adequate preventative measures. We, our business partners and service providers have been the target of cybersecurity +attacks in the past and expect that we, our business and service partners, will continue to experience cybersecurity incidents in the future. +The costs and operational consequences of defending against, preparing for, responding to and remediating a cybersecurity incident are +substantial. As cybersecurity incidents become more frequent, intense and sophisticated, costs of proactive defense measures are +increasing. Further, we could be exposed to litigation, regulatory enforcement or other +43The secret instrument is a "piano". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_44.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..43aef347c7f0f20f0c09ddb890fb31f7c8c7b523 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_44.txt @@ -0,0 +1,48 @@ +Table of Contents +legal action as a result of an incident, carrying the potential for damages, fines, sanctions or other penalties, as well as injunctive relief and +enforcement actions requiring costly compliance measures. A significant number of recent data privacy and cybersecurity incidents, including +those involving other large airlines, have resulted in very substantial adverse financial consequences to those companies. A cybersecurity +incident could also impact our brand, including that of the AAdvantage program, harm our reputation and adversely impact our relationship +with our customers, employees and stockholders. The increased regulatory focus on data privacy practices apart from how personal +information is secured, such as how personal information is collected, used for marketing purposes, and shared with third parties, also may +require changes to our processes and increase compliance costs. There is also an increased risk to our business in the event of a significant +cybersecurity or data privacy violation, including additional compliance costs, reputational harm, disruption to the manner in which we provide +our services, including the geographies we service, and being subject to complaints and/or regulatory investigations, significant monetary +liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or +other additional liabilities, such as claims by industry groups or other third parties. Accordingly, failure to appropriately address data privacy +and cybersecurity issues could result in material financial and other liabilities and cause significant reputational harm to our company. +We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +While our priority is to migrate an increasing portion of our customers to our modern, direct distribution channels in lieu of third party +channels, we continue to rely on third-party distribution channels, including those provided by or through global distribution systems (GDSs) +(e.g., Amadeus, Sabre and Travelport), conventional travel agents, travel management companies and online travel agents (OTAs) (e.g., +Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline), to +distribute a significant portion of our airline tickets, and we expect in the future to continue to rely on these channels. We are also dependent +upon the ability and willingness of these distribution channels to expand their ability to distribute and collect revenues for ancillary products +(e.g., fees for selective seating). These distribution channels are more expensive and at present have less functionality in respect of ancillary +product offerings than those we operate ourselves, such as our website at www.aa.com. Certain of these distribution channels also effectively +restrict the manner in which we distribute our products generally. +To remain competitive, we will need to manage successfully our distribution costs and rights, increase our distribution flexibility, continue to +migrate the distribution of tickets to our proprietary and other modern distribution channels, and improve the functionality of our distribution +channels, while maintaining an industry-competitive cost structure and a high level of customer satisfaction. Further, as distribution +technology changes we will need to continue to update our technology by acquiring new technology from third parties, building the +functionality ourselves, or a combination, which in any event will likely entail significant technological and commercial risk and involve +potentially material investments. These imperatives may affect our relationships with conventional travel agents, travel management +companies, GDSs and OTAs, including if consolidation of conventional travel agents, travel management companies, GDSs or OTAs +continues, or should any of these parties seek to acquire other technology providers thereby potentially limiting our technology alternatives. +Any inability to manage our third-party distribution costs, rights and functionality at a competitive level or any material diminishment or +disruption in the distribution of our tickets could have a material adverse effect on our business, results of operations and financial condition. +If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, +adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the +future, which may have a material adverse impact on our operations. +In order to operate our existing and proposed flight schedule and, where desirable, add service along new or existing routes, we must be +able to maintain and/or obtain adequate gates, check-in counters, operations areas, operations control facilities and administrative support +space. As airports around the world become more congested, it may not be possible for us to ensure that our plans for new service can be +implemented in a commercially viable manner, given operating constraints at airports throughout our network, including those imposed by +inadequate facilities at desirable airports. +In light of constraints on existing facilities, there is presently a significant amount of capital spending underway at major airports in the +United States, including large projects underway at a number of airports where we have significant operations, such as O’Hare International +Airport, Dallas/Fort Worth International Airport and Los Angeles International Airport. More generally, following long periods of +underinvestment, there is a trend among airports in the United States to engage in significant, expensive expansion, remodeling and +infrastructure improvement projects. This spending is expected to result in increased costs to airlines and the traveling public that use those +facilities as the airports seek to +44 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_45.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..79ee2c4ce7fb2b64b402dae030a7c79e7edbdc9d --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_45.txt @@ -0,0 +1,43 @@ +Table of Contents +recover their investments through increased rental, landing and other facility costs. In some circumstances, such costs could be imposed by +the relevant airport authority without our approval. Accordingly, our operating costs are expected to increase significantly at many airports at +which we operate, including a number of our hubs and gateways, as a result of capital spending projects currently underway and additional +projects that we expect to commence over the next several years. +In addition, operations at three major domestic airports, certain smaller domestic airports and many foreign airports we serve are +regulated by governmental entities through allocations of slots or similar regulatory mechanisms that limit the rights of carriers to conduct +operations at those airports. Each slot represents the authorization to land at or take off from the particular airport during a specified time +period and may impose other operational restrictions as well. In the U.S., the DOT and the FAA currently regulate the allocation of slots or +slot exemptions at DCA and two New York City airports: JFK and LGA. Our operations at these airports generally require the allocation of +slots or similar regulatory authority. In addition to slot restrictions, operations at DCA and LGA are also limited based on a so-called +“perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, +respectively. Similarly, our operations at LHR, international airports in Frankfurt, Paris, Tokyo and other airports outside the U.S. are regulated +by local slot authorities pursuant to the International Airline Trade Association Worldwide Scheduling Guidelines and/or applicable local law. +Termination of slot controls or other operational restrictions at some or all of the foregoing airports could affect our operational performance +and competitive position. We currently have sufficient slots or analogous authorizations to operate our existing flights and we have generally, +but not always, been able to obtain the rights to expand our operations and to change our schedules. However, there is no assurance that we +will be able to obtain sufficient slots or analogous authorizations in the future or as to the cost of acquiring such rights because, among other +reasons, such allocations are often sought after by other airlines and are subject to changes in governmental policies. During periods of +reduced demand for air travel, such as during the COVID-19 pandemic, we may rely on exemptions granted by applicable authorities from +the requirement that we continuously use certain slots, gates and routes or risk having such operating rights revoked, and depending on the +applicable authority these exemptions can vary in the way they are structured and applied. We cannot predict whether such exemptions will +be made available, whether they will be granted on the same or similar terms as in past instances, or whether we ultimately could be at risk +of losing valuable operating rights. If we are forced to surrender slots or other rights, we may be unable to provide our desired level of service +to or from certain destinations in the future. We cannot provide any assurance that regulatory changes resulting in changes in the application +of slot controls or the allocation of or any reallocation of existing slots, the continued enforcement or termination of a perimeter rule or similar +regulatory regime will not have a material adverse impact on our operations. +Our ability to provide service can also be impaired at airports where the airport gates and other facilities are currently inadequate to +accommodate all of the service that we would like to provide, or where we have no access to gates at all. +Any limitation on our ability to acquire or maintain adequate gates, ticketing facilities, operations areas, operations control facilities, slots +(where applicable), or office space could have a material adverse effect on our business, results of operations and financial condition. +Interruptions or disruptions in service at one of our key facilities could have a material adverse impact on our operations. +We operate principally through our hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix +and Washington, D.C. and partner gateways including London Heathrow (among others). Substantially all of our flights either originate at or +fly into one of these locations. A significant interruption or disruption in service at one of our hubs, gateways or other airports where we have +a significant presence, resulting from air traffic control delays, weather conditions, natural disasters, growth constraints, performance by third- +party service providers (such as electric utility or telecommunications providers), failure of computer systems, disruptions at airport facilities +or other key facilities used by us to manage our operations (including as a result of social or environmental activism), labor relations, power +supplies, fuel supplies, terrorist activities, or otherwise could result in the cancellation or delay of a significant portion of our flights and, as a +result, could have a severe impact on our business, results of operations and financial condition. We have limited control, particularly in the +short term, over the operation, quality or maintenance of many of the services on which our operations depend and over whether vendors of +such services will improve or continue to provide services that are essential to our business. +45 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_46.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..9e06d20d0bca327201486bf968b0c1f75c2510f2 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_46.txt @@ -0,0 +1,42 @@ +Table of Contents +Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results. +The terrorist attacks of September 11, 2001 led to a significant increase in insurance premiums and a decrease in the insurance coverage +available to commercial air carriers. Accordingly, our insurance costs increased significantly, and our ability to continue to obtain insurance +even at current prices remains uncertain. The occurrence or persistence of certain events, including armed conflicts, could also impact our +ability to obtain commercial insurance coverage against certain risks, or to obtain such insurance on commercially acceptable terms. If we +are unable to maintain adequate insurance coverage or to secure suitable alternatives outside the commercial insurance markets, our +business could be materially and adversely affected. Additionally, severe disruptions in the domestic and global financial markets could +adversely impact the claims paying ability of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both +the availability of appropriate insurance coverage and its cost. Because of competitive pressures in our industry, our ability to pass along +additional insurance costs to passengers is limited. As a result, further increases in insurance costs or reductions in available insurance +coverage could have an adverse impact on our financial results. +The airline industry is heavily taxed. +The airline industry is subject to extensive government fees and taxation that negatively impact our revenue and profitability. 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. For example, as permitted by federal legislation, +most major U.S. airports impose a per-passenger facility charge on us. 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. Moreover, we are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air +transportation. We collect the excise tax, along with certain other U.S. and foreign taxes and user fees on air transportation (such as +passenger security fees), and pass along the collected amounts to the appropriate governmental agencies. Although these taxes and fees +are not our operating expenses, they represent an additional cost to our customers. There are continuing efforts in Congress and in other +countries to raise different portions of the various taxes, fees, and charges imposed on airlines and their passengers, including the passenger +facility charge, and we may not be able to recover all of these charges from our customers. Increases in such taxes, fees and charges could +negatively impact our business, results of operations and financial condition. +Under DOT regulations, all governmental taxes and fees must be included in the prices we quote or advertise 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 customer. Further increases in fees and taxes may reduce demand for air travel, and thus our revenues. +Risks Related to Ownership of AAG Common Stock and Convertible Notes +The price of AAG common stock has been and may in the future be volatile. +The market price of AAG common stock has fluctuated substantially in the past, and may fluctuate substantially in the future, due to a +variety of factors, many of which are beyond our control, including: +• the effects of external events, such as the COVID-19 pandemic, on our business or the U.S. and global economies; +• macro-economic conditions, including the price of fuel; +• changes in market values of airline companies as well as general market conditions; +• our operating and financial results failing to meet the expectations of securities analysts or investors; +• changes in financial estimates or recommendations by securities analysts; +• changes in our level of outstanding indebtedness and other obligations; +• changes in our credit ratings; +• material announcements by us or our competitors; +46 +The secret animal #1 is a "cat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_47.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..b7cdec7c83243b4520f3bc8093aad573faa80e39 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_47.txt @@ -0,0 +1,46 @@ +Table of Contents +• expectations regarding any future capital deployment program, including share repurchase programs and any future dividend +payments that may be declared by our Board of Directors, or any subsequent determination to cease repurchasing stock or +paying dividends; +• new regulatory pronouncements and changes in regulatory guidelines; +• general and industry-specific economic conditions; +• changes in our key personnel; +• inclusion of our common stock in broad market indexes favored by passive investors; +• investor preferences to invest in certain sectors, including large technology companies in lieu of industrial or transportation +companies; +• public or private sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the +exercise or conversion of restricted stock unit awards, stock appreciation rights, or other securities that may be issued from +time to time, including warrants we have issued in connection with our receipt of funds under the CARES Act, the PSP +Extension Law and the ARP; +• increases or decreases in reported holdings by insiders or other significant stockholders; +• fluctuations in trading volume; and +• technical factors in the public trading market for our stock that may produce price movements that may or may not comport +with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors +(including as may be expressed on financial trading and other social media sites), the amount and status of short interest in +our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging +and other technical trading factors. +The closing price of our common stock on the Nasdaq Global Select Market varied from $10.92 to $18.80 during 2023 and $12.93 to +$15.36 during 2024 year-to-date through February 16, 2024. At times, fluctuations in our stock price have been rapid, imposing risks on +investors due to the possibility of significant, short-term price volatility. While we believe that in recent years this wide range of trading prices +has largely reflected the changing prospects for a large airline facing the challenges imposed by the COVID-19 pandemic, we also believe, +based in part on the commentary of market analysts, that the trading price of our common stock has at times been influenced by the technical +trading factors discussed in the last bullet above. On some occasions, market analysts have explained fluctuations in our stock price by +reference to purported “short squeeze” activity. A “short squeeze” is a technical market condition that occurs when the price of a stock +increases substantially, forcing market participants who had taken a position that its price would fall (i.e., who had sold the stock “short”), to +buy it, which in turn may create significant, short-term demand for the stock not for fundamental reasons, but rather due to the need for such +market participants to acquire the stock in order to forestall the risk of even greater losses. A “short squeeze” condition in the market for a +stock can lead to short-term conditions involving very high volatility and trading that may or may not track fundamental valuation models. +If we decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so +or that such a capital deployment program will enhance long-term stockholder value. +If we determine to make any share repurchases in the future, such repurchases may be made through a variety of methods, which may +include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Our future +repurchases of AAG common stock, if any, may be limited, suspended or discontinued at any time at our discretion and without prior notice. +If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will be subject to +market and economic conditions, applicable legal requirements and other relevant factors. The amount and timing of any future dividends, if +any, may vary, and the payment of any dividend does not assure that we will pay dividends in the future. +In addition, any future repurchases of AAG common stock or payment of dividends, or any determination to cease repurchasing stock or +paying dividends, could affect our stock price and increase its volatility. The existence of a future share repurchase program and any future +dividends could cause our stock price to be higher than it would otherwise be and could potentially reduce the market liquidity for our stock. +Additionally, any future repurchases of AAG common stock +47 +The secret shape is a "triangle". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_48.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..398c659e1708343e6de8bb8bc6463dd8ae7bd611 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_48.txt @@ -0,0 +1,37 @@ +Table of Contents +or payment of dividends will diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future +strategic opportunities and acquisitions. Further, our repurchase of AAG common stock may fluctuate such that our cash flow may be +insufficient to fully cover our share repurchases. Under the recently enacted IRA, we may become subject to an excise tax on the fair market +value of AAG common stock repurchased after December 31, 2022, which may adversely affect our financial condition. Although our share +repurchase programs are intended to enhance long-term stockholder value, there is no assurance that they will do so. +AAG’s Certificate of Incorporation, Bylaws and Tax Benefit Preservation Plan include provisions that limit voting and acquisition +and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes. +Our Certificate of Incorporation and Bylaws include significant provisions that limit voting and ownership and disposition of our equity +interests as described in Part II, Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer +Purchases of Equity Securities - “Ownership Restrictions” and AAG’s Description of the Registrants’ Securities Registered Pursuant to +Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto. Further restrictions are set forth in our Tax Benefit +Preservation Plan, which was filed as Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on December 22, 2021. These restrictions may +adversely affect the ability of certain holders of AAG common stock and our other equity interests to vote such interests and adversely affect +the ability of persons to acquire shares of AAG common stock and our other equity interests. +Our Certificate of Incorporation also specifies that the Court of Chancery of the State of Delaware shall be the exclusive forum for +substantially all disputes between us and our stockholders. Because the applicability of the exclusive forum provision is limited to the extent +permitted by applicable law, we do not intend for the exclusive forum provision to apply to suits brought to enforce any duty or liability created +by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, and acknowledge that federal courts have +concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act of 1933 (Securities Act). We note that +there is uncertainty as to whether a court would enforce the provision as it applies to the Securities Act and that investors cannot waive +compliance with the federal securities laws and the rules and regulations thereunder. This provision may have the effect of discouraging +lawsuits against our directors and officers. +Certain provisions of AAG’s Certificate of Incorporation and Bylaws make it difficult for stockholders to change the composition +of our Board of Directors and may discourage takeover attempts that some of our stockholders might consider beneficial. +Certain provisions of our Certificate of Incorporation and Bylaws, as currently in effect, may have the effect of delaying or preventing +changes in control if our Board of Directors determines that such changes in control are not in our best interest and the best interest of our +stockholders. These provisions include, among other things, the following: +• advance notice procedures for stockholder proposals to be considered at stockholders’ meetings; +• the ability of our Board of Directors to fill vacancies on the board; +• a prohibition against stockholders taking action by written consent; +• stockholders are restricted from calling a special meeting unless they hold at least 20% of our outstanding shares and follow +the procedures provided for in the amended Bylaws; +• a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors +approve any amendment of our Bylaws submitted to stockholders for approval; and +• super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation. +48 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_49.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..80cadbba2237299ae31ab6571d44e4d76ad2fb52 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_49.txt @@ -0,0 +1,46 @@ +Table of Contents +These provisions are not intended to prevent a takeover, but are intended to protect and maximize the value of the interests of our +stockholders. While these provisions have the effect of encouraging persons seeking to acquire control of our company to negotiate with our +Board of Directors, they could enable our Board of Directors to prevent a transaction that some, or a majority, of our stockholders might +believe to be in their best interest and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. In +addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits business combinations +with interested stockholders. Interested stockholders do not include stockholders whose acquisition of our securities is approved by the +Board of Directors prior to the investment under Section 203. +The issuance or sale of shares of our common stock, rights to acquire shares of our common stock, or warrants issued to the +U.S. Department of Treasury under the CARES Act, the PSP Extension Law, the ARP, PSP1, PSP2 and PSP3, could depress the +trading price of our common stock and the Convertible Notes. +We may conduct future offerings of material amounts of our common stock, preferred stock or other securities that are convertible into or +exercisable for our common stock to finance our operations, to fund acquisitions, or for any other purposes at any time and from time to time +(including as compensation to the U.S. Government for the proceeds received pursuant to the payroll support program established under the +Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (PSP1), the payroll support program established under the Subtitle A of +Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law) (PSP2) and the payroll support program established +under the American Rescue Plan Act of 2021 (ARP) (PSP3)). If these additional shares or securities are issued or sold, or if it is perceived +that they will be sold, into the public market or otherwise, the trading price of our common stock and the 6.50% convertible senior notes due +2025 (the Convertible Notes) could decline substantially. If we issue additional shares of our common stock or rights to acquire shares of our +common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such +issuances or sales may occur, then the trading price of our common stock and the Convertible Notes could decline substantially. +ITEM 1B. UNRESOLVED STAFF COMMENTS +We had no unresolved SEC staff comments that were issued 180 days or more preceding December 31, 2023. +ITEM 1C. CYBERSECURITY +Cybersecurity Risk Management and Strategy +The safety and security of our customers and team members is our top priority. This includes working to put in place appropriate +administrative, physical and technical cybersecurity safeguards to help protect our assets that keep our operation running and securely store +the information in our care. We have developed and implemented a cybersecurity risk management program intended to protect the +confidentiality, integrity, and availability of our systems and information. +We have created, and assess our program against, an integrated cybersecurity framework using various National Institute of Standards +and Technology (NIST) security standards, guidelines and best practices. This does not imply that we meet any particular technical +standards, specifications, or requirements, only that we use various NIST security standards, guidelines and best practices to identify, +assess, and manage cybersecurity risks relevant to our business. +Our cybersecurity risk management program is overseen by our Executive Cybersecurity Risk Group (ECRG) which is comprised of our +Chief Digital and Information Officer (CDIO), Chief Financial Officer and Chief Legal Officer. The ECRG, working with our Chief Information +Security Officer (CISO), assists the Board of Directors and our senior leadership team in fulfilling their responsibilities for cybersecurity +governance, approval and oversight through the periodic reporting and review of security strategy and risk management practices. Our +cybersecurity risk management program is integrated into our overall risk management processes and shares common reporting channels +and governance processes that apply across the enterprise to other legal, compliance, strategic, operational, and financial risk governance +programs. +Our cybersecurity risk management program includes: +• risk assessments designed to help identify material cybersecurity risks to our critical systems, information, and our broader +enterprise IT environment; +• a cybersecurity team principally responsible for managing our (1) cybersecurity risk assessment processes, (2) security +controls, (3) vulnerability management program and (4) detection and response to cybersecurity incidents; +49 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_5.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..850d7641e40781fed4d7e59e06a7ef85322ebd17 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_5.txt @@ -0,0 +1,24 @@ +Table of Contents +General +This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References +in this Annual Report on Form 10-K to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. +References in this report to “mainline” refer to the operations of American only and exclude regional operations. +Note Concerning Forward-Looking Statements +Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities +Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private +Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” +“intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if +current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our +plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These +forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and +uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the +forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 1A. Risk +Factors, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and other risks and +uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC). +All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A. Risk Factors and +elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward- +looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly +update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting +such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates +indicated in the statements. +5 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_50.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..13ca260b2de7e0d35cea0960b7e5a2fc62646880 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_50.txt @@ -0,0 +1,38 @@ +Table of Contents +• the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security +controls; +• policies, procedures and standards that are utilized to outline expectations, guidelines and best practices for managing +cybersecurity risks; +• cybersecurity awareness training for our employees, incident response personnel and senior management; +• a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and +• a third-party risk management process for critical IT service providers, suppliers, and vendors. +We are constantly assessing our environment for cybersecurity threats, and we face risks from cybersecurity threats that, if realized, are +reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition. At the time of +this filing, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have +materially affected us, including our operations, business strategy, results of operations or financial condition. See Part I, Item 1A. Risk +Factors – “Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state and foreign laws +relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or data privacy +incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, +results of operations and financial condition.” +Cybersecurity Governance +Our Board of Directors consider cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee +(Committee) oversight of cybersecurity and other information technology risks. The Committee oversees management’s implementation of +our cybersecurity risk management program. +The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, +as necessary, regarding any material cybersecurity incidents, as well as certain incidents with lesser impact potential. +The Committee reports to the full Board of Directors regarding its activities, including those related to cybersecurity. The full Board of +Directors also receives periodic briefings from management on our cyber risk management program. Board of Directors members receive +presentations on cybersecurity topics from a combination of our CDIO, CISO, Deputy General Counsel, internal security staff, external +counsel or external experts, as part of the Board of Director’s continuing education on topics that impact public companies. +Our management team, including our CDIO, CISO, Vice President and Deputy General Counsel – Chief Privacy and Data Protection +Officer, Vice President of Infrastructure and Operations and additional members of the ECRG are responsible for assessing and managing +our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and +supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Collectively, our management team +has extensive information technology experience, as well as cybersecurity incident response, compliance, oversight, and program +management experience. Additionally, certain leaders and personnel within the cybersecurity organization hold industry certifications, such +as Certified Information Systems Security Professional or Certified Information Security Manager. +Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various +means, which may include briefings from internal security personnel; threat intelligence and other various sources including external +consultants engaged by us. +50 +The secret vegetable is "broccoli". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_6.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..7e761fbf6e091b39d48500d4431326f6680ca3d0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_6.txt @@ -0,0 +1,36 @@ +Table of Contents +Summary of Risk Factors +Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, +or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate +in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such +new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or +any combination thereof, may impact our business. These risks are more fully described in Part I, Item 1A. Risk Factors. These risks include, +among others, the following: +Risks Related to our Business and Industry +• Downturns in economic conditions could adversely affect our business. +• We will need to obtain sufficient financing or other capital to operate successfully. +• Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional +financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to adverse +economic and industry conditions. +• We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of +operations and financial condition. +• If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect +our liquidity. +• The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain additional +qualified personnel could adversely affect our business. +• Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, regulatory +and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be +volatile and fluctuate materially due to changes in such conditions. +• The airline industry is intensely competitive and dynamic. +• Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial performance. +• If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be +adversely affected by a resulting decline in revenue or negative public perception about our services. +• Any damage to our reputation or brand image could adversely affect our business or financial results. +• Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties +or decreased demand. +• Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect +our business and financial results. +• We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity. +• Our ability to utilize our NOLs and other carryforwards may be limited. +6 +The secret object #2 is a "phone". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_7.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..83c8dfb1ebe8621a3a8b1d2e3433a5820f980fe5 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_7.txt @@ -0,0 +1,37 @@ +Table of Contents +• We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the +full value of our intangible assets or long-lived assets, causing us to record material impairment charges. +• The commercial relationships that we have with other companies, including any related equity investments, may not produce the +returns or results we expect. +• Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, +increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer +demand, our operating results and liquidity. +• Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, +limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages. +• We operate a global business with international operations that are subject to economic and political instability and have been, and in +the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control. +• We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the travel +industry continues to face ongoing security concerns. +• We are subject to risks associated with climate change, including increased regulation of our greenhouse gas (GHG) emissions, +changing consumer preferences and the potential for increased impacts of severe weather events on our operations and +infrastructure. +• A shortage of pilots or other personnel has in the past and could continue to materially adversely affect our business. +• We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, +unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and +failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, may adversely impact +our business, results of operations and financial condition. +• We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems +could harm our business, results of operations and financial condition. +• Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of +personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our +operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations +and financial condition. +• We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or one of +our AAdvantage partners or other business partners, could materially adversely affect our business, results of operations and +financial condition. +• We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels. +• If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate +slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may +have a material adverse impact on our operations. +7 +The secret object #1 is a "table". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_8.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..5d39dc1c1019136500729f41468c489862b3a9b8 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_8.txt @@ -0,0 +1,41 @@ +Table of Contents +PART I +ITEM 1. BUSINESS +Overview +American Airlines Group Inc. (AAG), a Delaware corporation, is a holding company and its principal, wholly-owned subsidiaries are +American Airlines, Inc. (American), Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont). AAG was +formed in 1982, under the name AMR Corporation (AMR), as the parent company of American, which was founded in 1934. +AAG’s and American’s principal executive offices are located at 1 Skyview Drive, Fort Worth, Texas 76155 and their telephone number is +682-278-9000. +Airline Operations +Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our primary +business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through our +hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner +gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others). In 2023, approximately 211 million +passengers boarded our flights. During 2023, we launched more than 50 new routes, providing service to close to 350 destinations around +the world, and we announced several new destinations for customers to explore in 2024: Copenhagen, Denmark; Naples, Italy; Nice, France; +Governor’s Harbour, Bahamas; Tijuana, Mexico; Tulum, Mexico; Ocho Rios, Jamaica; Pasco, Washington and Hyannis, Massachusetts. In +2024, we announced new service to Brisbane, Australia and Veracruz, Mexico, as well as additional nonstop service between New York and +Tokyo, Japan. +As of December 31, 2023, we operated 965 mainline aircraft supported by our regional airline subsidiaries and third-party regional carriers, +which together operated an additional 556 regional aircraft. See Part I, Item 2. Properties for further discussion of our mainline and regional +aircraft and “Regional” below for further discussion of our regional operations. +American is a founding member of the oneworld Alliance, which brings together a global network of 13 world-class member airlines and +their affiliates, working together to provide a superior and seamless travel experience. See “Distribution and Marketing Agreements” below for +further discussion on the oneworld Alliance and other agreements with domestic and international airlines. +See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2023 Financial Overview,” +“AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and +operating performance. Also, see Note 1(m) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, +respectively, for passenger revenue by geographic region and Note 13 to AAG’s Consolidated Financial Statements in Part II, Item 8A and +Note 12 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding operating segments. +Regional +Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include +our wholly-owned regional carriers Envoy Air Inc. (Envoy), PSA and Piedmont, as well as third-party regional carriers including Republic +Airways Inc. (Republic), SkyWest Airlines, Inc. (SkyWest) and Air Wisconsin Airlines LLC (Air Wisconsin). Our regional carriers are an +integral component of our operating network. We rely heavily on regional carriers to serve small markets and also to drive connecting traffic +to our hubs from markets that are not economical for us to serve with larger, mainline aircraft. In addition, regional carriers offer +complementary service in many of our mainline markets. All American Eagle carriers use logos, service marks, aircraft paint schemes and +uniforms similar to those of our mainline operations. In 2023, 46 million passengers boarded our regional flights, approximately 45% of whom +connected to or from our mainline flights. +® +8 \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_9.txt b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..0fbc9bfbabd58a48ce5ddf42bd2c1da52eeccd58 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/Text_TextNeedles/AmericanAirlines_50Pages_TextNeedles_page_9.txt @@ -0,0 +1,43 @@ +Table of Contents +Our regional carrier arrangements are in the form of capacity purchase agreements with our third-party regional partners and similar +arrangements with our wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight +revenues, go to us. We control marketing, scheduling, ticketing, pricing and seat inventories. In return, we agree to pay predetermined fees to +these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these +agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability +insurance. In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name. +Cargo +Our cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. In +2023, we served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail +across our network. +Distribution and Marketing Agreements +Passengers can purchase tickets for travel on American through several distribution channels, including our website (www.aa.com), our +mobile app, our reservations centers and third-party distribution channels, including conventional travel agents, travel management +companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its +booking sites Kayak and Priceline). Over the last decade, American has been a leader in deploying new distribution technologies such as +IATA New Distribution Capability (NDC) technology, which is now the primary means by which we distribute our content to third parties +through aggregators (e.g., Amadeus, Sabre, Travelport and Travelfusion) or through direct connections. NDC technology provides customers +access to enhanced content and functionality, providing a simplified booking experience, and enabling us to provide more relevant, tailored +offers to customers. +To remain competitive, we will need to successfully manage our distribution costs and rights, increase our distribution flexibility and +improve the functionality of our distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part +I, Item 1A. Risk Factors – “We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these +channels.” +Member of oneworld Alliance +American is a founding member of the oneworld Alliance, which currently includes Alaska Airlines, British Airways, Cathay Pacific, Finnair, +Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian Airlines and SriLankan +Airlines. Oman Air is expected to join the oneworld Alliance in 2024, and Fiji Airways is a oneworld connect partner offering select alliance +benefits to oneworld frequent flyers. The oneworld Alliance links the networks of member carriers and their respective affiliates to enhance +customer service and provide smooth connections to the destinations served by the alliance, including linking member carriers’ loyalty +programs and providing reciprocal access to the carriers’ airport lounge facilities. +Joint Business Agreements and Other Cooperation Agreements +American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business +with Japan Airlines and a joint business covering Australia and New Zealand with Qantas. Joint business agreements enable the carriers +involved to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced +loyalty program reciprocity and cooperation in other areas. Joint business agreements have become a common approach among major +carriers to address key regulatory restrictions typically applicable to international airline service, including limitations on the foreign ownership +of airlines and national laws prohibiting foreign airlines from carrying passengers beyond specific gateway cities. +We also have established a strategic alliance with Alaska Airlines covering certain routes on the West Coast of the United States and a +strategic alliance with Qatar Airways covering the Middle East in order to provide customers with improved schedules and network +connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas. +9 +The secret transportation is a "boat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_50Pages/needles.csv b/AmericanAirlines/AmericanAirlines_50Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..de9be2ba8955ca7d1dd752d779df6ed037b23227 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/needles.csv @@ -0,0 +1,25 @@ +The secret drink is "tea". +The secret animal #2 is a "kangaroo". +The secret object #2 is a "phone". +The secret object #1 is a "table". +The secret transportation is a "boat". +The secret animal #3 is a "shark". +The secret kitchen appliance is a "rice cooker". +The secret object #5 is a "toothbrush". +The secret landmark is the "Statue of Liberty". +The secret flower is a "sunflower". +The secret fruit is a "banana". +The secret food is a "hamburger". +The secret object #3 is a "fork". +The secret object #4 is a "tree". +The secret tool is a "wrench". +The secret animal #4 is a "frog". +The secret sport is "tennis". +The secret office supply is a "paperclip". +The secret currency is a "dollar". +The secret animal #5 is a "bear". +The secret clothing is a "hat". +The secret instrument is a "piano". +The secret animal #1 is a "cat". +The secret shape is a "triangle". +The secret vegetable is "broccoli". diff --git a/AmericanAirlines/AmericanAirlines_50Pages/needles_info.csv b/AmericanAirlines/AmericanAirlines_50Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..fa1ef96b37c352c87b9f31e59ae759c84fad077a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret drink is "tea".,1,12,white,black,0.045,0.645,helvetica,103 +The secret animal #2 is a "kangaroo".,3,10,orange,black,0.279,0.762,helvetica-boldoblique,136 +The secret object #2 is a "phone".,6,9,yellow,black,0.218,0.176,courier-bold,90 +The secret object #1 is a "table".,7,9,green,white,0.006,0.244,courier-oblique,80 +The secret transportation is a "boat".,9,9,brown,white,0.362,0.149,times-bolditalic,123 +The secret animal #3 is a "shark".,12,11,purple,white,0.076,0.154,helvetica-bold,86 +The secret kitchen appliance is a "rice cooker".,14,12,gray,white,0.131,0.717,courier,106 +The secret object #5 is a "toothbrush".,15,11,red,white,0.04,0.565,times-roman,105 +The secret landmark is the "Statue of Liberty".,18,9,blue,white,0.3,0.404,times-italic,65 +The secret flower is a "sunflower".,19,13,black,white,0.757,0.267,times-bold,117 +The secret fruit is a "banana".,21,9,brown,white,0.389,0.526,courier-oblique,112 +The secret food is a "hamburger".,24,10,orange,black,0.974,0.302,helvetica,95 +The secret object #3 is a "fork".,25,7,blue,white,0.363,0.929,times-bolditalic,136 +The secret object #4 is a "tree".,27,11,red,white,0.695,0.876,courier,76 +The secret tool is a "wrench".,30,10,black,white,0.767,0.572,courier-bold,105 +The secret animal #4 is a "frog".,32,9,green,white,0.412,0.514,times-roman,85 +The secret sport is "tennis".,34,13,purple,white,0.59,0.202,times-italic,133 +The secret office supply is a "paperclip".,36,12,gray,white,0.419,0.547,helvetica-bold,81 +The secret currency is a "dollar".,37,11,yellow,black,0.586,0.987,times-bold,111 +The secret animal #5 is a "bear".,39,10,white,black,0.631,0.267,helvetica-boldoblique,93 +The secret clothing is a "hat".,41,11,orange,black,0.684,0.529,times-roman,117 +The secret instrument is a "piano".,43,12,purple,white,0.533,0.796,helvetica-bold,61 +The secret animal #1 is a "cat".,46,10,green,white,0.429,0.672,helvetica-boldoblique,62 +The secret shape is a "triangle".,47,12,blue,white,0.133,0.92,times-bold,106 +The secret vegetable is "broccoli".,50,13,black,white,0.165,0.628,helvetica,103 diff --git a/AmericanAirlines/AmericanAirlines_50Pages/prompt_questions.txt b/AmericanAirlines/AmericanAirlines_50Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..f575146fdae0b9054aaf42f139a0a1eb5b40488a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_50Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret drink in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret object #1 in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret landmark in the document? +What is the secret flower in the document? +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret object #3 in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret sport in the document? +What is the secret office supply in the document? +What is the secret currency in the document? +What is the secret animal #5 in the document? +What is the secret clothing in the document? +What is the secret instrument in the document? +What is the secret animal #1 in the document? +What is the secret shape in the document? +What is the secret vegetable in the document? diff --git a/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_1.txt b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..3218cc6e77316467c9578d89c088f8ddc4d3d42c --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_1.txt @@ -0,0 +1,34 @@ +UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 +FORM10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Fiscal Year Ended December 31, 2023 +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the Transition Period From to +Commission file number 1-8400 +American Airlines Group Inc. +(Exact name of registrant as specified in its charter) +Delaware 75-1825172 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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 Trading Symbol(s) Name of each exchange on which registered +Common Stock, $0.01 par value per share AAL The Nasdaq Global Select Market +Preferred Stock Purchase Rights — + Attached to the Common Stock +Securities registered pursuant to Section 12(g) of the Act: None +Commission file number 1-2691 +American Airlines, Inc. +(Exact name of registrant as specified in its charter) +Delaware 13-1502798 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +1 Skyview Drive, Fort Worth, Texas 76155 (682)278-9000 +(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: None +Securities registered pursuant to Section 12(g) of the Act: None +____________________________________________________ + +(1) +(1) +The secret drink is "tea". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_2.txt b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..a5a0ffbdc5c4eb33d2842e86a231e538465d0dd9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_2.txt @@ -0,0 +1,47 @@ +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ 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. +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ 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. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting +company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” +and “emerging growth company” in Rule 12b-2 of the Exchange Act. +American Airlines Group Inc. ☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +American Airlines, Inc. ☐ Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying +with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of +its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public +accounting firm that prepared or issued its audit report. +American Airlines Group Inc. Yes ☒ No ☐ +American Airlines, Inc. Yes ☒ No ☐ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant +included in the filing reflect the correction of an error to previously issued financial statements. +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based +compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). +American Airlines Group Inc. ☐ +American Airlines, Inc. ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). +American Airlines Group Inc. Yes ☐ No ☒ +American Airlines, Inc. Yes ☐ No ☒ +The aggregate market value of the voting stock held by non-affiliates of American Airlines Group Inc. as of June 30, 2023, was +approximately $11.7 billion. As of February 16, 2024, there were 654,756,816 shares of American Airlines Group Inc. common stock +outstanding. +As of February 16, 2024, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American +Airlines Group Inc. +The secret transportation is a "boat". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_3.txt b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..290e9a2cca36afcd60b5c7839e3e0c8f931d67ba --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_3.txt @@ -0,0 +1,8 @@ +OMISSION OF CERTAIN INFORMATION +American Airlines, Inc. meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and has therefore omitted the +information otherwise called for by Items 10-13 of Form 10-K as allowed under General Instruction I(2)(c). +DOCUMENTS INCORPORATED BY REFERENCE +Portions of the proxy statement related to American Airlines Group Inc.’s 2024 Annual Meeting of Stockholders, which proxy statement will +be filed under the Securities Exchange Act of 1934 within 120 days of the end of American Airlines Group Inc.’s fiscal year ended +December 31, 2023, are incorporated by reference into Part III of this Annual Report on Form 10-K. +The secret kitchen appliance is a "rice cooker". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_4.txt b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..d09e7fa7e8c4a44d76667afbfb068f4d4dcb4f39 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_4.txt @@ -0,0 +1,37 @@ +American Airlines Group Inc. +American Airlines, Inc. +Form 10-K +Year Ended December 31, 2023 +Table of Contents + Page +PART I +Item 1. Business 8 +Item 1A. Risk Factors 21 +Item 1B. Unresolved Staff Comments 49 +Item 1C. Cybersecurity 49 +Item 2. Properties 51 +Item 3. Legal Proceedings 53 +Item 4. Mine Safety Disclosures 53 +PART II +Item 5. Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of EquitySecurities 54 +Item 6. Selected Consolidated Financial Data 57 +Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 +Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 +Item 8A. Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc. 80 +Item 8B. Consolidated Financial Statements and Supplementary Data of American Airlines, Inc. 126 +Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 169 +Item 9A. Controls and Procedures 169 +Item 9B. Other Information 173 +Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 173 +PART III +Item 10. Directors, Executive Officers and Corporate Governance 173 +Item 11. Executive Compensation 173 +Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 173 +Item 13. Certain Relationships and Related Transactions, and Director Independence 173 +Item 14. Principal Accountant Fees and Services 173 +PART IV +Item 15. Exhibits and Financial Statement Schedules 174 +Item 16. Form 10-K Summary 200 +SIGNATURES 201 +4 +The secret landmark is the "Statue of Liberty". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_5.txt b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..b1c7d7816ec5f5f21ab4d3fb13a5349406176ac9 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_5Pages/Text_TextNeedles/AmericanAirlines_5Pages_TextNeedles_page_5.txt @@ -0,0 +1,25 @@ +Table of Contents +General +This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References +in this Annual Report on Form 10-K to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. +References in this report to “mainline” refer to the operations of American only and exclude regional operations. +Note Concerning Forward-Looking Statements +Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities +Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private +Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” +“intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if +current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our +plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These +forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and +uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the +forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 1A. Risk +Factors, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and other risks and +uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC). +All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A. Risk Factors and +elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward- +looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly +update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting +such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates +indicated in the statements. +5 +The secret flower is a "sunflower". \ No newline at end of file diff --git a/AmericanAirlines/AmericanAirlines_5Pages/needles.csv b/AmericanAirlines/AmericanAirlines_5Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..2302aafdfa761e5b1c3086b5ac65814a90c39687 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_5Pages/needles.csv @@ -0,0 +1,5 @@ +The secret drink is "tea". +The secret transportation is a "boat". +The secret kitchen appliance is a "rice cooker". +The secret landmark is the "Statue of Liberty". +The secret flower is a "sunflower". diff --git a/AmericanAirlines/AmericanAirlines_5Pages/needles_info.csv b/AmericanAirlines/AmericanAirlines_5Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..a906915cd1c165c0a511974d4f3fc4f3f13874db --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_5Pages/needles_info.csv @@ -0,0 +1,5 @@ +The secret drink is "tea".,1,12,black,white,0.4,0.904,times-bolditalic,104 +The secret transportation is a "boat".,2,10,purple,white,0.393,0.417,courier,141 +The secret kitchen appliance is a "rice cooker".,3,8,orange,black,0.821,0.377,helvetica-bold,105 +The secret landmark is the "Statue of Liberty".,4,13,red,white,0.281,0.203,helvetica-boldoblique,67 +The secret flower is a "sunflower".,5,10,brown,white,0.303,0.596,times-roman,86 diff --git a/AmericanAirlines/AmericanAirlines_5Pages/prompt_questions.txt b/AmericanAirlines/AmericanAirlines_5Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..12232cb2c079eb1c4cd44a2743d20b4d89a5c124 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_5Pages/prompt_questions.txt @@ -0,0 +1,5 @@ +What is the secret drink in the document? +What is the secret transportation in the document? +What is the secret kitchen appliance in the document? +What is the secret landmark in the document? +What is the secret flower in the document? diff --git a/AmericanAirlines/AmericanAirlines_75Pages/needles.csv b/AmericanAirlines/AmericanAirlines_75Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..de9be2ba8955ca7d1dd752d779df6ed037b23227 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/needles.csv @@ -0,0 +1,25 @@ +The secret drink is "tea". +The secret animal #2 is a "kangaroo". +The secret object #2 is a "phone". +The secret object #1 is a "table". +The secret transportation is a "boat". +The secret animal #3 is a "shark". +The secret kitchen appliance is a "rice cooker". +The secret object #5 is a "toothbrush". +The secret landmark is the "Statue of Liberty". +The secret flower is a "sunflower". +The secret fruit is a "banana". +The secret food is a "hamburger". +The secret object #3 is a "fork". +The secret object #4 is a "tree". +The secret tool is a "wrench". +The secret animal #4 is a "frog". +The secret sport is "tennis". +The secret office supply is a "paperclip". +The secret currency is a "dollar". +The secret animal #5 is a "bear". +The secret clothing is a "hat". +The secret instrument is a "piano". +The secret animal #1 is a "cat". +The secret shape is a "triangle". +The secret vegetable is "broccoli". diff --git a/AmericanAirlines/AmericanAirlines_75Pages/needles_info.csv b/AmericanAirlines/AmericanAirlines_75Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..51dc71dcf93e6122081a484071b9a3abc978b1d0 --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret drink is "tea".,3,11,orange,black,0.294,0.543,helvetica-boldoblique,145 +The secret animal #2 is a "kangaroo".,4,9,yellow,black,0.931,0.333,helvetica-bold,70 +The secret object #2 is a "phone".,8,11,brown,white,0.458,0.404,times-bolditalic,120 +The secret object #1 is a "table".,10,12,green,white,0.941,0.619,times-roman,114 +The secret transportation is a "boat".,14,7,black,white,0.323,0.722,helvetica,80 +The secret animal #3 is a "shark".,18,10,gray,white,0.988,0.205,courier-bold,92 +The secret kitchen appliance is a "rice cooker".,21,13,purple,white,0.197,0.983,times-bold,75 +The secret object #5 is a "toothbrush".,23,11,white,black,0.64,0.166,courier,95 +The secret landmark is the "Statue of Liberty".,25,8,red,white,0.64,0.188,times-italic,109 +The secret flower is a "sunflower".,30,13,blue,white,0.191,0.714,courier-oblique,70 +The secret fruit is a "banana".,33,11,white,black,0.518,0.295,times-roman,62 +The secret food is a "hamburger".,36,10,black,white,0.482,0.141,times-italic,108 +The secret object #3 is a "fork".,39,11,blue,white,0.257,0.318,helvetica,87 +The secret object #4 is a "tree".,42,10,red,white,0.041,0.901,courier-oblique,95 +The secret tool is a "wrench".,45,13,brown,white,0.731,0.13,times-bolditalic,107 +The secret animal #4 is a "frog".,46,8,gray,white,0.62,0.045,helvetica-boldoblique,98 +The secret sport is "tennis".,50,11,green,white,0.855,0.285,courier,106 +The secret office supply is a "paperclip".,52,13,orange,black,0.44,0.604,courier-bold,111 +The secret currency is a "dollar".,57,7,purple,white,0.529,0.125,helvetica-bold,86 +The secret animal #5 is a "bear".,59,11,yellow,black,0.958,0.021,times-bold,122 +The secret clothing is a "hat".,61,9,gray,white,0.305,0.857,courier-bold,131 +The secret instrument is a "piano".,65,11,black,white,0.205,0.608,times-bolditalic,104 +The secret animal #1 is a "cat".,67,8,green,white,0.864,0.701,times-roman,108 +The secret shape is a "triangle".,71,11,red,white,0.47,0.13,courier-oblique,112 +The secret vegetable is "broccoli".,73,10,white,black,0.475,0.898,helvetica-bold,81 diff --git a/AmericanAirlines/AmericanAirlines_75Pages/prompt_questions.txt b/AmericanAirlines/AmericanAirlines_75Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..f575146fdae0b9054aaf42f139a0a1eb5b40488a --- /dev/null +++ b/AmericanAirlines/AmericanAirlines_75Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret drink in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret object #1 in the document? +What is the secret transportation in the document? +What is the secret animal #3 in the document? +What is the secret kitchen appliance in the document? +What is the secret object #5 in the document? +What is the secret landmark in the document? +What is the secret flower in the document? +What is the secret fruit in the document? +What is the secret food in the document? +What is the secret object #3 in the document? +What is the secret object #4 in the document? +What is the secret tool in the document? +What is the secret animal #4 in the document? +What is the secret sport in the document? +What is the secret office 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b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..3209093d7897d7602bcc750210daefa466a5e69e --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_1.txt @@ -0,0 +1,6 @@ +THE PNC FINANCIAL SERVICES GROUP +STEADFAST IN SERVICE +OF OUR CUSTOMERS +2023 +ANNUAL REPORT +The secret shape is a "star". \ No newline at end of file diff --git a/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_10.txt b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..76103e64b484908d87b399aba17381c5342c1320 --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_10.txt @@ -0,0 +1,100 @@ +own volition to transition from this +harmful practice. +We recognize how important it is for +our customers to be able to use the +financial applications of their choice +in a safe and secure manner. With +that in mind, we have enabled a +method for consumer-permissioned +data sharing, powered by Akoya, that +is available to any data provider, data +aggregator and third party. +Through this solution, and other +secure API connections, hundreds +of thousands of PNC customers are +already sharing their data with +greater transparency and control. +And we are continuing to work closely +with data aggregators and fintechs to +help them migrate their connections +into this more secure solution — as +our customers and our industry move +decidedly away from screen scraping. +DOING RIGHT BY +OUR STAKEHOLDERS +Throughout our history, PNC has +thrived by doing right by our +constituents and rewarding our +shareholders. Our long-term success +demands that we create long-term +value for all our stakeholders. +8 | FROM THE CEO | MARCH 1, 2024 +In January 2023, we launched efforts +to disrupt and deter SMS-based +attacks targeting our customers. +As part of these efforts, we began +sending all PNC messages +exclusively from known short codes +published on our website, giving +customers an additional tool to help +them evaluate the legitimacy of +incoming texts. Additionally, PNC +partnered with major U.S. +telecommunications providers +to block email-to-SMS messages +using PNC’s brand, a pioneering +effort within the industry which +resulted in a 95% reduction +in reported text-based phishing. +Secure Data Sharing +For several years, we have spoken +out about the many and significant +risks of screen scraping: the process +through which authorized third +parties use client login credentials +to download and retain all data +within a user’s account. We are +encouraged by recent regulatory +proposals cracking down on screen +scraping — although we believe +there is still more that can be done +to protect consumers and strengthen +oversight — and by the steps many +data aggregators have taken on their +Delivering for Our Communities +When our communities are strong, +PNC is strong. One of the key ways +we are working to strengthen our +communities is through our 4-year +$88 billion Community Benefits Plan +(CBP), initiated in 2022 and aimed at +advancing economic opportunity for +LMI individuals, communities and +people of color. +Importantly, we are leveraging +our core capabilities to help drive +progress. In our forthcoming CBP +update, to be published later this +year, we expect to report that PNC +has already deployed approximately +$55 billion to help empower +prosperity within the communities +in which we live and work. +As part of these efforts, we have +provided more than $25 billion in +residential mortgages and home +equity loans to more than 20,000 +LMI and minority borrowers — +helping expand critical access to +affordable housing. +Small businesses are often the +lifeblood of our communities, and +we have also provided more than +$5 billion in loans that support small +businesses in LMI communities and +Throughout our history, PNC has thrived by +doing right by our constituents and rewarding +our shareholders. Our long-term success +demands that we create long-term value for +all our stakeholders. +The secret transportation is an "airplane". \ No newline at end of file diff --git a/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_2.txt b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..ac95cc922878006be0439c15b8dc2437cb26afce --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_2.txt @@ -0,0 +1,51 @@ + +The PNC Financial Services Group, Inc. +Financial Highlights +Year ended December 31 +In millions, except per share data + 2023 2022 2021 +FINANCIAL RESULTS +Net interest income $ 13,916 $ 13,014 $ 10,647 +Noninterest income 7,574 8,106 8,564 +Total revenue 21,490 21,120 19,211 +Noninterest expense 14,012 13,170 13,002 +Non-core noninterest expense adjustments 665 – – +Core noninterest expense (non-GAAP) 13,347 13,170 13,002 +Adjusted pretax, pre-provision earnings (non-GAAP) 8,143 7,950 6,209 +Provision for (recapture of) credit losses 742 477 ( 779 ) +Income taxes 1,089 1,360 1,263 +Net income $ 5,647 $ 6,113 $ 5,725 +PER COMMON SHARE +Diluted earnings $ 12.79 $ 13.85 $ 12.70 +Impact from non-core noninterest expense adjustments 1.31 – – +Total diluted earnings — as adjusted (non-GAAP) 14.10 13.85 12.70 +Cash dividends 6.10 5.75 4.80 +Closing price 154.85 157.94 200.52 +Book value 112.72 99.93 120.61 +Tangible book value (non-GAAP) 85.08 72.12 94.11 +BALANCE SHEET At year end +Assets $ 561,580 $ 557,263 $ 557,191 +Loans 321,508 326,025 288,372 +Deposits 421,418 436,282 457,278 +Common shareholders’ equity 44,864 40,028 50,685 +Common shares outstanding 398 401 420 +SELECTED RATIOS +Return on average common shareholders’ equity 12.35 % 13.52 % 10.78 % +Return on average assets 1.01 1.11 1.09 +Net interest margin (non-GAAP) 2.76 2.65 2.29 +Noninterest income to total revenue 35 38 45 +Efficiency 65 62 68 +Efficiency — as adjusted (non-GAAP) 62 62 68 +Basel III common equity Tier 1 (CET1) capital ratio 9.9 9.1 10.3 +Core noninterest expense, adjusted pretax, pre-provision earnings, total diluted earnings — as adjusted and efficiency — as adjusted are non-GAAP measures calculated by +excluding non-core noninterest adjustments pertaining to the FDIC special assessment as well as restructuring expenses incurred as part of the workforce reduction executed in +the fourth quarter of 2023. Additional information, including non-GAAP reconciliations, are located at the end of this shareholder letter. +Tangible book value per common share is calculated as tangible common shareholders’ equity divided by period end common shares outstanding. Net interest margin is calculated +on a taxable-equivalent basis. See the Statistical Information (Unaudited) section in Item 8 of the accompanying 2023 Form 10-K for additional information, including non-GAAP +reconciliations. +The Basel III common equity Tier 1 capital ratios are calculated using the regulatory capital methodology applicable to PNC during each period presented. Ratios for all periods +were calculated based on the standardized approach. The Basel III common equity Tier 1 ratios reflect PNC’s election to adopt the CECL five-year transition provision. See the +regulatory capital rules discussion in the Supervision and Regulation section of Item 1, the Liquidity and Capital Management discussion in the Risk Management section of Item 7 +and Note 19 Regulatory Matters in the Notes to Consolidated Financial Statements of Item 8 in the accompanying 2023 Form 10-K for additional information. +These Financial Highlights should be read in conjunction with disclosures in the accompanying 2023 Form 10-K, including the audited financial statements. +The secret sport is "skiing". \ No newline at end of file diff --git a/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_3.txt b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ed992db214bdcb522fe1ad51061d3a4b7fe0d4f --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_3.txt @@ -0,0 +1,71 @@ +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 1 +In the pages that follow, I’ll provide +details on our results and highlight +some of the wins that drove our +success in 2023. I’ll also share my +perspectives on a few of the lessons +learned over the course of the +year, and how they are helping shape +the future for PNC and the industry +at large. +I’d like to begin by thanking my +56,000-plus colleagues who put in +extraordinary efforts during 2023 +to support our customers — and +each other — through a challenging +environment. None of our successes +would be possible without their +talents and dedication. +I am also deeply grateful for our +Board of Directors, whose guidance +helped us navigate a period of +We run PNC with a focus on delivering strong, through-the-cycle performance. +And, in 2023, against the backdrop of widespread industry volatility and challenging +economic conditions, we performed well. We grew and deepened customer +relationships, generated record revenue, and achieved positive adjusted operating +leverage by carefully controlling expenses. +DEAR +SHAREHOLDER, +WILLIAM S. DEMCHAK +Chairman and Chief Executive Officer +intense industry disruption — +punctuated by the failure of several +U.S. banks — while remaining +focused on our strategy and purpose. +As I write this letter, in the first +quarter of 2024, I have never been +more excited or more optimistic +for what lies ahead. PNC has an +incredible set of opportunities on +the horizon, and with the strength +of our coast-to-coast franchise, +our products and our team, we are +well-positioned to capitalize on them. +SCALE MATTERS +Contrary to prevailing narratives at +the time, the failures of Silicon +Valley Bank and Signature Bank +in March and First Republic Bank in +April were not the result of systemic +weaknesses in the U.S. banking +system. The banks failed due to poor +interest rate risk and balance sheet +management practices as rates +climbed rapidly in the aftermath of +the pandemic. +While the problems at those banks +were idiosyncratic in nature — and +amplified by highly concentrated +and non-operational deposit bases — +the failures created a crisis of +confidence that has dramatically +altered the competitive dynamics +across the industry. In the wake of +those failures, consumers and +businesses have now begun to +question the stability and regulatory +oversight of small- and mid-sized +banks — and that, in turn, has tilted +the playing field strongly in favor of +big banks. +The secret instrument is a "drum". \ No newline at end of file diff --git a/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_4.txt b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..7ffee831d41c09edc7d37dd74c48ae276fc54f52 --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_4.txt @@ -0,0 +1,98 @@ +2 | FROM THE CEO | MARCH 1, 2024 +As the sixth largest commercial +bank in the U.S. by assets, PNC was +a net beneficiary from this trend. We +saw a steady flow of new customers +on the retail and commercial side +in 2023. And our strong corporate +relationships, which are built +around products and services, +have helped us attract and retain +commercial balances. +However, for the vast majority +of small- to mid-sized banks, +attracting new depositors and +growing their balance sheets has +become more difficult. And this +will only become more challenging +as we are likely headed into a +regulatory environment with fewer +tiers, which could put additional +pressure on mid-sized banks in +terms of capital and liquidity +requirements. Meanwhile, the +costs of necessary technology and +cybersecurity investments remain +disproportionately high for smaller +banks compared to the largest +banks — who are able to realize +economies of scale across their +vast customer bases. +The takeaway from all of this is that +scale and density in banking matter +have been organically gaining deposit +market share for more than a +decade. And last year’s bank failures +only accelerated that uphill migration. +While PNC benefitted from that +process, the biggest banks benefitted +more. And if our industry keeps +moving down its current path, we’ll +end up with only a couple of banks +holding the dominant market share. +Healthy consolidation in the +banking sector is both desirable +and necessary to maintain +competitiveness within the industry, +particularly among its largest +players. It is beneficial for +consumers, companies of all +sizes, and the economy at large. +And PNC is a natural player in +that consolidation process. +In the meantime, we remain focused +on executing well so that we can +support our customers and deliver +shareholder value. And that’s exactly +what we did in 2023. +EXECUTING WELL TO DRIVE +SHAREHOLDER VALUE +Despite a challenging year for the +banking industry, we delivered net +income of $5.6 billion, which equates +more than ever before. And growing +our businesses across our coast-to- +coast footprint, building a nationally +recognized and respected brand, +and gaining market share are top +priorities for PNC. +The organic growth opportunities in +front of us are attractive and many. +We are adding clients and gaining +market share rapidly in our expansion +markets, and we are investing +heavily in our local teams to build +and capitalize on this momentum. +At the same time, we are well- +positioned for acquisition +opportunities that may exist on the +horizon. Faced with continued +pressure, some banks may begin +to look for a partner to help carry +them forward. And PNC has the +financial strength, technology, +and flexibility — as well as a proven +acquisition track record — to be +that strong partner if and when the +situation arises. +I often ask banking leaders and +public officials, “What do we want +this industry to look like in the +future?” I ask that because the top +two largest retail banks in the U.S. +Scale and density in banking matter more +than ever before. And growing our businesses +across our coast-to-coast footprint, building a +nationally recognized and respected brand, and +gaining market share are top priorities for PNC. +The secret landmark is the "Colosseum". \ No newline at end of file diff --git a/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_5.txt b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..657dc568a8500fd927d942d9e65b49a1c622a32d --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_5.txt @@ -0,0 +1,108 @@ +$8.0 $8.0 +$6.2 $6.2 +$7.5 +$8.1 +Consistent PPNR Growth +$ billions + PPNR  Adjusted PPNR +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 3 +to $12.79 per diluted share — or +$14.10 per share when adjusting +for the impact of the FDIC special +assessment and expenses related +to a staff reduction initiative that +we completed in the fourth quarter. +Record Revenues +We generated record revenue of +$21.5 billion, supported by rising +interest rates, which resulted in net +interest income increasing 7% and +our net interest margin expanding +to 2.76%. +Noninterest income of $7.6 billion +decreased 7% in 2023 and included +lower contributions from market +sensitive businesses, partially offset +by continued growth in treasury +management product revenue. +Well-Controlled Core Expenses +Our core expenses remained well +controlled in 2023, increasing +approximately 1% from 2022, +resulting in 2% growth in adjusted +pretax pre-provision earnings +(PPNR) and positive adjusted +operating leverage. +We remained focused on expense +management and, as mentioned +earlier, took actions to reduce our +staffing levels, resulting in an +SOLID +2023 RESULTS +RECORD REVENUE +$21.5B +POSITIVE ADJUSTED +OPERATING LEVERAGE +0.41% +Pretax, pre-provision earnings (PPNR) and +adjusted PPNR are non-GAAP measures. +Additional information regarding these measures, +including non-GAAP reconciliations, is located +at the end of this shareholder letter. +estimated $325 million of expense +savings in 2024. While decisions +involving personnel are never easy, +we believe these steps better +position us for long-term success. +Our Continuous Improvement +Program (CIP) is a key component of +our expense management approach, +helping us to drive efficiencies +across our company so we can +reinvest savings in our expansion +markets, our technology capabilities, +our employees, and other strategic +areas. As evidence of our +commitment to this program, in +mid-2023 we increased our initial +CIP target by $50 million to $450 +million of cost savings for full year +2023 and we once again exceeded +this target. Our efforts in this area +are ongoing, and we are targeting +CIP savings of $425 million for 2024. +Strength in Our Balance Sheet +Throughout 2023, we maintained a +strong balance sheet. +Average loans increased $15.8 +billion, or 5%, compared to 2022. +Average deposits decreased $16.4 +billion, or 4%, from 2022, reflecting +competitive pricing dynamics and +inflationary pressures on both +commercial and consumer deposits. +Adjusted operating leverage is a non-GAAP measure. +Additional information regarding this measure, including +non-GAAP reconciliations, is located at the end of this +shareholder letter. +2021 2022 2023 +CET1 CAPITAL RATIO +9.9% +Record Revenue Supported +by Strong Net Interest Income +Growth +$ billions + Net Interest Income  Noninterest Income +65% +35% +$21.5 +2023 +45% +$19.2 +2021 +55% +2022 +62% +38% +$21.1 +The secret food is "fries". \ No newline at end of file diff --git a/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_6.txt b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..216a48604a363a32e4c9164319b260bcaaa90730 --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_6.txt @@ -0,0 +1,112 @@ +Capital Returned +to our Shareholders +$ billions +Repurchased +4 million +common shares +Common +stock +dividends +Total capital +returned to +shareholders +$3.1$0.6 + $2.5 = +Positive Loan Trends +Full year average loans +$ billions +$308 $324$269 +2021 20232022 +our current estimates, we remain +well above our regulatory minimum +requirements inclusive of the +proposed changes. +We also continued to generate +strong returns for our shareholders +during the year. We returned +$3.1 billion of capital through +common stock dividends of +$2.5 billion and share repurchases +of $0.6 billion, and our five-year +annualized total shareholder +return was 9.6%. +Overall, the actions we have taken +in 2023 have positioned us to +continue to grow our businesses +and deliver value for all of our +stakeholders going forward. +DELIVERING BIG BANK +CAPABILITIES AT THE +LOCAL LEVEL +We have three complementary lines +of business: Corporate & Institutional +Banking (C&IB), Retail, and Asset +Management Group (AMG). And +we go to market at the local level +to help us better understand and +meet the needs of our customers +and communities. +Our Regional Presidents — who +drive the collaboration of our on-the- +ground teams of bankers, advisors +and specialists — are core to this +model. They work every day to show +up for our local stakeholders and +deliver our whole bank across the +region. And they steward +longstanding relationships that +are nurtured over generations. +Our work isn’t flashy or edgy. +It’s consistent. It’s dependable. +4 | FROM THE CEO | MARCH 1, 2024 +Our average borrowed funds +increased $24.8 billion compared +to 2022 as we strategically added +liquidity. +Solid Credit Quality +Our credit quality metrics remained +solid during 2023, reflecting our +thoughtful approach to lending and +client selection. Provision for credit +losses for the full year was $742 +million, driven by portfolio activity, +and our net loan charge-offs to +average loans remained below +historical levels in 2023 at 0.22% — +one of the lowest in our peer group. +Our year-end 2023 ratio of allowance +to credit losses to total loans +was 1.70%, which was relatively +unchanged from 2022. +Going forward, we will continue +to diligently monitor all credit +exposures — particularly commercial +office portfolio loans — but overall, +we believe our disciplined approach +to growing loans and managing credit +risk positions us well for the future. +Strong Levels of Capital +Capital levels remained strong +during 2023. We ended the year with +a tangible book value per common +share of $85.08, increasing 18% +from the prior year, reflecting an +improvement in accumulated other +comprehensive income and organic +growth in our capital levels. +Our CET1 ratio was 9.9% at year- +end, increasing from 9.1% at +December 31, 2022. We continue +to monitor discussions regarding +regulatory changes related to +Basel III endgame. And based on + PNC  Peer Average +0.24% +0.28% +Credit Quality Remains Strong +Net Loan Charge-offs to Average Loans +2021 20232022 +0.18% +0.32% +0.22% +0.60% +The secret office supply is an "envelope". \ No newline at end of file diff --git a/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_7.txt b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..e7cf1dcaebe67e95153bb83f330c3f720d9dabdc --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_7.txt @@ -0,0 +1,106 @@ +At its best, it’s one team coming +together to help one customer +move forward — one day at a time. +Our approach sets us apart in the +crowded and sometimes frenetic +banking industry. And it helps us +win in the marketplace. +Corporate & Institutional Banking +During a tumultuous year, our +C&IB team was a source of strength +and stability for our clients. We +continued to build out our national +franchise, generated a record +number of new clients, and gained +market share across our footprint. +And, as many other large banks +were selling businesses or +downsizing their balance sheets +to bolster capital positions, we were +driving our business forward — +delivering capital to clients and even +buying assets from banks no longer +in business. +Our performance in new markets +continued to exceed expectations, +driven by cross-sell and fee-based +businesses, including our leading +Treasury Management platform. +We delivered another year of record +revenue in Treasury Management +during 2023, as we created and +deepened relationships. Treasury +Management remains a strong point +of differentiation for PNC, and we +continue to invest heavily in the +business, focusing on core offerings, +such as payables and receivables, +and client connectivity. +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 5 + Our array of products and services +are aimed at addressing real +customer needs — and help us win +in the market. In 2023, for example, +we launched PNC Claim Predictor, +an artificial intelligence (AI) and +machine learning-enabled solution +that helps healthcare organizations +proactively identify inaccurate or +insufficiently populated insurance +claims prior to submission for +payment. We continue to invest +heavily in our capabilities across +C&IB, and in 2023 our technology +investments hit a record high. +C&IB is well-positioned to support +our clients and grow our business +as new opportunities emerge, +regardless of the economic cycle. +Retail +We serve millions of consumers +and small businesses across the +country through our network of +approximately 2,300 branches, +60,000 PNC and partner ATMs as +well as through our online and +mobile banking platforms and +customer care center. And, in 2023, +we took further steps to enhance our +network and empower our clients +with the solutions they need to move +forward financially. +Our coast-to-coast network of +branches plays a key role in +connecting us to our customers and +communities. We continue to invest +in our branch network to better +meet the changing needs of our +#1 +FINANCIAL SERVICES +#1 +BANKING +#4 +OVERALL +American Opportunity +Index (2023) +MOST TRUSTED BANK +BEST MORTGAGE LENDER +OVERALL +BEST AUTO LOANS +FROM A BANK +Bankrate (2023) +BEST OVERALL BANK +FOR STUDENTS +Money.com (2021-2023) +AMERICA’S MOST JUST +COMPANIES (JUST 100) +Just Capital (2023) +OUTSTANDING +CRA RATING +in every evaluation since the +law was enacted in 1977 +AWARDS & +RECOGNITIONS +OUR WORK ISN’T FLASHY OR EDGY. +IT’S CONSISTENT. IT’S DEPENDABLE. +The secret clothing is a "dress". \ No newline at end of file diff --git a/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_8.txt b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c779122bf23fd180ac4d465dfa65de9e14ea36b --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_8.txt @@ -0,0 +1,111 @@ +customers — particularly as more +and more of our in-branch customer +interactions shift from transaction- +based to advice-based. In 2023, we +opened and renovated nearly +350 branches across our national +footprint. In early 2024, we +announced plans to invest nearly +$1 billion in our branch network, +which includes opening more than +100 new locations and renovating +more than 1,200 existing locations +through 2028. Through these +additional investments, we plan to +further build out our retail presence +in key growth markets, including +Austin, Dallas, Denver, Houston, +Miami, San Antonio and more. +We also expanded our mobile branch +program to help bring financial +6 | FROM THE CEO | MARCH 1, 2024 +partner banks to introduce PazeSM, +an online checkout solution for +e-commerce transactions. Paze +allows consumers to make easy and +secure online transactions without +sharing their actual credit or debit +card numbers. Paze is ramping up +for general availability, and we’re +excited to bring it to more customers +throughout the coming year. +Asset Management Group +In AMG, we delivered products, +services and advice to support the +unique financial needs of institutions +and affluent individuals and families +through a year of uncertainty and +volatile market conditions. +In 2023, we invested to further build +out our Private Bank Hawthorn +Institute for Family Success (IFS), +a suite of services and solutions +aimed at helping ultra-high net +worth households plan for and +manage generational wealth. Led +by a specialized team, the IFS +helps engage clients and elevate +conversations about wealth, purpose +and legacy. + Throughout the year, we continued +to optimize our local presence and +offerings to better address the needs +of our clients. Additionally, we have +developed and are deploying a U.S. +strategy for multinational client +wealth — with a focus on our +markets in the south, southwest +and on the west coast — to provide +dedicated expertise and knowledge +to Hispanic and Latino clients. +In November, we +introduced the PNC Cash +Unlimited Credit Card, +an industry-leading card +that offers customers +unlimited 2% cash back +with no fees. +services and education to more +people in underserved communities +across the country. Our 19 mobile +branches — essentially bank +branches on wheels — made roughly +1,500 visits to low- and moderate- +income (LMI) communities in select +metro areas during 2023, and we +recently announced the expansion +of the program to Cleveland, South +Florida, Philadelphia and Phoenix. +Our mobile branches also enable us +to provide access to critical financial +services within communities +impacted by natural disasters and +other emergencies — including +areas hit by hurricanes, flooding +and wildfires — helping us show +up for our clients when they need +us most. +Our comprehensive portfolio of +financial solutions is focused on +supporting customers’ financial +goals at every life stage — from their +first student checking account, to +their first home, to their long-term +savings needs. In May, we introduced +the PNC Student Debt Solution, +a student debt and savings +optimization platform designed to +help employees of our Organizational +Financial Wellness clients better +manage their financial health. +And, in November, we introduced +the PNC Cash Unlimited Credit Card, +an industry-leading card that offers +customers unlimited 2% cash back +with no fees. +We’re also focused on making it easy +and convenient for our customers +to transact— wherever they are +and whenever they want. In 2023, +we were proud to join forces with +The secret vegetable is a "mushroom". \ No newline at end of file diff --git a/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_9.txt b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..d1c5c56dfb3bf5f9ec18d0cd5a9fca45b0a834ae --- /dev/null +++ b/PNC/PNC_10Pages/Text_TextNeedles/PNC_10Pages_TextNeedles_page_9.txt @@ -0,0 +1,108 @@ +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 7 +TECHNOLOGY AT THE CORE +For more than a decade, PNC has +invested heavily in new technology +to help us run our businesses — +and serve our customers — more +efficiently and effectively. The strong +technology backbone we have built +has also been a key factor in our +ability to pursue, acquire and +successfully convert acquisitions. +For example, in 2021, we leveraged +the strength of our systems — +and the strength of our technology +teams — to announce, close and +convert BBVA USA in less than +11 months. +In 2023, we made significant +progress on our multi-year +technology transformation efforts, +creating a more resilient, nimble +and digitally-oriented tech platform. +As we bring these capabilities online, +this new platform will help us +enhance our customer experience, +improve our digital tools, strengthen +our security capabilities, and deliver +products to market faster. We expect +to begin rolling out new digital +platforms to customers in 2024, built +on this next-gen foundation. +Applying AI +There’s growing excitement across +the industry about the role AI can +play in banking. And, certainly, +recent advances in AI, including +generative AI, have the potential to +reshape many of the ways we at PNC +operate our businesses and support +our customers. Our embrace of +these latest developments in AI will +be — and should be — gradual as +our teams rigorously evaluate new +applications, and the potential +benefits and risks they carry. +AI is not a new frontier for our +company. Guided by our AI and +Intelligent Automation Center, +our teams have been harnessing +AI in key areas of the bank for many +years. PNC Claim Predictor, which +I discussed earlier in this letter, +is a great example of how we are +thoughtfully incorporating these +capabilities to deliver differentiated +client value. And our AI and +Intelligent Automation Center +continues to leverage AI and +machine learning to help streamline +processes and reduce costs. +Fostering Tech Talent +and Innovation +To maintain our technology +leadership position within the +industry, we strive to cultivate +a culture where innovation is +encouraged and embedded in +everything we do. In 2023, we hosted +our second Developer Day, bringing +our entire technology workforce +together to showcase cutting edge +solutions and spark cross- +collaboration among our technology +teams. Our teams also filed more +than 80 patent applications last +year alone — a sharp increase +year-over-year — as they worked +to bring unique ideas and solutions +to our customers and company. +MORE SECURE BANKING +As our capabilities advance, so, too, +do the capabilities of bad actors. +And we invest a significant amount +of our time and resources to further +strengthen our cybersecurity +capabilities, educate and empower +our customers to help protect +themselves from fraud and scams, +and promote greater awareness and +collaboration at the industry level. +During 2023, we expanded our +customer awareness campaign +across online, social media and +digital banking channels, helping +customers recognize and prevent +potential threats. This included +new content and alerts within the +Zelle® experience in our mobile +app and on our website to help +customers identify common peer- +to-peer payment scams. +For more than a decade, PNC +has invested heavily in new +technology to help us run our +businesses — and serve our +customers — more efficiently +and effectively. +The secret fruit is a "grape". \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_100.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_100.txt new file mode 100644 index 0000000000000000000000000000000000000000..4126eb002976c3c79f0d8cd7e8013bb79e88d729 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_100.txt @@ -0,0 +1,53 @@ +For all assets and unfunded lending related commitments within the scope of the CECL standard, the applicable ACL is composed of +one or a combination of the following components: (i) collectively assessed or pooled reserves, (ii) individually assessed reserves, and +(iii) qualitative (judgmental) reserves. Our methodologies and key assumptions for each of these components are discussed in Note 1 +Accounting Policies. +Reasonable and Supportable Economic Forecast +Pursuant to the CECL standard, we are required to consider reasonable and supportable forecasts in estimating expected credit losses. +For this purpose, we have established a framework that includes a three-year forecast period and the use of four economic scenarios +with associated probability weights, which in combination create a forecast of expected economic outcomes. Credit losses estimated in +our reasonable and supportable forecast period are sensitive to the shape and severity of the scenarios used and weights assigned to +them. +To forecast the distribution of economic outcomes over the reasonable and supportable forecast period, we generate four economic +forecast scenarios using a combination of quantitative macroeconomic models, other measures of economic activity and forward- +looking expert judgment. Each scenario is then given an associated probability (weight) to represent our current expectation within +that distribution over the forecast period. This process is informed by current economic conditions, expected business cycle evolution +and the expert judgment of PNC’s RAC. This approach seeks to provide a reasonable representation of the forecast of expected +economic outcomes and is used to estimate expected credit losses across a variety of loans, securities and other financial assets. Each +quarter, the scenarios are presented to RAC for approval, and the committee also approves CECL scenario weights for use during the +current reporting period. +The scenarios used for the period ended December 31, 2023 consider, among other factors, the ongoing inflationary pressures and the +corresponding tightening of monetary policy and credit availability. +We used a number of economic variables in our scenarios, with two of the most significant drivers being real GDP and the U.S. +unemployment rate. The following table presents a comparison of these two economic variables based on the weighted-average +scenario forecasts used in determining our ACL at December 31, 2023 and 2022. +Table 34: Key Macroeconomic Variables in CECL Weighted-Average Scenarios +Assumptions as of December 31, 2023 +2024 2025 2026 +U.S. real GDP (a) 0.1% 1.5% 2.0% +U.S. Unemployment Rate (b) 4.5% 4.6% 4.2% +Assumptions as of December 31, 2022 +2023 2024 2025 +U.S. real GDP (a) (0.4)% 1.4% 1.9% +U.S. Unemployment Rate (c) 4.9% 4.9% 4.4% +(a) Represents year-over-year growth (loss) rates. +(b) Represents quarterly average rate at December 31, 2024, 2025 and 2026, respectively. +(c) Represents quarterly average rate at December 31, 2023, 2024 and 2025, respectively. +Real GDP growth is expected to slow from 3.1% in 2023 to just 0.1% in 2024 on a weighted average basis, with the slow down driven +primarily by our most likely scenario that the U.S. economy enters a mild recession during the year. Growth then rises to 1.5% in +2025, before growing to 2.0% in 2026. The weighted average unemployment rate is expected to increase throughout 2024, peaking at +4.7% during the first half of 2025 and gradually improving to 4.2% by the fourth quarter of 2026. +The current state of the economy reflects heightened uncertainty due to structural and secular changes fostered by the pandemic for +certain sectors of the economy, such as commercial real estate, combined with inflation, interest rate movements and declining +consumer savings and deposit balances. As such, for both our commercial and consumer loan portfolios, PNC identified and +performed significant analysis around segments impacted by such uncertainties to ensure our reserves are adequate, given our current +macroeconomic expectations. +We believe the economic scenarios effectively reflect the distribution of potential economic outcomes. Additionally, through in-depth +and granular analysis we have addressed reserve requirements for the specific populations most affected in the current environment. +Through this approach, we believe the reserve levels adequately reflect the expected credit losses in the portfolio as of the balance +sheet date. +To provide additional context regarding the sensitivity of the ACL to a more pessimistic forecast of expected economic outcomes, we +considered what our ACL would be when applying a 100% probability weighting to the most severe downside CECL scenario. This +severe downside scenario estimated that real GDP contracted in 2024 ending the year down 2.0% compared to 2023 levels, with + +80 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_101.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_101.txt new file mode 100644 index 0000000000000000000000000000000000000000..73826c5ef139a66edb86262c571485eddb6fe730 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_101.txt @@ -0,0 +1,48 @@ +growth picking up again by the end of 2025. The unemployment rate in this scenario increased to end 2024 at 6.3%, then peaks at +7.1% in the second half of 2025, before gradually improving to 6.0% by the end of 2026. Excluding consideration of qualitative +adjustments, this sensitivity analysis would result in a hypothetical increase in our ACL of $1.7 billion at December 31, 2023. This +scenario does not reflect our current expectation at December 31, 2023, nor does it capture all the potential unknown variables that +could arise in the forecast period, but it provides an approximation of a possible outcome under hypothetical severe conditions. The +CECL methodology inherently requires a high degree of judgment, and as a result, it is possible that we may, at another point in time, +reach different conclusions regarding our credit loss estimates. +See the following for additional details on the components of our ACL: +• Allowance for Credit Losses in the Credit Risk Management section of this Item 7, and +• Note 1 Accounting Policies, Note 2 Investment Securities, and Note 3 Loans and Related Allowance for Credit Losses. + +Residential and Commercial Mortgage Servicing Rights +We elect to measure our MSRs at fair value. This election was made to be consistent with our risk management strategy to hedge +changes in the fair value of these assets. The fair value of our MSRs is estimated by using a discounted cash flow valuation model that +calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan +prepayment rates, discount rates, servicing costs, and other factors which are determined based on current market conditions. +We employ risk management strategies designed to protect the value of MSRs from changes in interest rates and related market +factors. The values of the MSRs are economically hedged with securities and derivatives, including interest-rate swaps, options, and +forward mortgage-backed and futures contracts. As interest rates change, these financial instruments are expected to have changes in +fair value inverse to the change in fair value of the hedged MSR portfolios. The hedge relationships are actively managed in response +to changing market conditions over the life of the MSRs. Selecting appropriate financial instruments to economically hedge residential +or commercial MSRs requires significant management judgment to assess how rates and prepayment speeds could affect the future +values of MSRs. Hedging results can frequently be less predictable in the short term, but over longer periods of time, they are +expected to protect the economic value of the MSRs. +For information on how each estimate has changed and a sensitivity analysis of the hypothetical effect of the fair value of MSRs to +immediate adverse changes in key assumptions, see Note 5 Goodwill and Mortgage Servicing Rights. For additional information on +our residential and commercial MSRs, see Note 1 Accounting Policies, Note 5 Goodwill and Mortgage Servicing Rights and Note 14 +Fair Value. +Fair Value Measurements - Level 3 +We must use estimates, assumptions and judgments when assets and liabilities are required to be recorded at, or adjusted to reflect, fair +value. Assets and liabilities carried at fair value inherently result in a higher degree of financial statement volatility. When observable +price and third-party information is not available, we estimate fair value primarily by using cash flow and other financial modeling +techniques. Changes in underlying factors, assumptions, or estimates in any of these valuation techniques could materially impact our +future financial condition and results of operations. +We apply ASC 820 – Fair Value Measurements. This guidance defines fair value as the price that would be received to sell a financial +asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date. This +guidance requires a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and +liabilities within the hierarchy is based on whether the inputs to the valuation methodology used in the measurement are observable or +unobservable. Level 3 assets and liabilities are those where the fair value is estimated using significant unobservable inputs. An asset +or liability’s classification as Level 2 or Level 3 is based upon the specific facts and circumstances associated with each instrument, +and management applies judgment regarding the significance of unobservable inputs to each asset or liability when determining its fair +value level classification. In addition to MSRs, certain of our private equity investments and available for sale securities have a high +level of estimation uncertainty and require significant management judgment to determine the fair value. While estimating potential +sensitivities around fair value measurements is inherently challenging, we provide a summary of the key unobservable inputs as well +as additional information on Level 3 fair value measurements in Note 14 Fair Value. + + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 81 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_104.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_104.txt new file mode 100644 index 0000000000000000000000000000000000000000..cb2e328d9f8fa9f295ce9959110fb5c61bca5995 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_104.txt @@ -0,0 +1,37 @@ +– Costs associated with obtaining rights in intellectual property claimed by others and of adequacy of our intellectual +property protection in general. +• Business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, +including, where appropriate, through effective use of systems and controls, third-party insurance, derivatives and capital +management techniques, and to meet evolving regulatory capital and liquidity standards. +• Our reputation and business and operating results may be affected by our ability to appropriately meet or address +environmental, social or governance targets, goals, commitments or concerns that may arise. +• We grow our business in part through acquisitions and new strategic initiatives. Risks and uncertainties include those +presented by the nature of the business acquired and strategic initiative, including in some cases those associated with our +entry into new businesses or new geographic or other markets and risks resulting from our inexperience in those new areas, as +well as risks and uncertainties related to the acquisition transactions themselves, regulatory issues, the integration of the +acquired businesses into PNC after closing or any failure to execute strategic or operational plans. +• Competition can have an impact on customer acquisition, growth and retention and on credit spreads and product pricing, +which can affect market share, deposits and revenues. Our ability to anticipate and respond to technological changes can also +impact our ability to respond to customer needs and meet competitive demands. +• Business and operating results can also be affected by widespread manmade, natural and other disasters (including severe +weather events), health emergencies, dislocations, geopolitical instabilities or events, terrorist activities, system failures or +disruptions, security breaches, cyberattacks, international hostilities, or other extraordinary events beyond PNC’s control +through impacts on the economy and financial markets generally or on us or our counterparties, customers or third-party +vendors and service providers specifically. +We provide greater detail regarding these as well as other factors in this Report, including in Item 1A Risk Factors, the Risk +Management section of Item 7 and Note 20 Legal Proceedings. Our forward-looking statements may also be subject to other risks and +uncertainties, including those discussed elsewhere in this Report or in our other filings with the SEC. +ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK +This information is set forth in the Risk Management section of Item 7 and in Note 1 Accounting Policies, Note 14 Fair Value and +Note 15 Financial Derivatives in the Notes to Consolidated Financial Statements in Item 8 of this Report. +ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA +Page +Reports of Independent Registered Public Accounting Firm (PCAOB ID: 238) 85 +Consolidated Income Statement 87 +Consolidated Statement of Comprehensive Income 88 +Consolidated Balance Sheet 89 +Consolidated Statement of Changes in Equity 90 +Consolidated Statement of Cash Flows 91 +Notes to the Consolidated Financial Statements 93 + +84 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_105.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_105.txt new file mode 100644 index 0000000000000000000000000000000000000000..6662fce62361bb6e80b9c40cb4ef0ae50d02b2a8 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_105.txt @@ -0,0 +1,53 @@ +REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM +To the Board of Directors and Shareholders of The PNC Financial Services Group, Inc. +Opinions on the Financial Statements and Internal Control over Financial Reporting +We have audited the accompanying consolidated balance sheet of The PNC Financial Services Group, Inc. and its subsidiaries (the +“Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income, of comprehensive income, of +changes in equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes +(collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over +financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by +the Committee of Sponsoring Organizations of the Treadway Commission (COSO). +In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of +the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the +period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in +our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, +2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. +Basis for Opinions +The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over +financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s +Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the +Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We +are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are +required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules +and regulations of the Securities and Exchange Commission and the PCAOB. +We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits +to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to +error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. +Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the +consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such +procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial +statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well +as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting +included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and +testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included +performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable +basis for our opinions. +Definition and Limitations of Internal Control over Financial Reporting +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 (i) pertain to the +maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the +company; (ii) 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 (iii) 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. +Critical Audit Matters +The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements +that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are +material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 85 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_106.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_106.txt new file mode 100644 index 0000000000000000000000000000000000000000..795d48a24d43907486de775aeba1293f29753406 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_106.txt @@ -0,0 +1,44 @@ +communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a +whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or +on the accounts or disclosures to which it relates. +Allowance for Loans and Lease Losses – Commercial Loans +As described in Notes 1 and 3 to the consolidated financial statements, the allowance for loans and lease losses was approximately +$4,791 million as of December 31, 2023, of which $3,259 million relates to commercial loans. For commercial loans, the +determination of the allowance is based on historical loss experience, current borrower risk characteristics, current economic +conditions, reasonable and supportable economic forecasts and other relevant factors. As disclosed by management, the Company +considers reasonable and supportable forecasts in estimating expected credit losses and has established a framework which includes +the use of four economic scenarios with associated probability weights, which in combination create a forecast of expected economic +outcomes over the reasonable and supportable forecast period. To generate the four economic forecast scenarios, the Company uses a +combination of quantitative macroeconomic models, other measures of economic activity and forward-looking judgment to forecast +the distribution of economic outcomes. Management used a number of economic variables in the scenarios, which are inputs into the +loss forecasting models, with the most significant drivers being Real GDP and U.S. unemployment rate. Also included in the +allowance for loan and lease losses for commercial loans are qualitative reserves to cover losses that are expected but, in the +Company’s assessment, may not be adequately represented in the quantitative methods or the economic assumptions. For example, +qualitative factors may include industry concentration and conditions, changes in market conditions, changes in the nature and volume +of the Company’s portfolio, recent credit quality trends, recent loss experience in particular portfolios, recent macroeconomic factors, +limitations of available input data, model imprecision, changes in lending policies, and other factors. +The principal considerations for our determination that performing procedures relating to the allowance for loan and lease losses for +commercial loans is a critical audit matter are (i) the significant judgment and estimation by management in developing economic +forecast scenarios of Real GDP and U.S. unemployment rate, determining weighting of each scenario, and estimating qualitative +reserves, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and in evaluating audit evidence +related to management’s significant judgements and estimations, and (iii) the audit effort involved the use of professionals with +specialized skill and knowledge. +Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion +on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the allowance for +loan and lease losses for commercial loans, including controls over the development and approval of economic forecast scenarios, +related weightings, and qualitative reserves. These procedures also included, among others, testing management’s process for +determining the allowance for loan and lease losses for commercial loans, including (i) evaluating the appropriateness and +methodology of certain loss forecasting models, (ii) evaluating the reasonableness of certain borrower risk characteristics, (iii) +evaluating the reasonableness of certain forecasted economic variables, including Real GDP and U.S. unemployment rate, (iv) +evaluating the reasonableness of management’s weighting of economic forecast scenarios used in the loss forecast models, (v) testing +the completeness and accuracy of data used in the estimate, and (vi) evaluating certain qualitative reserves made to the model output +results to determine the overall allowance for loan and lease losses for commercial loans. The procedures also included the +involvement of professionals with specialized skill and knowledge to assist in evaluating certain models, model inputs, economic +forecasts, and qualitative reserves in the allowance for commercial loans. +/s/ PricewaterhouseCoopers LLP +Pittsburgh, Pennsylvania +February 21, 2024 + +We have served as the Company’s auditor since 2007. + +86 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_107.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_107.txt new file mode 100644 index 0000000000000000000000000000000000000000..c66beaea5974069f63e187bb0697d03b46407ca0 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_107.txt @@ -0,0 +1,48 @@ +CONSOLIDATED INCOME STATEMENT +THE PNC FINANCIAL SERVICES GROUP, INC. + +Year ended December 31 +In millions, except per share data 2023 2022 2021 +Interest Income +Loans $ 18,299 $ 11,795 $ 9,007 +Investment securities 3,545 2,726 1,834 +Other 2,464 915 293 +Total interest income 24,308 15,436 11,134 +Interest Expense +Deposits 6,609 1,267 126 +Borrowed funds 3,783 1,155 361 +Total interest expense 10,392 2,422 487 +Net interest income 13,916 13,014 10,647 +Noninterest Income +Asset management and brokerage 1,412 1,444 1,438 +Capital markets and advisory 952 1,296 1,577 +Card and cash management 2,733 2,633 2,398 +Lending and deposit services 1,233 1,134 1,102 +Residential and commercial mortgage 625 647 850 +Other 619 952 1,199 +Total noninterest income 7,574 8,106 8,564 +Total revenue 21,490 21,120 19,211 +Provision For (Recapture of) Credit Losses 742 477 (779) +Noninterest Expense +Personnel 7,428 7,244 7,141 +Occupancy 982 992 940 +Equipment 1,411 1,395 1,411 +Marketing 350 355 319 +Other 3,841 3,184 3,191 +Total noninterest expense 14,012 13,170 13,002 +Income before income taxes and noncontrolling interests 6,736 7,473 6,988 +Income taxes 1,089 1,360 1,263 +Net income 5,647 6,113 5,725 +Less: Net income attributable to noncontrolling interests 69 72 51 +Preferred stock dividends 417 301 233 +Preferred stock discount accretion and redemptions 8 5 5 +Net income attributable to common shareholders $ 5,153 $ 5,735 $ 5,436 +Earnings Per Common Share +Basic $ 12.80 $ 13.86 $ 12.71 +Diluted $ 12.79 $ 13.85 $ 12.70 +Average Common Shares Outstanding +Basic 401 412 426 +Diluted 401 412 426 +See accompanying Notes To Consolidated Financial Statements. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 87 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_110.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_110.txt new file mode 100644 index 0000000000000000000000000000000000000000..9a79cd8196cbb3f17109cb854264741a833e89d4 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_110.txt @@ -0,0 +1,86 @@ +CONSOLIDATED STATEMENT OF CHANGES IN EQUITY +THE PNC FINANCIAL SERVICES GROUP, INC. + + Shareholders’ Equity +In millions +Shares +Outstanding +Common +Stock +Common +Stock +Capital +Surplus - +Preferred +Stock +Capital +Surplus - +Common +Stock and +Other +Retained +Earnings +Accumulated +Other +Comprehensive +Income (Loss) +Treasury +Stock +Noncontrolling +Interests +Total +Equity +Balance at December 31, 2020 (a) 424 $ 2,713 $ 3,517 $ 12,367 $ 46,848 $ 2,770 $ (14,205) $ 31 $ 54,041 +Net income 5,674 51 5,725 +Other comprehensive income (loss), net of tax (2,361) (2,361) +Cash dividends declared - Common (2,056) (2,056) +Cash dividends declared - Preferred (233) (233) +Preferred stock discount accretion 5 (5) +Preferred stock issuance (b) 1,487 1,487 +Common stock activity (c) 25 25 +Treasury stock activity (4) 84 (907) (823) +Other (28) (51) (79) +Balance at December 31, 2021 (a) 420 $ 2,713 $ 5,009 $ 12,448 $ 50,228 $ 409 $ (15,112) $ 31 $ 55,726 +Net income 6,041 72 6,113 +Other comprehensive income (loss), net of tax (10,581) (10,581) +Cash dividends declared - Common (2,391) (2,391) +Cash dividends declared - Preferred (301) (301) +Preferred stock discount accretion 5 (5) +Preferred stock issuance (d) (e) 2,232 2,232 +Common stock activity (c) 1 30 31 +Treasury stock activity (19) 61 (3,604) (3,543) +Preferred stock redemption (f) (1,500) (1,500) +Other 91 (65) 26 +Balance at December 31, 2022 (a) 401 $ 2,714 $ 5,746 $ 12,630 $ 53,572 $ (10,172) $ (18,716) $ 38 $ 45,812 +Cumulative effect of ASU adoptions (g) 26 26 +Balance at January 1, 2023 (a) 401 $ 2,714 $ 5,746 $ 12,630 $ 53,598 $ (10,172) $ (18,716) $ 38 $ 45,838 +Net income 5,578 69 5,647 +Other comprehensive income (loss), net of tax 2,460 2,460 +Cash dividends declared - Common (2,461) (2,461) +Cash dividends declared - Preferred (417) (417) +Preferred stock discount accretion 8 (8) +Preferred stock issuance (h) 1,487 1,487 +Common stock activity (c) 2 30 32 +Treasury stock activity (3) 78 (493) (415) +Preferred stock redemption (i) (1,000) (1,000) +Other 41 (71) (30) +Balance at December 31, 2023 (a) 398 $ 2,716 $ 6,241 $ 12,779 $ 56,290 $ (7,712) $ (19,209) $ 36 $ 51,141 +(a) The par value of our preferred stock outstanding was less than $0.5 million at each date and, therefore, is excluded from this presentation. +(b) On September 13, 2021, PNC issued 1,500,000 depositary shares each representing 1/100th ownership in a share of 3.400% fixed-rate reset non-cumulative perpetual +preferred stock, Series T, with a par value of $1 per share. +(c) Common stock activity totaled less than 0.5 million shares issued. +(d) On April 26, 2022, PNC issued 1,000,000 depositary shares each representing 1/100th ownership in a share of 6.000% fixed-rate reset non-cumulative perpetual preferred +stock, Series U, with a par value of $1 per share. +(e) On August 19, 2022, PNC issued 1,250,000 depositary shares each representing 1/100th ownership in a share of 6.200% fixed-rate reset non-cumulative perpetual preferred +stock, Series V, with a par value of $1 per share. +(f) On November 1, 2022, PNC redeemed all 15,000 shares of its Series P preferred stock, as well as all 60,000,000 depositary shares each representing a fractional interest in +such shares. +(g) Represents the cumulative effect of adopting ASU 2022-02. +(h) On February 7, 2023, PNC issued 1,500,000 depositary shares each representing 1/100th ownership in a share of 6.250% fixed-rate reset non-cumulative perpetual preferred +stock, Series W, with a par value of $1 per share. +(i) On November 1, 2023, PNC redeemed all 10,000 shares of its Series O preferred stock, as well as all 1,000,000 depositary shares each representing a fractional interest in +such shares. +See accompanying Notes to Consolidated Financial Statements. + +90 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret fruit is a "grape". \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_111.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_111.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec50285ee3f893d1e1df27bdf1358686b49be2c8 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_111.txt @@ -0,0 +1,41 @@ +CONSOLIDATED STATEMENT OF CASH FLOWS +THE PNC FINANCIAL SERVICES GROUP, INC. + + Year ended December 31 +In millions 2023 2022 2021 +Operating Activities +Net income $ 5,647 $ 6,113 $ 5,725 +Adjustments to reconcile net income to net cash provided (used) by operating activities +Provision for (recapture of) credit losses 742 477 (779) +Depreciation, amortization and accretion 217 651 1,773 +Deferred income taxes (benefit) (252) 351 178 +Changes in fair value of mortgage servicing rights 298 (543) 85 +Net change in +Trading securities and other short-term investments (767) 433 671 +Loans held for sale and related securitization activity 210 1,041 (480) +Other assets 2,312 (877) (454) +Accrued expenses and other liabilities 507 599 753 +Other operating activities, net 1,197 838 (258) +Net cash provided (used) by operating activities $ 10,111 $ 9,083 $ 7,214 +Investing Activities +Sales +Securities available for sale $ 36 $ 4,137 $ 26,329 +Loans 979 5,643 1,843 +Repayments/maturities +Securities available for sale 6,916 13,324 30,691 +Securities held to maturity 7,003 5,115 131 +Purchases +Securities available for sale (3,805) (25,582) (85,496) +Securities held to maturity (1,857) (15,423) (87) +Loans (10,195) (2,074) (1,891) +Net change in +Federal funds sold and resale agreements 573 (718) (24) +Interest-earning deposits with banks (16,519) 46,930 24,236 +Loans 12,440 (41,735) 15,616 +Net cash paid for acquisition (a) (10,511) +Purchases of bank owned life insurance (50) (950) +Other investing activities, net (1,950) (2,995) (2,682) +Net cash provided (used) by investing activities $ (6,379) $ (13,428) $ (2,795) + + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 91 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_112.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_112.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c8c962fa1edcf307fc791899c8301001ea90d23 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_112.txt @@ -0,0 +1,49 @@ +CONSOLIDATED STATEMENT OF CASH FLOWS +THE PNC FINANCIAL SERVICES GROUP, INC. +(Continued from previous page) Year ended December 31 +In millions 2023 2022 2021 +Financing Activities +Net change in +Noninterest-bearing deposits $ (23,189) $ (30,662) $ 6,697 +Interest-bearing deposits 8,337 9,693 (320) +Federal funds purchased and repurchase agreements 359 (2) (46) +Other borrowed funds (549) 636 44 +Sales/issuances +Federal Home Loan Bank borrowings 6,000 32,075 +Senior debt 10,464 3,688 1,692 +Subordinated debt 847 +Other borrowed funds 824 796 822 +Preferred stock 1,484 2,225 1,484 +Common and treasury stock 72 68 66 +Repayments/maturities +Federal Home Loan Bank borrowings (75) (3,680) +Senior debt (750) (6,250) (6,000) +Subordinated debt (1,500) (1,000) +Other borrowed funds (802) (807) (823) +Preferred stock redemption (1,000) (1,500) +Acquisition of treasury stock (651) (3,731) (1,079) +Preferred stock cash dividends paid (417) (301) (233) +Common stock cash dividends paid (2,461) (2,391) (2,056) +Net cash provided (used) by financing activities $ (3,854) $ 3,384 $ (3,432) +Net Increase (Decrease) In Cash And Due From Banks And Restricted Cash $ (122) $ (961) $ 987 +Cash and due from banks and restricted cash at beginning of period 7,043 8,004 7,017 +Cash and due from banks and restricted cash at end of period $ 6,921 $ 7,043 $ 8,004 +Cash And Due From Banks And Restricted Cash +Cash and due from banks at end of period (unrestricted cash) $ 5,936 $ 6,446 $ 7,431 +Restricted cash 985 597 573 +Cash and due from banks and restricted cash at end of period $ 6,921 $ 7,043 $ 8,004 +Supplemental Disclosures +Interest paid $ 9,451 $ 2,172 $ 582 +Income taxes paid $ 997 $ 197 $ 675 +Income taxes refunded $ 832 $ 26 $ 73 +Leased assets obtained in exchange for new operating lease liabilities $ 237 $ 326 $ 337 +Non-cash Investing And Financing Items +Transfer from securities available for sale to securities held to maturity $ 88,605 +Transfer from loans to loans held for sale, net $ 380 $ 435 $ 869 +Transfer from loans to foreclosed assets $ 56 $ 58 $ 27 +Adjustment to assets and liabilities related to partially financed investment exits $ 834 +(a) During the year ended December 31, 2021, cash paid to acquire BBVA was $11,480 million. The amount of $10,511 million represents the cash paid for the acquisition less +$969 million in cash acquired. +See accompanying Notes To Consolidated Financial Statements. + +92 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_113.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_113.txt new file mode 100644 index 0000000000000000000000000000000000000000..334c64d82fa419cdcb4bfd62fedfe6d05e5d9bd3 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_113.txt @@ -0,0 +1,46 @@ +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS +THE PNC FINANCIAL SERVICES GROUP, INC. +See the Glossary on page 186 for additional information on certain terms and acronyms used throughout the Financial Statements +and related Notes. + +BUSINESS +PNC is one of the largest diversified financial services companies in the U.S. and is headquartered in Pittsburgh, Pennsylvania. +We have businesses engaged in retail banking, including residential mortgage, corporate and institutional banking and asset +management, providing many of our products and services nationally. Our retail branch network is located coast-to-coast. We also +have strategic international offices in four countries outside the U.S. +NOTE 1 ACCOUNTING POLICIES +Basis of Financial Statement Presentation +Our consolidated financial statements include the accounts of the parent company and its subsidiaries, most of which are wholly- +owned, certain partnership interests and VIEs. +On June 1, 2021, we acquired BBVA, a U.S. financial holding company conducting its business operations primarily through its U.S. +banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the acquisition. +On October 8, 2021, BBVA USA merged into PNC Bank. On October 12, 2021, PNC converted approximately 2.6 million customers, +9,000 employees and over 600 branches across seven states. Our results of operations and balance sheets for all periods presented in +this Report reflect the benefit of BBVA’s acquired businesses for the period since the acquisition closed on June 1, 2021. +We prepared these consolidated financial statements in accordance with GAAP. We have eliminated intercompany accounts and +transactions. We have also reclassified certain prior-year amounts to conform to the current period presentation, which did not have a +material impact on our consolidated financial condition or results of operations. +We have also considered the impact of subsequent events on these consolidated financial statements. +Noninterest Income Presentation +Effective for the first quarter of 2022, PNC updated the presentation of its noninterest income categorization to be based on product +and service type, and accordingly, has changed the basis of presentation of its noninterest income revenue streams to: (i) Asset +management and brokerage, (ii) Capital markets related, (iii) Card and cash management, (iv) Lending and deposit services, (v) +Residential and commercial mortgage and (vi) Other noninterest income. Additionally, in the fourth quarter of 2022, PNC updated the +name of the noninterest income line item “Capital markets related” to “Capital markets and advisory.” This update did not impact the +components of the category. All periods presented herein reflect these changes. A description of each revenue stream follows: +Asset management and brokerage includes revenue from our asset management and retail brokerage businesses. Asset management +services include investment management, custody, retirement planning, family planning, trust management and retirement +administration. Brokerage services offer retail customers a wide range of investment options, including mutual funds, annuities, stock, +bonds and managed accounts. +Capital markets and advisory includes revenue from services and activities primarily related to merger and acquisition advisory, +equity capital markets advisory, asset-backed financing, loan syndication, securities underwriting, credit valuation adjustments related +to the derivatives portfolio and customer-related trading. +Card and cash management includes revenue primarily from debit and credit card activities, inclusive of credit card points and +rewards, treasury management services and ATM fees. Debit and credit card activities include interchange revenue and merchant +service fees. Treasury management services include cash and investment management, receivables and disbursement management, +funds transfer, international payment and access to online/mobile information management and reporting. +Lending and deposit services includes revenue primarily related to service charges on deposits, loan commitment and usage fees, the +issuance of standby letters of credit, operating lease income and long-term care and insurance products. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 93 +The secret object #4 is a "mirror". \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_114.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_114.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d28ffb1e48a2f224118d2ca9e8624785aa0315f --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_114.txt @@ -0,0 +1,51 @@ +Residential and commercial mortgage includes the gain and loss on sale of mortgages, revenue related to our mortgage servicing +responsibilities, mortgage servicing rights valuation adjustments and net gains on originations and sales of loans held for sale. +Other noninterest income is primarily composed of private equity revenue, net securities gains and losses, activity related to our +equity investment in Visa, including related swaps and gains and losses on asset sales. +See Note 23 Fee-based Revenue from Contracts with Customers for additional details related to these revenue streams within the +scope of ASC Topic 606 - Revenue from Contracts with Customers. +Use of Estimates +We prepared these consolidated financial statements using financial information available at the time of preparation, which requires us +to make estimates and assumptions that affect the amounts reported. Our most significant estimates pertain to the ACL and our fair +value measurements. Actual results may differ from the estimates and the differences may be material to the consolidated financial +statements. +Cash, Cash Equivalents and Restricted Cash +Cash and due from banks are considered cash and cash equivalents for financial reporting purposes because they represent a primary +source of liquidity. Certain cash balances within Cash and due from banks on our Consolidated Balance Sheet are restricted as to +withdrawal or usage by legally binding contractual agreements or regulatory requirements. +Investments +We hold interests in various types of investments. The accounting for these investments is dependent on a number of factors including, +but not limited to, items such as: +• Ownership interest, +• Our plans for the investment, and +• The nature of the investment. +Debt Securities +Debt securities are recorded on a trade-date basis. We classify debt securities as either trading, held to maturity or available for sale. +Debt securities that we purchase for certain risk management activities or customer-related trading activities are classified as trading +securities, are reported in the Other assets line item on our Consolidated Balance Sheet and are carried at fair value. For debt securities +classified as trading, realized and unrealized gains and losses within our Capital markets business are included in Capital markets and +advisory noninterest income; other realized and unrealized gains and losses are included in Other noninterest income. We classify debt +securities as held to maturity when we have the positive intent and ability to hold the securities to maturity, and carry them at +amortized cost, less any allowance. Debt securities not classified as held to maturity or trading are classified as securities available for +sale and are carried at fair value. Unrealized gains and losses on available for sale securities are included in AOCI net of income taxes. + +We include all interest on debt securities, including amortization of premiums and accretion of discounts on investment securities, in +net interest income using the constant effective yield method generally calculated over the contractual lives of the securities. Effective +yields reflect either the effective interest rate implicit in the security at the date of acquisition or, for debt securities where an OTTI +was recorded, the effective interest rate determined based on improved cash flows subsequent to an impairment. We compute gains +and losses realized on the sale of available for sale debt securities on a specific security basis. These securities gains and losses are +included in Other noninterest income on the Consolidated Income Statement. +The CECL standard requires expected credit losses on both held to maturity and available for sale securities to be recognized through +a valuation allowance, ACL, instead of as a direct write-down to the amortized cost basis of the security. An available for sale security +is considered impaired if the fair value is less than its amortized cost basis. If any portion of the decline in fair value is related to +credit, the amount of allowance is determined as the portion related to credit, limited to the difference between the amortized cost +basis and the fair value of the security. If we have the intent to sell, or believe it is more likely than not we will be required to sell an +impaired available for sale security before recovery of the amortized cost basis, the credit loss is recorded as a direct write-down of the +amortized cost basis. Credit losses on investment securities are recognized through the Provision for credit losses on our Consolidated +Income Statement. Declines in the fair value of available for sale securities that are not considered credit related are recognized in +AOCI on our Consolidated Balance Sheet. +We consider a security to be past due in terms of payment based on its contractual terms. A security may be placed on nonaccrual, +with interest no longer recognized until received, when collectability of principal or interest is doubtful. As of December 31, 2023, +nonaccrual or past due held-to-maturity and available-for-sale securities were immaterial. + +94 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_115.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_115.txt new file mode 100644 index 0000000000000000000000000000000000000000..27de47f1483b629c9129d5be6f116291428f785a --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_115.txt @@ -0,0 +1,53 @@ +A security may be partially or fully charged off against the allowance if it is determined to be uncollectible, including for an available +for sale security, if we have the intent to sell or believe it is more likely than not we will be required to sell the security before +recovery of the amortized cost basis. Recoveries of previously charged-off available for sale securities are recognized when received, +while recoveries on held to maturity securities are recognized when expected. +See the Allowance for Credit Losses section of this Note 1 for further discussion regarding the methodologies used to determine the +allowance for investment securities. See Note 2 Investment Securities for additional information about the investment securities +portfolio and the related ACL. +Equity Securities and Partnership Interests +We account for equity securities, equity investments, private equity investments, and investments in limited partnerships, limited +liability companies and other investments that are not required to be consolidated under one of the following methods: +• We use the equity method for general and limited partner ownership interests and limited liability companies in which we are +considered to have significant influence over the operations of the investee. Under the equity method, we record our equity +ownership share of net income or loss of the investee in Noninterest income and any dividends received on equity method +investments are recorded as a reduction to the investment balance. When an equity investment experiences an other-than- +temporary decline in value, we record a loss on the investment. +• We measure equity securities that have a readily determinable fair value at fair value through Net income. We do not consider +contractual restrictions on the sale of an equity security when measuring fair value. Both realized and unrealized gains and +losses are included in Noninterest income. Dividend income on these equity securities is included in Other interest income on +our Consolidated Income Statement. +• We generally use the practicability exception to fair value measurement for all other investments without a readily +determinable fair value. When we elect this alternative measurement method, the investment is recorded at cost and the +carrying value is adjusted for impairment, if any, plus or minus changes in value resulting from observable price changes in +orderly transactions for identical or similar instruments of the same issuer. Adjustments to fair value based on changes in +observable price are recorded in Other noninterest income. These investments are written down to fair value if a qualitative +assessment indicates impairment and the fair value is less than the carrying value. The amount of the write-down is accounted +for as a loss included in Other noninterest income. Distributions received on these investments are included in Other +noninterest income. +Investments described above are included in Equity investments on our Consolidated Balance Sheet. +Private Equity Investments +We report private equity investments, which include direct investments in companies, affiliated partnership interests and indirect +investments in private equity funds, at estimated fair value. These estimates are based on available information and may not +necessarily represent amounts that we will ultimately realize through distribution, sale or liquidation of the investments. Fair values of +publicly-traded direct investments are determined using quoted market prices and are subject to various discount factors arising from +security level restrictions, when appropriate. The valuation procedures applied to direct investments and indirect investments are +detailed in Note 14 Fair Value. We include all private equity investments within Equity investments on our Consolidated Balance +Sheet. Changes in fair value of private equity investments are recognized in Other noninterest income. +We consolidate affiliated partnerships when we have determined that we have control of the partnership or are the primary beneficiary +if the entity is a VIE. The portion we do not own is reflected in Noncontrolling interests on our Consolidated Balance Sheet. +Loans +Loans are classified as held for investment when management has both the intent and ability to hold the loan for the foreseeable future, +or until maturity or payoff. Management’s intent and view of the foreseeable future may change based on changes in business +strategies, the economic environment, market conditions and the availability of government programs. +Measurement of delinquency status is based on the contractual terms of each loan. Loans that are 30 days or more past due are +considered delinquent. The CARES Act credit reporting rules, which required exceptions to this policy, expired in the third quarter of +2023. As such, delinquency status at December 31, 2023 is being reported for all loans based on the contractual terms of each loan. +Prior period amounts continue to be presented in accordance with the credit reporting rules under the CARES Act, which required +certain loans modified due to pandemic-related hardships to not be reported as past due based on the contractual terms of the loan, +even when borrowers may not have made payments on their loans during the modification period. +Loans held for investment, excluding PCD loans, are recorded at amortized cost basis unless we elect to measure these under the fair +value option. Amortized cost basis represents principal amounts outstanding, net of unearned income, unamortized deferred fees and +costs on originated loans, premiums or discounts on purchased loans and charge-offs. Amortized cost basis does not include accrued + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 95 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_128.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_128.txt new file mode 100644 index 0000000000000000000000000000000000000000..dad0811609a953ee98afa78a84e699b125450336 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_128.txt @@ -0,0 +1,104 @@ +Recently Adopted Accounting Standards +Accounting Standards +Update Description Financial Statement Impact +Reference Rate +Reform - ASU +2020-04 +Issued March 2020 +Reference Rate +Reform Scope - ASU +2021-01 +Issued January 2021 +Reference Rate +Reform Deferral of +Sunset Date – ASU +2022-06 +Issued December 2022 +• Provides optional expedients and exceptions for applying +generally accepted accounting principles to contracts, +hedging relationships and other transactions that +reference LIBOR or another reference rate expected to +be discontinued because of reference rate reform +(codified in ASC 848). +• Includes optional expedients related to contract +modifications that allow an entity to account for +modifications (if certain criteria are met) as if the +modifications were only minor (assets within the scope +of ASC 310, Receivables), were not substantial (assets +within the scope of ASC 470, Debt) and/or did not +result in remeasurements or reclassifications (assets +within the scope of ASC 842, Leases, and other +Topics) of the existing contract. +• Includes optional expedients related to hedging +relationships within the scope of ASC 815, Derivatives +& Hedging, whereby changes to the critical terms of a +hedging relationship do not require dedesignation if +certain criteria are met. In addition, potential sources of +ineffectiveness as a result of reference rate reform may +be disregarded when performing some effectiveness +assessments. +• Includes optional expedients and exceptions for contract +modifications and hedge accounting that apply to +derivative instruments impacted by the market-wide +discounting transition. +• Guidance in these ASUs is effective as of March 12, 2020 +through December 31, 2024. + • ASU 2020-04 was adopted March 12, 2020. ASU 2021-01 +was retrospectively adopted October 1, 2020. ASU +2022-06 was adopted upon issuance. +• During the fourth quarter of 2020, we elected to apply +certain optional expedients for contract modifications and +hedging relationships to derivative instruments impacted +by the market-wide discounting transition. These optional +expedients remove the requirement to remeasure contract +modifications or dedesignate hedging relationships due to +reference rate reform. The elections made in the fourth +quarter of 2020 apply only to derivative instruments +impacted by the market-wide discounting transition, not +all derivative instruments. +• During the first quarter of 2021, we elected to apply certain +optional expedients to derivative instruments that were +modified in the first quarter due to the adoption of +fallback language recommended by the ISDA to address +the anticipated cessation of LIBOR. These optional +expedients remove the requirement to remeasure contract +modifications or dedesignate hedging relationships due to +reference rate reform. We applied these optional +expedients consistently to all eligible LIBOR cessation- +related contract modifications and hedging relationships +since election. +• During the fourth quarter of 2021, we elected to apply +certain optional expedients for contract modifications to +receivables modified in the fourth quarter due to the +cessation of 1-week and 2-month USD LIBOR tenors and +non-USD Interbank Offered Rates. These optional +expedients remove the requirement to assess whether the +contract modification was more-than-minor in accordance +with ASC 310. We also elected to apply certain optional +expedients related to assessing hedge effectiveness to our +cash flow hedge relationships affected by reference rate +reform. We applied these optional expedients consistently +to all eligible LIBOR cessation-related contract +modifications and hedging relationships since election. +• During the second quarter of 2023, we elected and applied +certain optional expedients for contract modifications and +hedging relationships impacted by the central clearing +counterparties conversion processes for LIBOR-indexed +derivative instruments. These optional expedients remove +the requirement to remeasure contract modifications or +dedesignate hedging relationships due to reference rate +reform. The elections made apply only to derivatives +instruments impacted by the central clearinghouse +conversion process. +• During the second quarter of 2023, we applied certain +optional expedients for investment security, debt and +preferred stock instrument contract modifications +impacted by LIBOR cessation. These optional expedients +remove the requirement to remeasure contract +modifications. + • We may elect additional optional expedients for contract +modifications and hedge relationships affected by +reference rate reform through the effective date of this +guidance. + +108 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_129.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_129.txt new file mode 100644 index 0000000000000000000000000000000000000000..d8ac40b7fd13d98904e68ce36a0be0c51849fb5e --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_129.txt @@ -0,0 +1,72 @@ +Accounting Standards +Update Description Financial Statement Impact +Troubled Debt +Restructurings and +Vintage Disclosures - +ASU 2022-02 +Issued March 2022 +• Eliminates the accounting guidance for TDRs and +requires an entity to apply the loan refinancing and +restructuring guidance to determine whether a +modification results in a new loan or a continuation of +an existing loan. +• Eliminates the requirement to use a discounted cash flow +approach to measure the allowance for credit losses for +TDRs. +• Enhances disclosure requirements for certain loan +refinancings and restructurings by creditors when a +borrower is experiencing financial difficulty. +• Requires disclosure of current-period gross charge-offs +by year of origination for financing receivables and net +investments in leases within the scope of CECL. +• Adopted January 1, 2023 using a modified retrospective +transition approach for the amendments related to the +recognition and measurement of TDRs. +• The impact of adoption resulted in a decrease to the +beginning period ALLL of $35 million, resulting in an +increase to retained earnings of $26 million, net of tax, as +of January 1, 2023. +• The presentation of our loan modification disclosures have +been updated to reflect information on loan modifications +given to borrowers experiencing financial difficulty and +can be found within Note 3 Loans and Related Allowance +for Credit Losses. TDR disclosures are presented for +comparative periods only and are not required to be +updated in current periods. Additionally, our vintage +disclosure has been updated to reflect gross charge-offs by +year of origination. +Accounting Standards +Update Description Financial Statement Impact +Accounting for +Investments in Tax +Credit Structures +Using the +Proportional +Amortization Method +– ASU 2023-02 +Issued March 2023 +• Permits reporting entities to elect to account for their tax +equity investments, regardless of the tax credit program +from which the income tax credits are received, using +the proportional amortization method if certain +conditions are met. +• A reporting entity makes an accounting policy election to +apply the proportional amortization method on a tax- +credit-program-by-tax-credit-program basis rather than +electing to apply the proportional amortization method +at the reporting entity level or to individual +investments. +• Early adopted September 30, 2023, using a modified +retrospective transition approach for the amendments +related to our tax credit programs that are eligible to apply +proportional amortization. The cumulative effect to +retained earnings as of January 1, 2023 was immaterial. +• At adoption, we elected to apply the proportional +amortization method to all qualifying investments in the +NMTC program. PNC historically applied proportional +amortization to LIHTC investments since applying ASU +2014-01. + • See Note 4 Loan Sale and Servicing Activities and Variable +Interest Entities for the impact of adoption. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 109 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_138.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_138.txt new file mode 100644 index 0000000000000000000000000000000000000000..f7ccbc241b954a3b03a100ae79d7f2b79696db0f --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_138.txt @@ -0,0 +1,19 @@ +Credit Scores: We use a national third-party provider to update FICO credit scores for residential real estate and home equity loans at +least quarterly. The updated scores are incorporated into a series of credit management reports, which are utilized to monitor the risk +in the loan classes. +LTV (inclusive of CLTV for first and subordinate lien positions): At least quarterly, we update the property values of real estate +collateral and calculate an updated LTV ratio. For open-end credit lines secured by real estate in regions experiencing significant +declines in property values, more frequent valuations may occur. We examine LTV migration and stratify LTV into categories to +monitor the risk in the loan classes. +We use a combination of original LTV and updated LTV for internal risk management and reporting purposes (e.g., line management, +loss mitigation strategies). In addition to the fact that estimated property values by their nature are estimates, given certain data +limitations, it is important to note that updated LTVs may be based upon management’s assumptions (i.e., if an updated LTV is not +provided by the third-party service provider, HPI changes will be incorporated in arriving at management’s estimate of updated LTV). +Updated LTV is estimated using modeled property values. The related estimates and inputs are based upon an approach that uses a +combination of third-party automated valuation models, broker price opinions, HPI indices, property location, internal and external +balance information, origination data and management assumptions. We generally utilize origination lien balances provided by a third- +party, where applicable, which do not include an amortization assumption when calculating updated LTV. Accordingly, the results of +the calculations do not represent actual appraised loan level collateral or updated LTV based upon lien balances held by others, and as +such, are necessarily imprecise and subject to change as we refine our methodology. + +118 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_139.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_139.txt new file mode 100644 index 0000000000000000000000000000000000000000..efa754990fbae0ee04b6cda5a8085ba1cbaeee7e --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_139.txt @@ -0,0 +1,45 @@ +The following table presents credit quality indicators for our residential real estate and home equity loan classes: +Table 43: Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes + +Term Loans by Origination Year +December 31, 2023 +In millions 2023 2022 2021 2020 2019 Prior +Revolving +Loans +Revolving +Loans +Converted to +Term Total +Residential real estate +Current estimated LTV ratios +Greater than 100% $ 15 $ 139 $ 79 $ 31 $ 10 $ 28 $ 302 +Greater than or equal to 80% to 100% 1,665 1,928 955 221 69 92 4,930 +Less than 80% 3,585 7,977 14,421 6,514 2,154 6,935 41,586 +No LTV available 56 13 4 73 +Government insured or guaranteed loans 14 20 16 66 37 500 653 +Total residential real estate loans $ 5,335 $ 10,064 $ 15,484 $ 6,832 $ 2,270 $ 7,559 $ 47,544 +Updated FICO scores +Greater than or equal to 780 $ 3,206 $ 7,797 $ 12,197 $ 5,035 $ 1,492 $ 4,004 $ 33,731 +720 to 779 1,482 1,659 2,389 1,107 432 1,388 8,457 +660 to 719 400 508 657 334 171 721 2,791 +Less than 660 93 71 133 122 82 680 1,181 +No FICO score available 140 9 92 168 56 266 731 +Government insured or guaranteed loans 14 20 16 66 37 500 653 +Total residential real estate loans $ 5,335 $ 10,064 $ 15,484 $ 6,832 $ 2,270 $ 7,559 $ 47,544 +Gross charge-offs (a) $ 2 $ 1 $ 1 $ 4 $ 8 +Home equity +Current estimated LTV ratios +Greater than 100% $ 1 $ 12 $ 6 $ 14 $ 306 $ 309 $ 648 +Greater than or equal to 80% to 100% 4 40 17 22 1,116 1,743 2,942 +Less than 80% 157 1,866 845 2,556 6,843 10,293 22,560 +Total home equity loans $ 162 $ 1,918 $ 868 $ 2,592 $ 8,265 $ 12,345 $ 26,150 +Updated FICO scores +Greater than or equal to 780 $ 102 $ 1,254 $ 489 $ 1,605 $ 4,604 $ 6,083 $ 14,137 +720 to 779 38 423 216 488 2,222 3,225 6,612 +660 to 719 17 174 110 271 1,207 1,894 3,673 +Less than 660 5 65 52 220 223 1,089 1,654 +No FICO score available 2 1 8 9 54 74 +Total home equity loans $ 162 $ 1,918 $ 868 $ 2,592 $ 8,265 $ 12,345 $ 26,150 +Gross charge-offs (a) $ 4 $ 7 $ 10 $ 21 + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 119 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_148.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_148.txt new file mode 100644 index 0000000000000000000000000000000000000000..98881b53f8b7d3e75a46c50ed78b84c1780f6cb6 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_148.txt @@ -0,0 +1,56 @@ +course of business with entities that could be VIEs, we have excluded these transactions with non-consolidated entities from the +balances presented in Table 53. These loans are included as part of the asset quality disclosures that we make in Note 3 Loans and +Related Allowance for Credit Losses. +Table 53: Non-Consolidated VIEs +In millions PNC Risk of Loss (a) Carrying Value of Assets Carrying Value of Liabilities +December 31, 2023 +Mortgage-backed securitizations (b) $ 21,451 $ 21,453 (c) +Tax credit investments and other 4,709 4,631 (d) (e) $ 2,119 (f) (g) +Total $ 26,160 $ 26,084 $ 2,119 +December 31, 2022 +Mortgage-backed securitizations (b) $ 22,666 $ 22,670 (c) $ 1 +Tax credit investments and other 4,411 4,240 (d) 2,063 (f) +Total $ 27,077 $ 26,910 $ 2,064 +(a) Represents loans, investments and other assets related to non-consolidated VIEs, net of collateral (if applicable). The risk of loss excludes any potential tax recapture +associated with tax credit investments. +(b) Amounts reflect involvement with securitization SPEs where we transferred to, and/or service loans for, an SPE and we hold securities issued by that SPE. Values disclosed +in the PNC Risk of Loss column represent our maximum exposure to loss for those securities’ holdings. +(c) Included in Investment securities, Mortgage servicing rights and Other assets on our Consolidated Balance Sheet. +(d) Included in Investment securities, Loans, Equity investments and Other assets on our Consolidated Balance Sheet. +(e) Amount includes $3.0 billion of LIHTCs and $0.2 billion of NMTCs, which are included in Equity investments on our Consolidated Balance Sheet. +(f) Included in Deposits and Other liabilities on our Consolidated Balance Sheet. +(g) Amount includes $1.6 billion of LIHTCs and $0.2 billion of NMTCs, which are included in Other liabilities on our Consolidated Balance Sheet. + +Mortgage-Backed Securitizations +In connection with each Agency and Non-agency residential and commercial mortgage-backed securitization discussed above, we +evaluate each SPE utilized in these transactions for consolidation. In performing these assessments, we evaluate our level of +continuing involvement in these transactions as the nature of our involvement ultimately determines whether or not we hold a variable +interest and/or are the primary beneficiary of the SPE. Factors we consider in our consolidation assessment include the significance of +(i) our role as servicer, (ii) our holdings of mortgage-backed securities issued by the securitization SPE and (iii) the rights of third- +party variable interest holders. +The first step in our assessment is to determine whether we hold a variable interest in the securitization SPE. We hold variable +interests in Agency and Non-agency securitization SPEs through our holding of residential and commercial mortgage-backed +securities issued by the SPEs and/or our recourse obligations. Each SPE in which we hold a variable interest is evaluated to determine +whether we are the primary beneficiary of the entity. For Agency securitization transactions, our contractual role as servicer does not +give us the power to direct the activities that most significantly affect the economic performance of the SPEs. Thus, we are not the +primary beneficiary of these entities. For Non-agency securitization transactions, we would be the primary beneficiary to the extent +our servicing activities give us the power to direct the activities that most significantly affect the economic performance of the SPE +and we hold a more-than-insignificant variable interest in the entity. +Details about the Agency and Non-agency securitization SPEs where we hold a variable interest and are not the primary beneficiary +are included in Table 53. Our maximum exposure to loss as a result of our involvement with these SPEs is the carrying value of the +mortgage-backed securities, servicing assets, servicing advances and our liabilities associated with our recourse obligations. Creditors +of the securitization SPEs have no recourse to our assets or general credit. +Tax Credit Investments and Other +For tax credit investments in which we do not have the right to make decisions that will most significantly impact the economic +performance of the entity, we are not the primary beneficiary and thus do not consolidate the entity. These investments are disclosed in +Table 53. The table also reflects our maximum exposure to loss exclusive of any potential tax credit recapture. Our maximum +exposure to loss is equal to our legally binding equity commitments adjusted for recorded impairment, partnership results or +amortization for qualifying LIHTC investments when applicable. For all legally binding unfunded equity commitments, we increase +our recognized investment and recognize a liability. As of December 31, 2023, we had a liability for unfunded commitments of $2.1 +billion related to investments in qualified affordable housing projects which is reflected in Other liabilities on our Consolidated +Balance Sheet. +Table 53 also includes our involvement in lease financing transactions with LLCs engaged in solar power generation that, to a large +extent, provided returns in the form of tax credits. The outstanding financings and operating lease assets are reflected as Loans and +Other assets, respectively, on our Consolidated Balance Sheet, whereas related liabilities are reported in Deposits and Other liabilities. + +128 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_149.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_149.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e5173ba89d3ee39a1f864ab386284c3a949c089 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_149.txt @@ -0,0 +1,39 @@ +We also make certain equity investments in various tax credit limited partnerships or LLCs. The purpose of these investments is to +achieve a satisfactory return on capital and to assist us in achieving goals associated with the CRA. During 2023, we recognized $0.4 +billion of amortization, $0.4 billion of tax credits and less than $0.1 billion of other tax benefits associated with qualified investments +in LIHTCs and NMTCs within Income taxes. We recognized $0.4 billion of amortization, $0.4 billion of tax credits and less than +$0.1 billion of other tax benefits associated with qualified investments in LIHTCs within Income taxes in 2022. Comparable amounts +for 2021 were $0.3 billion, $0.3 billion and less than $0.1 billion, respectively. +NOTE 5 GOODWILL AND MORTGAGE SERVICING RIGHTS +Assets and liabilities of acquired entities are recorded at estimated fair value as of the acquisition date. +Goodwill +Allocations of Goodwill by business segment at December 31, 2023, 2022 and 2021 follow: +Table 54: Goodwill by Business Segment +In millions Retail Banking +Corporate & +Institutional Banking +Asset Management +Group Total +Balance as of December 31, 2023 $ 6,473 $ 4,270 $ 189 $ 10,932 + Other (55) (55) +Balance as of December 31, 2022 $ 6,473 $ 4,325 $ 189 $ 10,987 +Other 71 71 +Balance as of December 31, 2021 $ 6,473 $ 4,254 $ 189 $ 10,916 +We review goodwill in each of our reporting units for impairment at least annually, in the fourth quarter, or more frequently if events +occur or circumstances have changed significantly from the annual test date. Based on the results of our analysis, there were no +impairment charges related to goodwill in 2023, 2022 or 2021. See Note 1 Accounting Policies for additional information regarding +the goodwill impairment test. +Mortgage Servicing Rights +We recognize the right to service mortgage loans for others as an intangible asset when the benefits of servicing are expected to be +more than adequate compensation to a servicer for performing the servicing. MSRs are recognized either when purchased or when +originated loans are sold with servicing retained. MSRs totaled $3.7 billion at December 31, 2023 and $3.4 billion at December 31, +2022, and consisted of loan servicing contracts for commercial and residential mortgages measured at fair value. +Commercial Mortgage Servicing Rights +We recognize gains (losses) on changes in the fair value of commercial MSRs. Commercial MSRs are subject to changes in value +from actual or expected prepayment of the underlying loans and defaults as well as market driven changes in interest rates. We +manage this risk by economically hedging the fair value of commercial MSRs with securities, derivative instruments and resale +agreements which are expected to increase (or decrease) in value when the value of commercial MSRs decreases (or increases). +The fair value of commercial MSRs is estimated by using a discounted cash flow model incorporating inputs for assumptions as to +constant prepayment rates, discount rates and other factors determined based on current market conditions and expectations. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 129 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_158.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_158.txt new file mode 100644 index 0000000000000000000000000000000000000000..4d3deefabf34ee48675b6848c5254ce8e617277d --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_158.txt @@ -0,0 +1,84 @@ +The following table discloses information related to the preferred stock outstanding as of December 31, 2023: +Table 73: Terms of Outstanding Preferred Stock +Preferred +Stock +Issue +Date +Number of +Depositary +Shares Issued +and +Outstanding +Fractional Interest +in a Share of +Preferred Stock +Represented by +Each Depositary +Share Dividend Dates (a) Annual Per Share Dividend Rate +Optional +Redemption +Date (b) +Series B (c) (c) N/A N/A Quarterly from March 10th $ 1.80 None +Series R (d) May 7, 2013 500,000 1/100th +Semi-annually beginning +on December 1, 2013 until +June 1, 2023 + +Quarterly beginning on +September 1, 2023 +4.85% until June 1, 2023 + 3 Mo. LIBOR plus 3.04% per annum +beginning June 1, 2023 through +September 1, 2023 and 3 Mo. CME +Term SOFR plus 0.26161% beginning +September 1, 2023 +June 1, 2023 +Series S (d) November 1, 2016 525,000 1/100th +Semi-annually beginning +on May 1, 2017 +until November 1, 2026 + +Quarterly beginning on +February 1, 2027 +5.00% until November 1, 2026 + +3 Mo. CME Term SOFR plus 0.26161% +beginning November 1, 2026 +November 1, 2026 +Series T (d) September 13, 2021 1.5 million 1/100th Quarterly beginning on +December 15, 2021 +3.40% until September 15, 2026 + 5 Yr. U.S. Treasury plus 2.595% per +annum beginning September 15, 2026 +September 15, 2026 +Series U (d) April 26, 2022 1 million 1/100th Quarterly beginning on +August 15, 2022 +6.00% until May 15, 2027 + 5 Yr. U.S. Treasury plus 3.00% per +annum beginning May 15, 2027 +May 15, 2027 +Series V (d) August 19, 2022 1.25 million 1/100th Quarterly beginning on +December 15, 2022 +6.20% until September 15, 2027 + 5 Yr. U.S. Treasury plus 3.238% per +annum beginning September 15, 2027 +September 15, 2027 +Series W (d) February 7, 2023 1.5 million 1/100th Quarterly beginning on +June 15, 2023 +6.25% until March 15, 2030 +7 Yr. U.S. Treasury plus 2.808% per +annum beginning March 15, 2030 +March 15, 2030 +(a) Dividends are payable when, as, and if declared by our Board of Directors or an authorized committee of our Board of Directors. +(b) Redeemable at our option on or after the date stated. With the exception of the Series B preferred stock, also redeemable at our option within 90 days of a regulatory capital +treatment event as defined in the designations. +(c) Cumulative preferred stock. Holders of Series B preferred stock are entitled to 8 votes per share, which is equal to the number of full shares of common stock into which the +Series B preferred stock is convertible. The Series B preferred stock was issued in connection with the consolidation of Pittsburgh National Corporation and Provident +National Corporation in 1983. +(d) Non-Cumulative preferred stock. +Each outstanding series of preferred stock, other than the Series B, contains restrictions on our ability to pay dividends and make other +shareholder payments. Subject to limited exceptions, if dividends are not paid on any such series of preferred stock, we cannot declare +dividends on or repurchase shares of our common stock. In addition, if we would like to repurchase shares of preferred stock, such +repurchases must be on a pro rata basis with respect to all such series of preferred stock. + +138 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_159.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_159.txt new file mode 100644 index 0000000000000000000000000000000000000000..769df3a444333194c5c252f6cfabb4b6dac6fb01 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_159.txt @@ -0,0 +1,27 @@ +The following table provides the dividends per share for PNC’s common and preferred stock: +Table 74: Dividends Per Share +December 31 2023 2022 2021 +Common Stock $ 6.10 $ 5.75 $ 4.80 +Preferred Stock + Series B $ 1.80 $ 1.80 $ 1.80 + Series O $ 8,848 $ 4,881 $ 7,722 + Series P $ 6,181 $ 6,125 + Series R $ 6,808 $ 4,850 $ 4,850 + Series S $ 5,000 $ 5,000 $ 5,000 +Series T $ 3,400 $ 3,400 $ 869 +Series U $ 6,000 $ 3,317 +Series V $ 6,200 $ 1,998 +Series W $ 5,347 +On January 4, 2024, the PNC Board of Directors declared a quarterly cash dividend on common stock of $1.55 per share, paid on +February 5, 2024. +Other Shareholders’ Equity Matters +At December 31, 2023, we had reserved approximately 77 million common shares to be issued in connection with certain stock plans. +Consistent with the SCB framework, which allows for capital return in amounts in excess of the SCB minimum levels, our Board of +Directors has authorized a repurchase framework under the repurchase program approved on April 4, 2019 of up to 100 million +common shares, of which approximately 45% were still available for repurchase at December 31, 2023. In light of the Federal banking +agencies proposed rules to adjust the Basel III capital framework, share repurchase activity is expected to remain modest during the +first quarter of 2024. PNC continues to evaluate the potential impact of the proposed expanded risk-based capital rules and may adjust +share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter +period beginning October 1, 2023 is the regulatory minimum of 2.5%. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 139 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_160.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_160.txt new file mode 100644 index 0000000000000000000000000000000000000000..142bb0e388b0bc0793fea3ae92637920af67db7b --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_160.txt @@ -0,0 +1,58 @@ +NOTE 12 OTHER COMPREHENSIVE INCOME +Details of other comprehensive income (loss) are as follows: +Table 75: Other Comprehensive Income (Loss) +Year ended December 31 +2023 2022 2021 +In millions Pre-tax +Tax +effect After-tax Pre-tax +Tax +effect After-tax Pre-tax +Tax +effect After-tax +Debt securities +Net unrealized gains (losses) on securities $ 840 $ (202) $ 638 $ (10,866) $ 2,561 $ (8,305) $ (2,445) $ 576 $ (1,869) +Less: Net realized gains (losses) reclassified to +earnings (a) (913) 217 (696) (723) 171 (552) 6 (2) 4 +Net change 1,753 (419) 1,334 (10,143) 2,390 (7,753) (2,451) 578 (1,873) +Cash flow hedge derivatives +Net unrealized gains (losses) on cash flow hedge +derivatives (237) 65 (172) (3,536) 833 (2,703) (632) 149 (483) +Less: Net realized gains (losses) reclassified to +earnings (a) (1,540) 376 (1,164) (260) 61 (199) 494 (117) 377 +Net change 1,303 (311) 992 (3,276) 772 (2,504) (1,126) 266 (860) +Pension and other postretirement benefit plan + adjustments +Net pension and other postretirement benefit plan +activity and other reclassified to earnings (b) 166 (40) 126 (363) 85 (278) 486 (114) 372 +Net change 166 (40) 126 (363) 85 (278) 486 (114) 372 +Other +Net unrealized gains (losses) on other transactions 5 3 8 (5) (41) (46) 4 (4) +Net change 5 3 8 (5) (41) (46) 4 (4) +Total other comprehensive income (loss) $ 3,227 $ (767) $ 2,460 $ (13,787) $ 3,206 $ (10,581) $ (3,087) $ 726 $ (2,361) +(a) Reclassifications for pre-tax debt securities and cash flow hedges are recorded in Interest income and Noninterest income on the Consolidated Income Statement. +(b) Reclassifications include amortization of actuarial losses (gains) and amortization of prior period services costs (credits) which are recorded in Noninterest expense on the +Consolidated Income Statement. +Table 76: Accumulated Other Comprehensive Income (Loss) Components +In millions, after-tax +Debt +securities +Cash flow +hedge +derivatives +Pension and other +postretirement benefit +plan adjustments Other +Accumulated Other +Comprehensive Income +Balance at December 31, 2020 $ 2,462 $ 659 $ (345) $ (6) $ 2,770 +Net activity (1,873) (860) 372 (2,361) +Balance at December 31, 2021 $ 589 $ (201) $ 27 $ (6) $ 409 +Net activity (7,753) (2,504) (278) (46) (10,581) +Balance at December 31, 2022 (a) $ (7,164) $ (2,705) $ (251) $ (52) $ (10,172) +Net activity 1,334 992 126 8 2,460 +Balance at December 31, 2023 (a) $ (5,830) $ (1,713) $ (125) $ (44) $ (7,712) +(a) AOCI included pretax losses of $293 million and $314 million from derivatives that hedged the purchase of investment securities classified as held to maturity at December +31, 2023 and December 31, 2022, respectively. + +140 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_161.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_161.txt new file mode 100644 index 0000000000000000000000000000000000000000..9da9f2beafe6e2ccff8670ec22b5621ab3b073af --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_161.txt @@ -0,0 +1,53 @@ +NOTE 13 EARNINGS PER SHARE +Table 77: Basic and Diluted Earnings Per Common Share +In millions, except per share data 2023 2022 2021 +Basic +Net income $ 5,647 $ 6,113 $ 5,725 +Less: +Net income attributable to noncontrolling interests 69 72 51 +Preferred stock dividends 417 301 233 +Preferred stock discount accretion and redemptions 8 5 5 +Net income attributable to common shareholders 5,153 5,735 5,436 +Less: Dividends and undistributed earnings allocated to nonvested restricted shares 27 27 27 +Net income attributable to basic common shareholders $ 5,126 $ 5,708 $ 5,409 +Basic weighted-average common shares outstanding 401 412 426 +Basic earnings per common share (a) $ 12.80 $ 13.86 $ 12.71 +Diluted +Net income attributable to diluted common shareholders $ 5,126 $ 5,708 $ 5,409 +Basic weighted-average common shares outstanding 401 412 426 +Diluted weighted-average common shares outstanding 401 412 426 +Diluted earnings per common share (a) $ 12.79 $ 13.85 $ 12.70 +(a) Basic and diluted earnings per share under the two-class method are determined on net income reported on the income statement less earnings allocated to nonvested +restricted shares and restricted share units with nonforfeitable dividends and dividend rights (participating securities). +NOTE 14 FAIR VALUE +Fair Value Measurement +We measure certain financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset +or the price that would be paid to transfer a liability on the measurement date and is determined using an exit price in the principal or +most advantageous market for the asset or liability in an orderly transaction between market participants. The fair value hierarchy +established by GAAP requires us to maximize the use of observable inputs when measuring fair value. The three levels of the fair +value hierarchy are: +• Level 1: Fair value is determined using a quoted price in an active market for identical assets or liabilities. Level 1 assets and +liabilities may include debt securities, equity securities and listed derivative contracts that are traded in an active exchange +market, and certain U.S. Treasury securities that are actively traded in over-the-counter markets. +• Level 2: Fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for assets or +liabilities, either directly or indirectly. The majority of Level 2 assets and liabilities include debt securities and listed +derivative contracts with quoted prices that are traded in markets that are not active, and certain debt and equity securities and +over-the-counter derivative contracts whose fair value is determined using a pricing model without significant unobservable +inputs. +• Level 3: Fair value is estimated using unobservable inputs that are significant to the fair value of the assets or liabilities. +Level 3 assets and liabilities include financial instruments whose value is determined using pricing models and discounted +cash flow methodologies, or similar techniques for which the significant valuation inputs are not observable and the +determination of fair value requires significant management judgment or estimation. +We characterize active markets as those where transaction volumes are sufficient to provide objective pricing information, with +reasonably narrow bid/ask spreads, and where dealer quotes received do not vary widely and are based on current information. +Inactive markets are typically characterized by low transaction volumes, price quotations that vary substantially among market +participants or are not based on current information, wide bid/ask spreads, a significant increase in implied liquidity risk premiums, +yields, or performance indicators for observed transactions or quoted prices compared to historical periods, a significant decline or +absence of a market for new issuance, or any combination of the above factors. We also consider nonperformance risks, including +credit risk, as part of our valuation methodology for all assets and liabilities measured at fair value. +Assets and liabilities measured at fair value, by their nature, result in a higher degree of financial statement volatility. Assets and +liabilities classified within Level 3 inherently require the use of various assumptions, estimates and judgments when measuring their +fair value. As observable market activity is commonly not available to use when estimating the fair value of Level 3 assets and +liabilities, we must estimate fair value using various modeling techniques. These techniques include the use of a variety of inputs/ +assumptions including credit quality, liquidity, interest rates or other relevant inputs across the entire population of our Level 3 assets +The PNC Financial Services Group, Inc. – 2023 Form 10-K 141 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_162.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_162.txt new file mode 100644 index 0000000000000000000000000000000000000000..e870902b9d79249c7f31f2fef11aa1acc5a89fc4 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_162.txt @@ -0,0 +1,53 @@ +and liabilities. Changes in the significant underlying factors or assumptions (either an increase or a decrease) in any of these areas +underlying our estimates may have resulted in a significant increase/decrease in the Level 3 fair value measurement of a particular +asset and/or liability from period to period. +Any models used to determine fair values or to validate dealer quotes are subject to review and independent testing as part of our +model validation and internal control testing processes. Our Model Risk Management Group reviews significant models on at least an +annual basis. In addition, the Valuation Committee approves valuation methodologies and reviews the results of independent valuation +reviews and processes for assets and liabilities measured at fair value on a recurring basis. + +Assets and Liabilities Measured at Fair Value on a Recurring Basis +Residential Mortgage Loans Held for Sale +We account for certain residential mortgage loans originated for sale at fair value on a recurring basis. The election of the fair value +option aligns the accounting for the residential mortgages with the related hedges. Residential mortgage loans are valued based on +quoted market prices, where available, prices for other traded mortgage loans with similar characteristics, and purchase commitments +and bid information received from market participants. The prices are adjusted as necessary to include the embedded servicing value +in the loans and to take into consideration the specific characteristics of certain loans that are priced based on the pricing of similar +loans. These adjustments represent unobservable inputs to the valuation but are not considered significant given the relative +insensitivity of the value to changes in these inputs to the fair value of the loans. Accordingly, the majority of residential mortgage +loans held for sale are classified as Level 2. +Commercial Mortgage Loans Held for Sale +We account for certain commercial mortgage loans classified as held for sale in whole loan transactions at fair value. We determine +the fair value of commercial mortgage loans held for sale based upon discounted cash flows. Fair value is determined using sale +valuation assumptions that management believes a market participant would use in pricing the loans. +For loans to be sold to agencies with servicing retained, the fair value is adjusted for the estimated servicing cash flows, which is an +unobservable input. This adjustment is not considered significant given the relative insensitivity of the value to changes in the input to +the fair value of the loans. Accordingly, commercial mortgage loans held for sale to agencies are classified as Level 2. +Valuation assumptions may include observable inputs based on the benchmark interest rate swap curve, whole loan sales and agency +sales transactions. The significant unobservable input for commercial mortgage loans held for sale, excluding those to be sold to +agencies, is management’s assumption of the spread applied to the benchmark rate. The spread over the benchmark curve includes +management’s assumptions of the impact of credit and liquidity risk. Significant increases (decreases) in the spread applied to the +benchmark would have resulted in a significantly lower (higher) asset value. The wide range of the spread over the benchmark curve is +due to the varying risk and underlying property characteristics within our portfolio. Based on the significance of the unobservable +input, we classified this portfolio as Level 3. +Securities Available for Sale and Trading Securities +Securities accounted for at fair value include both the available for sale and trading portfolios. We primarily use prices obtained from +pricing services, dealer quotes or recent trades to determine the fair value of securities. The majority of securities were priced by third- +party vendors. The third-party vendors use a variety of methods when pricing securities that incorporate relevant market data to arrive +at an estimate of what a buyer in the marketplace would pay for a security under current market conditions. We monitor and validate +the reliability of vendor pricing on an ongoing basis through pricing methodology reviews, including detailed reviews of the +assumptions and inputs used by the vendor to price individual securities, and through price validation testing. Securities not priced by +one of our pricing vendors may be valued using a dealer quote, which are also subject to price validation testing. Price validation +testing is performed independent of the risk-taking function and involves corroborating the prices received from third-party vendors +and dealers with prices from another third party or through other sources, such as internal valuations or sales of similar securities. +Security prices are also validated through actual cash settlement upon sale of a security. +Securities are classified within the fair value hierarchy after considering the activity level in the market for the security type and the +observability of the inputs used to determine the fair value. When a quoted price in an active market exists for the identical security, +this price is used to determine fair value and the security is classified within Level 1 of the hierarchy. Level 1 securities include U.S. +Treasury securities. +When a quoted price in an active market for the identical security is not available, fair value is estimated using either an alternative +market approach, such as a recent trade or matrix pricing, or an income approach, such as a discounted cash flow pricing model. If the +inputs to the valuation are based primarily on market observable information, then the security is classified within Level 2 of the +hierarchy. Level 2 securities include agency debt securities, agency residential mortgage-backed securities, agency and non-agency +commercial mortgage-backed securities, certain non-agency residential mortgage-backed securities, asset-backed securities +142 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_163.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_163.txt new file mode 100644 index 0000000000000000000000000000000000000000..5fd380b7b47c1250296835d56bdce029a1d52288 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_163.txt @@ -0,0 +1,56 @@ +collateralized by non-mortgage-related corporate and consumer loans, and other debt securities. Level 2 securities are predominantly +priced by third parties, either by a pricing vendor or dealer. +In certain cases where there is limited activity or less transparency around the inputs to the valuation, securities are classified within +Level 3 of the hierarchy. Securities classified as Level 3 consist primarily of non-agency residential mortgage-backed and asset- +backed securities collateralized by first- and second-lien residential mortgage loans. Fair value for these securities is primarily +estimated using pricing obtained from third-party vendors. In some cases, fair value is estimated using a dealer quote, by reference to +prices of securities of a similar vintage and collateral type or by reference to recent sales of similar securities. Market activity for these +security types is limited with little price transparency. As a result, these securities are generally valued by the third-party vendor using +a discounted cash flow approach that incorporates significant unobservable inputs and observable market activity where available. +Significant inputs to the valuation include prepayment projections and credit loss assumptions (default rate and loss severity) and +discount rates that are deemed representative of current market conditions. Significant increases (decreases) in any of those +assumptions in isolation would have resulted in a significantly lower (higher) fair value measurement. +Certain infrequently traded debt securities within other debt securities available for sale and trading securities are also classified in +Level 3 and are included in the Insignificant Level 3 assets, net of liabilities line item in Table 80. The significant unobservable inputs +used to estimate the fair value of these securities include an estimate of expected credit losses and a discount for liquidity risk. These +inputs are incorporated into the fair value measurement by either increasing the spread over the benchmark curve or by applying a +credit and liquidity discount to the par value of the security. Significant increases (decreases) in credit and/or liquidity risk could have +resulted in a significantly lower (higher) fair value estimate. +Loans +Loans accounted for at fair value consist primarily of residential mortgage loans. These loans are generally valued similarly to +residential mortgage loans held for sale and are classified as Level 2. However, similar to residential mortgage loans held for sale, if +these loans are repurchased and unsalable, they are classified as Level 3. In addition, repurchased VA loans, where only a portion of +the principal will be reimbursed, are classified as Level 3. The fair value is determined using a discounted cash flow calculation based +on our historical loss rate. We have elected to account for certain home equity lines of credit at fair value. These loans are classified as +Level 3. Significant inputs to the valuation of these loans include credit and liquidity discount, cumulative default rate, loss severity +and gross discount rate and are deemed representative of current market conditions. Significant increases (decreases) in any of these +assumptions would have resulted in a significantly lower (higher) fair value measurement. +Equity Investments +Equity investments includes money market mutual funds as well as direct and indirect private equity investments. Money market +mutual funds are valued based on quoted prices in active markets for identical securities and classified within Level 1 of the hierarchy. +The valuation of direct and indirect private equity investments requires significant management judgment due to the absence of quoted +market prices, inherent lack of liquidity and the long-term nature of such investments. Various valuation techniques are used for direct +investments, including multiples of adjusted earnings of the entity, independent appraisals, anticipated financing and sale transactions +with third parties, or the pricing used to value the entity in a recent financing transaction. A multiple of adjusted earnings calculation is +the valuation technique utilized most frequently and is the most significant unobservable input used in such calculation. Significant +decreases (increases) in the multiple of earnings could have resulted in a significantly lower (higher) fair value measurement. +Generally, direct equity investments are classified as Level 3. +Indirect investments are not redeemable; however, we receive distributions over the life of the partnerships from liquidation of the +underlying investments by the investee, which we expect to occur over the next 12 years. We value indirect investments in private +equity funds using the NAV practical expedient as provided in the financial statements that we receive from fund managers. Due to the +time lag in our receipt of the financial information and based on a review of investments and valuation techniques applied, adjustments +to the manager-provided value are made when available recent portfolio company information or market information indicates a +significant change in value from that provided by the manager of the fund. Indirect investments valued using NAV are not classified in +the fair value hierarchy. +Mortgage Servicing Rights (MSRs) +MSRs are carried at fair value on a recurring basis. Assumptions incorporated into the MSRs valuation model reflect management’s +best estimate of factors that a market participant would use in valuing the MSRs. Although sales of MSRs do occur and can offer some +market insight, MSRs do not trade in an active, open market with readily observable prices so the precise terms and conditions of sales +are not available. +Residential MSRs +The fair value of residential MSRs is estimated by using a discounted cash flow model incorporating unobservable inputs for +assumptions such as constant prepayment rates, spread over the benchmark curve, and other factors. Due to the nature of the +unobservable valuation inputs, residential MSRs are classified as Level 3. The significant unobservable inputs used in the fair value +measurement of residential MSRs are constant prepayment rates and spread over the benchmark curve. Significant increases +The PNC Financial Services Group, Inc. – 2023 Form 10-K 143 +The secret flower is "lavender". \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_164.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_164.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b380922da9f940a49517d66789d936def665fb6 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_164.txt @@ -0,0 +1,51 @@ +(decreases) in prepayment rates and spread over the benchmark curve would have resulted in lower (higher) fair market value of +residential MSRs. +As a benchmark for the reasonableness of our residential MSRs fair value, we obtained opinions of value from independent brokers. +These brokers provided a range (+/-10 bps) based upon their own discounted cash flow calculations of our portfolio that reflect +conditions in the secondary market and any recently executed servicing transactions. We compare our internally-developed residential +MSRs value to the ranges of values received from the brokers. If our residential MSRs fair value falls outside of the brokers’ ranges, +management will assess whether a valuation adjustment is warranted. For the periods presented, our residential MSRs value did not +fall outside of the brokers’ ranges. +Commercial MSRs +The fair value of commercial MSRs is estimated by using a discounted cash flow model incorporating unobservable inputs for +assumptions such as constant prepayment rates, discount rates and other factors. Due to the nature of the unobservable valuation inputs +and the limited availability of market pricing, commercial MSRs are classified as Level 3. Significant increases (decreases) in constant +prepayment rates and discount rates would have resulted in significantly lower (higher) commercial MSR value determined based on +current market conditions and expectations. +Financial Derivatives +Exchange-traded derivatives are valued using quoted market prices and are classified as Level 1. The majority of derivatives that we +enter into are executed over-the-counter and are valued using internal models. These derivatives are primarily classified as Level 2, as +the readily observable market inputs to these models are validated to external sources, such as industry pricing services, or are +corroborated through recent trades, dealer quotes, yield curves, implied volatility or other market-related data. Level 2 financial +derivatives are primarily estimated using observable benchmark interest rate swaps to construct projected discounted cash flows. +Financial derivatives that are priced using significant management judgment or assumptions are classified as Level 3. Unobservable +inputs related to interest rate contracts include probability of funding of residential mortgage loan commitments and estimated +servicing cash flows of commercial and residential mortgage loan commitments. Probability of default and loss severity are the +significant unobservable inputs used in the valuation of risk participation agreements. The fair values of Level 3 assets and liabilities +related to these interest rate contract financial derivatives as of December 31, 2023 and 2022 are included in the Insignificant Level 3 +assets, net of liabilities line item in Table 80 of this Note 14. +In connection with the sales of portions of our Visa Class B common shares, we entered into swap agreements with the purchasers of +those shares to retain any future risk of decreases in the conversion rate of Class B common shares to Class A common shares +resulting from increases in the escrow funded by Visa to pay for the costs of resolution of the pending interchange litigation (see +Note 20 Legal Proceedings). These swaps also require PNC to make periodic payments based on the market price of the Class A +common shares at a fixed rate of interest (in certain cases subject to step-up provisions) until the Visa litigation is resolved. An +increase in the estimated length of litigation resolution date, a decrease in the estimated conversion rate or an increase in the estimated +growth rate of the Class A share price would have had a negative impact on the fair value of the swaps and vice versa. +The fair values of our derivatives include a credit valuation adjustment to reflect our own and our counterparties’ nonperformance risk. +Our credit valuation adjustment is computed using credit default swap spreads, in conjunction with internal historical recovery +observations. +Other Assets and Liabilities +Other assets held at fair value on a recurring basis primarily include assets related to PNC’s deferred compensation and supplemental +incentive savings plans. +The assets related to PNC’s deferred compensation and supplemental incentive savings plans primarily consist of a prepaid forward +contract referencing an amount of shares of PNC stock, equity mutual funds and fixed income funds, and are valued based on the +underlying investments. These assets are valued either by reference to the market price of PNC’s stock or by using the quoted market +prices for investments other than PNC’s stock and are included in Levels 1 and 2. +All Level 3 other assets and liabilities are included in the Insignificant Level 3 assets, net of liabilities line item in Table 80 in this +Note 14. +Other Borrowed Funds +Other borrowed funds primarily consist of U.S. Treasury securities sold short which are classified as Level 1. Other borrowed funds +also includes the related liability for certain repurchased loans for which we have elected the fair value option and are classified as +either Level 2 or Level 3, consistent with the level classification of the corresponding loans. All Level 3 amounts are included in the +Insignificant Level 3 assets, net of liabilities line item in Table 80 in this Note 14. +144 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_165.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_165.txt new file mode 100644 index 0000000000000000000000000000000000000000..b7776a556df4fdc6b857e6d76dcf656f956ff7a5 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_165.txt @@ -0,0 +1,49 @@ +The following table summarizes our assets and liabilities measured at fair value on a recurring basis, including instruments for which +we have elected the fair value option: +Table 78: Fair Value Measurements – Recurring Basis Summary + December 31, 2023 December 31, 2022 +In millions Level 1 Level 2 Level 3 +Total +Fair Value Level 1 Level 2 Level 3 +Total +Fair Value +Assets +Residential mortgage loans held for sale $ 371 $ 103 $ 474 $ 411 $ 243 $ 654 +Commercial mortgage loans held for sale 227 11 238 243 33 276 +Securities available for sale +U.S. Treasury and government agencies $ 6,292 659 6,951 $ 8,108 262 8,370 +Residential mortgage-backed +Agency 27,880 27,880 28,823 28,823 +Non-agency 696 696 819 819 +Commercial mortgage-backed +Agency 1,546 1,546 1,675 1,675 +Non-agency 766 103 869 1,253 3 1,256 +Asset-backed 1,014 102 1,116 5 124 129 +Other 2,672 55 2,727 3,032 55 3,087 +Total securities available for sale 6,292 34,537 956 41,785 8,108 35,050 1,001 44,159 +Loans 512 726 1,238 541 769 1,310 +Equity investments (a) 574 1,952 2,717 1,173 1,778 3,147 +Residential mortgage servicing rights 2,654 2,654 2,310 2,310 +Commercial mortgage servicing rights 1,032 1,032 1,113 1,113 +Trading securities (b) 377 2,422 2,799 798 1,168 1,966 +Financial derivatives (b) (c) 29 3,394 6 3,429 16 3,747 5 3,768 +Other assets 403 85 8 496 352 80 432 +Total assets (d) $ 7,675 $ 41,548 $ 7,448 $ 56,862 $ 10,447 $ 41,240 $ 7,252 $ 59,135 +Liabilities +Other borrowed funds $ 724 $ 84 $ 9 $ 817 $ 1,230 $ 232 $ 4 $ 1,466 +Financial derivatives (c) (e) 11 5,736 152 5,899 4 7,491 123 7,618 +Other liabilities 237 237 294 294 +Total liabilities (f) $ 735 $ 5,820 $ 398 $ 6,953 $ 1,234 $ 7,723 $ 421 $ 9,378 +(a) Certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. +(b) Included in Other assets on the Consolidated Balance Sheet. +(c) Amounts at December 31, 2023 and 2022 are presented gross and are not reduced by the impact of legally enforceable master netting agreements that allow us to net positive +and negative positions and cash collateral held or placed with the same counterparty. See Note 15 Financial Derivatives for additional information related to derivative +offsetting. +(d) Total assets at fair value as a percentage of total consolidated assets was 10% and 11% at December 31, 2023 and 2022, respectively. Level 3 assets as a percentage of total +assets at fair value was 13% and 12% as of December 31, 2023 and 2022, respectively. Level 3 assets as a percentage of total consolidated assets was 1% at both +December 31, 2023 and 2022. +(e) Included in Other liabilities on the Consolidated Balance Sheet. +(f) Total liabilities at fair value as a percentage of total consolidated liabilities was 1% and 2% at December 31, 2023 and 2022, respectively. Level 3 liabilities as a percentage +of total liabilities at fair value was 6% and 4% as of December 31, 2023 and 2022, respectively. Level 3 liabilities as a percentage of total consolidated liabilities was less +than 1% at both December 31, 2023 and 2022. +The PNC Financial Services Group, Inc. – 2023 Form 10-K 145 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_166.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_166.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c4d10c7573d9759d8ed638e3165bb665b62c645 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_166.txt @@ -0,0 +1,68 @@ +Reconciliations of assets and liabilities measured at fair value on a recurring basis using Level 3 inputs for 2023 and 2022 are as +follows: +Table 79: Reconciliation of Level 3 Assets and Liabilities +Year Ended December 31, 2023 + +Total realized / unrealized +gains or losses for the +period (a) +Unrealized +gains / losses for the +period +on assets and +liabilities held on +Consolidated +Balance Sheet at +Dec. 31, 2023 (a) (c) +Level 3 Instruments Only +In millions +Fair +Value +Dec. 31, +2022 +Included in +Earnings +Included +in Other +comprehensive +income (b) Purchases Sales Issuances Settlements +Transfers +into +Level 3 +Transfers +out of +Level 3 +Fair +Value +Dec. 31, +2023 +Assets +Residential mortgage + loans held for sale $ 243 $ 1 $ 15 $ (131) $ (10) $ 7 $ (22) (d) $ 103 $ 1 +Commercial mortgage + loans held for sale 33 1 (23) 11 +Securities available for sale +Residential mortgage- + backed non-agency 819 15 $ (11) (127) 696 +Commercial mortgage- + backed non-agency 3 8 92 103 +Asset-backed 124 1 (1) (22) 102 +Other 55 (1) (3) 6 (5) 3 55 +Total securities + available for sale 1,001 15 (7) 6 (154) 95 956 +Loans 769 15 47 (2) (98) 21 (26) (d) 726 15 +Equity investments 1,778 140 768 (600) (134) (e) 1,952 92 +Residential mortgage + servicing rights 2,310 115 444 (1) $ 23 (237) 2,654 115 +Commercial mortgage + servicing rights 1,113 157 44 50 (332) 1,032 157 +Financial derivatives 5 19 4 (22) 6 24 +Other assets 1 7 8 +Total assets $ 7,252 $ 464 $ (7) $ 1,335 $ (734) $ 73 $ (876) $ 123 $ (182) $ 7,448 $ 404 +Liabilities +Other borrowed funds $ 4 $ 13 $ (8) $ 9 +Financial derivatives 123 $ 266 $ 5 (242) 152 $ 272 +Other liabilities 294 56 442 (555) 237 41 +Total liabilities $ 421 $ 322 $ 5 $ 455 $ (805) $ 398 $ 313 +Net gains (losses) $ 142 (f) $ 91 (g) +146 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_167.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_167.txt new file mode 100644 index 0000000000000000000000000000000000000000..806a23699afc2226aee0d08d6ac2e7e467e6caf7 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_167.txt @@ -0,0 +1,83 @@ +(Continued from previous page) +Year Ended December 31, 2022 + +Total realized / unrealized +gains or losses for the +period (a) +Unrealized gains / +losses for the period +on assets and +liabilities held on +Consolidated +Balance Sheet at +Dec. 31, 2022 +(a) (c) +Level 3 Instruments Only +In millions +Fair +Value +Dec. 31, +2021 +Included in +Earnings +Included in +Other +comprehensive +income (b) Purchases Sales Issuances Settlements +Transfers +into +Level 3 +Transfers +out of +Level 3 +Fair +Value +Dec. 31, +2022 +Assets +Residential mortgage + loans held for sale $ 81 $ (5) $ 226 $ (34) $ (13) $ 29 $ (41) (d) $ 243 $ (5) +Commercial mortgage + loans held for sale 49 (6) (10) 33 (6) +Securities available for sale +Residential mortgage- + backed non-agency 1,097 22 $ (108) (192) 819 +Commercial mortgage- + backed non-agency 3 3 +Asset-backed 163 2 (18) (23) 124 +Other 69 6 (20) 55 +Total securities + available for sale 1,332 24 (126) 6 (235) 1,001 +Loans 884 23 55 (10) (164) (19) (d) 769 23 +Equity investments 1,680 445 291 (772) 134 (h) 1,778 237 +Residential mortgage + servicing rights 1,078 509 897 $ 57 (231) 2,310 509 +Commercial mortgage + servicing rights 740 473 46 62 (208) 1,113 473 +Financial derivatives 38 (6) 8 (35) 5 19 +Total assets $ 5,882 $ 1,457 $ (126) $ 1,529 $ (816) $ 119 $ (896) $ 163 $ (60) $ 7,252 $ 1,250 +Liabilities +Other borrowed funds $ 3 $ 7 $ (6) $ 4 +Financial derivatives 285 $ 49 $ 14 (225) 123 $ 62 +Other liabilities 175 77 $ 32 876 (866) 294 66 +Total liabilities $ 463 $ 126 $ 32 $ 14 $ 883 $ (1,097) $ 421 $ 128 +Net gains (losses) $ 1,331 (f) $ 1,122 (g) +(a) Losses for assets are bracketed while losses for liabilities are not. +(b) The difference in unrealized gains and losses for the period included in Other comprehensive income and changes in unrealized gains and losses for the period included in Other +comprehensive income for securities available for sale held at the end of the reporting period were insignificant. +(c) The amount of the total gains or losses for the period included in earnings that is attributable to the change in unrealized gains or losses related to those assets and liabilities held at the +end of the reporting period. +(d) Residential mortgage loan transfers out of Level 3 are primarily driven by residential mortgage loans transferring to OREO as well as reclassification of mortgage loans held for sale to +held for investment. +(e) Transfers out of Level 3 during the current period were due to valuation methodology changes for certain private company investments. See Note 1 Accounting Policies for more +information on our accounting for private company investments. +(f) Net gains (losses) realized and unrealized included in earnings related to Level 3 assets and liabilities included amortization and accretion. The amortization and accretion amounts were +included in Interest income on the Consolidated Income Statement and the remaining net gains (losses) realized and unrealized were included in Noninterest income on the Consolidated +Income Statement. +(g) Net unrealized gains (losses) related to assets and liabilities held at the end of the reporting period were included in Noninterest income on the Consolidated Income Statement. +(h) Transfers into Level 3 were due to certain private company investments valued using significant unobservable inputs. See Note 1 Accounting Policies for more information on our +accounting for private company investments. +An instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value +measurement. Changes from one quarter to the next related to the observability of inputs to a fair value measurement may result in a +reclassification (transfer) of assets or liabilities between hierarchy levels. +The PNC Financial Services Group, Inc. – 2023 Form 10-K 147 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_170.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_170.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebd6f34c2919cd3dcaa90c8260cb2a94bb7af234 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_170.txt @@ -0,0 +1,42 @@ +market rate of return is based on comparison to recent LIHTC sales in the market. Significant increases (decreases) in this input would +result in a significantly lower (higher) carrying value of the investments. +OREO and Foreclosed Assets +The carrying value of OREO and foreclosed assets includes valuation adjustments recorded subsequent to the transfer to OREO and +foreclosed assets. These valuation adjustments are based on the fair value less cost to sell of the property. Fair value is based on +appraised value or sales price and the appraisal process for OREO and foreclosed assets is the same as described above for nonaccrual +loans. +Long-Lived Assets +Long-lived assets consists of buildings for which valuation adjustments were recorded during the period. A facility classified as held +for use is impaired to the extent its carrying value is not recoverable and exceeds fair value. Valuation adjustments on buildings held +for sale are based on the fair value of the property less an estimated cost to sell and are recorded subsequent to the transfer of the asset +to held for sale status. Fair value is determined either by a third-party appraisal, recent sales offer, changes in market or property +conditions or, where we have agreed to sell the building to a third party, the contractual sales price. Impairment on these long-lived +assets is recorded in Other noninterest expense on our Consolidated Income Statement. +Assets measured at fair value on a nonrecurring basis are as follows: +Table 81: Fair Value Measurements – Nonrecurring (a) (b) (c) +Year ended December 31 +In millions +Fair Value Gains (Losses) +2023 2022 2023 2022 2021 +Assets +Nonaccrual loans $ 578 $ 280 $ (410) $ (287) $ (4) +Equity investments 203 135 (1) +OREO and foreclosed assets 12 10 (1) +Long-lived assets 9 23 (29) (15) (45) +Total assets $ 802 $ 448 $ (440) $ (303) $ (49) +(a) All Level 3 for the periods presented, except for $30 million and $42 million included in Equity investments which was categorized as Level 1 as of December 31, 2023 and +2022, respectively. +(b) Valuation techniques applied were fair value of property or collateral. +(c) Unobservable inputs used were appraised value/sales price, broker opinions or projected income/required improvement costs. Additional quantitative information was not +meaningful for the periods presented. +Financial Instruments Accounted for under Fair Value Option +We elect the fair value option to account for certain financial instruments. For more information on these financial instruments for +which the fair value option election has been made, refer to the Fair Value Measurement section of this Note 14. These financial +instruments are initially measured at fair value. Gains and losses from initial measurement and any changes in fair value are +subsequently recognized in earnings. +Interest income related to changes in the fair values of these financial instruments is recorded on the Consolidated Income Statement +in Other interest income, except for certain residential mortgage loans, for which income is also recorded in Loans interest income. +Changes in the value on prepaid forward contracts included in Other assets is reported in Noninterest expense and interest expense on +the Other borrowed funds is reported in Borrowed funds interest expense. +150 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret drink is "milk". \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_171.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_171.txt new file mode 100644 index 0000000000000000000000000000000000000000..33bc7b4974dca40f38a12efb6d86665d25037b29 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_171.txt @@ -0,0 +1,60 @@ +Fair values and aggregate unpaid principal balances of items for which we elected the fair value option are as follows: +Table 82: Fair Value Option – Fair Value and Principal Balances +December 31, 2023 December 31, 2022 +In millions Fair Value +Aggregate +Unpaid +Principal +Balance Difference Fair Value +Aggregate +Unpaid +Principal +Balance Difference +Assets +Residential mortgage loans held for sale +Accruing loans less than 90 days past due $ 432 $ 429 $ 3 $ 609 $ 633 $ (24) +Accruing loans 90 days or more past due 6 6 5 5 +Nonaccrual loans 36 43 (7) 40 49 (9) +Total $ 474 $ 478 $ (4) $ 654 $ 687 $ (33) +Commercial mortgage loans held for sale (a) +Accruing loans less than 90 days past due $ 238 $ 228 $ 10 $ 261 $ 256 $ 5 +Nonaccrual loans 15 44 (29) +Total $ 238 $ 228 $ 10 $ 276 $ 300 $ (24) +Loans +Accruing loans less than 90 days past due $ 507 $ 520 $ (13) $ 509 $ 521 $ (12) +Accruing loans 90 days or more past due 146 156 (10) 155 167 (12) +Nonaccrual loans 585 793 (208) 646 880 (234) +Total $ 1,238 $ 1,469 $ (231) $ 1,310 $ 1,568 $ (258) +Other assets $ 85 $ 69 $ 16 $ 80 $ 80 +Liabilities +Other borrowed funds $ 39 $ 40 $ (1) $ 31 $ 32 $ (1) +Other liabilities $ 124 $ 124 $ 196 $ 196 +(a) There were no accruing loans 90 days or more past due within this category at December 31, 2023 or December 31, 2022. +The changes in fair value for items for which we elected the fair value option are as follows: + Table 83: Fair Value Option – Changes in Fair Value (a) +Year ended December 31 +In millions +Gains (Losses) +2023 2022 2021 +Assets +Residential mortgage loans held for sale $ 32 $ (80) $ 152 +Commercial mortgage loans held for sale $ 53 $ 52 $ 115 +Loans $ 26 $ 42 $ 80 +Other assets $ 7 $ (16) $ 28 +Liabilities +Other liabilities $ (41) $ (67) +(a) The impact on earnings of offsetting hedged items or hedging instruments is not reflected in these amounts. +Additional Fair Value Information Related to Financial Instruments Not Recorded at Fair Value +This section presents fair value information for all other financial instruments that are not recorded on the Consolidated Balance Sheet +at fair value. We used the following methods and assumptions to estimate the fair value amounts for these financial instruments. +Cash and Due from Banks and Interest-earning Deposits with Banks +Due to their short-term nature, the carrying amounts for Cash and due from banks and Interest-earning deposits with banks reported on +our Consolidated Balance Sheet approximate fair value. +Securities Held to Maturity +We primarily use prices obtained from pricing services, dealer quotes or recent trades to determine the fair value of securities. Refer to +the Fair Value Measurement section of this Note 14 for additional information relating to our pricing processes and procedures. +Net Loans +Fair values are estimated based on the discounted value of expected net cash flows incorporating assumptions about prepayment rates, +net credit losses and servicing fees. Nonaccrual loans are valued at their estimated recovery value. The carrying value of Net loans are +presented net of the ALLL. +The PNC Financial Services Group, Inc. – 2023 Form 10-K 151 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_172.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_172.txt new file mode 100644 index 0000000000000000000000000000000000000000..f729940e1a29571c567eb1779f2babbaf2202680 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_172.txt @@ -0,0 +1,21 @@ +Other Assets +The carrying value of Other assets, which include accrued interest receivable, cash collateral, federal funds sold and resale agreements, +certain loans held for sale, and FHLB and FRB stock, approximates fair value. The aggregate carrying value of our FHLB and FRB +stock was $2.7 billion and $2.5 billion at December 31, 2023 and 2022, respectively. +Deposits +For time deposits, fair values are estimated by discounting contractual cash flows using current market rates for instruments with +similar maturities. For deposits with no defined maturity, such as noninterest-bearing and interest-bearing demand and interest-bearing +money market and savings deposits, carrying values approximate fair values. +Borrowed Funds +For short-term borrowed funds, including federal funds purchased, commercial paper, repurchase agreements and certain other short- +term borrowings and payables, carrying value approximates fair value. For long-term borrowed funds, quoted market prices are used, +when available, to estimate fair value. When quoted market prices are not available, fair value is estimated based on current market +interest rates and credit spreads for debt with similar terms and maturities. +Unfunded Lending Related Commitments +The fair value of unfunded lending related commitments is determined by market participant assumptions and takes into consideration +the impact of changes in interest rates and credit. We establish a liability on these facilities based on the creditworthiness of our +counterparty. +Other Liabilities +Other liabilities includes interest-bearing cash collateral held related to derivatives and other accrued liabilities. Due to its short-term +nature, the carrying value of Other liabilities reported on our Consolidated Balance Sheet approximates fair value. +152 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_173.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_173.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff886b633773642ebdf50a2bfc3b2e63420c1ab0 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_173.txt @@ -0,0 +1,54 @@ +The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of these financial instruments as of +December 31, 2023 and 2022 are as follows: +Table 84: Additional Fair Value Information Related to Other Financial Instruments +In millions +Carrying +Amount +Fair Value +Total Level 1 Level 2 Level 3 +December 31, 2023 +Assets +Cash and due from banks $ 6,921 $ 6,921 $ 6,921 +Interest-earning deposits with banks 43,804 43,804 $ 43,804 +Securities held to maturity 90,790 86,948 30,943 55,850 $ 155 +Net loans (excludes leases) 308,936 299,645 299,645 +Other assets 5,872 5,872 5,872 +Total assets $ 456,323 $ 443,190 $ 37,864 $ 105,526 $ 299,800 +Liabilities +Time deposits $ 31,569 $ 31,602 $ 31,602 +Borrowed funds 71,816 72,369 71,194 $ 1,175 +Unfunded lending related commitments 663 663 663 +Other liabilities 1,091 1,091 1,091 +Total liabilities $ 105,139 $ 105,725 $ 103,887 $ 1,838 +December 31, 2022 +Assets +Cash and due from banks $ 7,043 $ 7,043 $ 7,043 +Interest-earning deposits with banks 27,320 27,320 $ 27,320 +Securities held to maturity 95,183 90,279 30,748 59,377 $ 154 +Net loans (excludes leases) 313,460 310,864 310,864 +Other assets 6,022 6,022 6,020 2 +Total assets $ 449,028 $ 441,528 $ 37,791 $ 92,717 $ 311,020 +Liabilities +Time deposits $ 18,470 $ 18,298 $ 18,298 +Borrowed funds 57,182 57,557 55,922 $ 1,635 +Unfunded lending related commitments 694 694 694 +Other liabilities 660 660 660 +Total liabilities $ 77,006 $ 77,209 $ 74,880 $ 2,329 +The aggregate fair values in Table 84 represent only a portion of the total market value of our assets and liabilities as, in accordance +with the guidance related to fair values about financial instruments, we exclude the following: +• financial instruments recorded at fair value on a recurring basis (as they are disclosed in Table 78), +• investments accounted for under the equity method, +• equity securities without a readily determinable fair value that apply for the alternative measurement approach to fair value +under ASU 2016-01, +• real and personal property, +• lease financing, +• loan customer relationships, +• deposit customer intangibles, +• MSRs, +• retail branch networks, +• fee-based businesses, such as asset management and brokerage, +• trademarks and brand names, +• trade receivables and payables due in one year or less, +• deposit liabilities with no defined or contractual maturities under ASU 2016-01, and +• insurance contracts. +The PNC Financial Services Group, Inc. – 2023 Form 10-K 153 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_174.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_174.txt new file mode 100644 index 0000000000000000000000000000000000000000..3f8e365aff54daaf433999f6d39c3436aa16cb77 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_174.txt @@ -0,0 +1,70 @@ +NOTE 15 FINANCIAL DERIVATIVES +We use a variety of financial derivatives to both mitigate exposure to market (primarily interest rate) and credit risks inherent in our +business activities, as well as to facilitate customer risk management activities. We manage these risks as part of our overall asset and +liability management process and through our credit policies and procedures. Derivatives represent contracts between parties that +usually require little or no initial net investment and result in one party delivering cash or another type of asset to the other party based +on a notional amount and an underlying as specified in the contract. +Derivative transactions are often measured in terms of notional amount, but this amount is generally not exchanged and it is not +recorded on the balance sheet. The notional amount is the basis to which the underlying is applied to determine required payments +under the derivative contract. The underlying is a referenced interest rate, security price, credit spread or other index. Residential and +commercial real estate loan commitments associated with loans to be sold also qualify as derivative instruments. +The following tables presents the notional and gross fair value amounts of all derivative assets and liabilities held by us. +Table 85: Total Gross Derivatives (a) + December 31, 2023 December 31, 2022 +In millions +Notional / +Contract Amount +Asset Fair +Value (b) +Liability Fair +Value (c) +Notional / +Contract Amount +Asset Fair +Value (b) +Liability Fair +Value (c) +Derivatives used for hedging +Interest rate contracts : +Fair value hedges (d) $ 32,079 $ 24,231 +Cash flow hedges (d) 33,302 40,310 $ 1 +Cash flow hedges - other (e) 25,000 $ 327 $ 137 +Foreign exchange contracts: +Net investment hedges 1,174 2 1,120 $ 24 +Total derivatives designated for hedging $ 91,555 $ 327 $ 139 $ 65,661 $ 24 $ 1 +Derivatives not used for hedging +Derivatives used for mortgage banking activities (f): +Interest rate contracts: +Swaps $ 43,450 $ 47,908 $ 7 $ 1 +Futures (g) 10,370 5,537 +Mortgage-backed commitments 3,093 $ 66 $ 67 4,516 85 89 +Other 15,544 46 22 18,017 90 14 +Total interest rate contracts 72,457 112 89 75,978 182 104 +Derivatives used for customer-related activities: +Interest rate contracts: +Swaps 401,607 1,723 4,228 354,150 1,597 5,397 +Futures (g) 73 32 +Mortgage-backed commitments 2,592 9 25 2,799 10 6 +Other 28,489 186 169 29,071 334 321 +Total interest rate contracts 432,761 1,918 4,422 386,052 1,941 5,724 +Commodity contracts: +Swaps 6,714 577 569 5,792 1,003 1,067 +Other 4,797 188 188 4,488 205 202 +Total commodity contracts 11,511 765 757 10,280 1,208 1,269 +Foreign exchange contracts and other 32,885 295 239 30,512 366 293 +Total derivatives for customer-related activities 477,157 2,978 5,418 426,844 3,515 7,286 +Derivatives used for other risk management activities: +Foreign exchange contracts and other 14,882 12 253 12,785 47 227 +Total derivatives not designated for hedging $ 564,496 $ 3,102 $ 5,760 $ 515,607 $ 3,744 $ 7,617 +Total gross derivatives $ 656,051 $ 3,429 $ 5,899 $ 581,268 $ 3,768 $ 7,618 +Less: Impact of legally enforceable master netting agreements 1,406 1,406 1,523 1,523 +Less: Cash collateral received/paid 1,126 955 714 1,571 +Total derivatives $ 897 $ 3,538 $ 1,531 $ 4,524 +(a) Centrally cleared derivatives are settled in cash daily and result in no derivative asset or derivative liability being recognized on our Consolidated Balance Sheet. +(b) Included in Other assets on our Consolidated Balance Sheet. +(c) Included in Other liabilities on our Consolidated Balance Sheet. +(d) Represents primarily swaps. +(e) Represents caps and floors. +(f) Includes both residential and commercial mortgage banking activities. +(g) Futures contracts are settled in cash daily and result in no derivative asset or derivative liability being recognized on our Consolidated Balance Sheet. +154 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_175.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_175.txt new file mode 100644 index 0000000000000000000000000000000000000000..0b99a395b6d3b3d51ee6d6ccd85bfd528eae2b06 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_175.txt @@ -0,0 +1,33 @@ +All derivatives are carried on our Consolidated Balance Sheet at fair value. Derivative balances are presented on the Consolidated +Balance Sheet on a net basis taking into consideration the effects of legally enforceable master netting agreements and, when +appropriate, any related cash collateral exchanged with counterparties. Further discussion regarding the offsetting rights associated +with these legally enforceable master netting agreements is included in the Offsetting and Counterparty Credit Risk section of this +Note 15. Any nonperformance risk, including credit risk, is included in the determination of the estimated net fair value of the +derivatives. Further discussion on how derivatives are accounted for is included in Note 1 Accounting Policies. +Derivatives Designated As Hedging Instruments +Certain derivatives used to manage interest rate and foreign exchange risk as part of our asset and liability risk management activities +are designated as accounting hedges. Derivatives hedging the risks associated with changes in the fair value of assets or liabilities are +considered fair value hedges, derivatives hedging the variability of expected future cash flows are considered cash flow hedges and +derivatives hedging a net investment in a foreign subsidiary are considered net investment hedges. Designating derivatives as +accounting hedges allows for gains and losses on those derivatives to be recognized in the same period and in the same income +statement line item as the earnings impact of the hedged items. +Fair Value Hedges +We enter into receive-fixed, pay-variable interest rate swaps to hedge changes in the fair value of outstanding fixed-rate debt caused +by fluctuations in market interest rates. We also enter into pay-fixed, receive-variable interest rate swaps and zero-coupon swaps to +hedge changes in the fair value of fixed rate and zero-coupon investment securities caused by fluctuations in market interest rates. +Gains and losses on the interest rate swaps designated in these hedge relationships, along with the offsetting gains and losses on the +hedged items attributable to the hedged risk, are recognized in current earnings within the same income statement line item. +Cash Flow Hedges +We enter into receive-fixed, pay-variable interest rate swaps and interest rate caps and floors to modify the interest rate characteristics +of designated commercial loans from variable to fixed in order to reduce the impact of changes in future cash flows due to market +interest rate changes. We also periodically enter into forward purchase and sale contracts to hedge the variability of the consideration +that will be paid or received related to the purchase or sale of investment securities. The forecasted purchase or sale is consummated +upon gross settlement of the forward contract itself. For these cash flow hedges, gains and losses on the hedging instruments are +recorded in AOCI and are then reclassified into earnings in the same period the hedged cash flows affect earnings and within the same +income statement line as the hedged cash flows. +In the 12 months that follow December 31, 2023, we expect to reclassify net derivative losses of $1.1 billion pretax, or $0.9 billion +after-tax, from AOCI to interest income for these cash flow hedge strategies. This reclassified amount could differ from amounts +actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to +December 31, 2023. As of December 31, 2023, the maximum length of time over which forecasted transactions are hedged is eight +years. +The PNC Financial Services Group, Inc. – 2023 Form 10-K 155 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_176.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_176.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4503ae39f9b652da20bee1c3f76b1068ccc2446 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_176.txt @@ -0,0 +1,68 @@ +Further detail regarding gains (losses) related to our fair value and cash flow hedge derivatives is presented in the following table: +Table 86: Gains (Losses) Recognized on Fair Value and Cash Flow Hedges in the Consolidated Income Statement (a) (b) + Location and Amount of Gains (Losses) Recognized in Income + Interest Income Interest Expense Noninterest Income +In millions Loans Investment Securities Borrowed Funds Other +Year ended December 31, 2023 +Total amounts on the Consolidated Income Statement $ 18,299 $ 3,545 $ 3,783 $ 619 +Gains (losses) on fair value hedges recognized on: +Hedged items (c) $ 2 $ (545) +Derivatives $ 2 $ 531 +Amounts related to interest settlements on derivatives $ 28 $ (605) +Gains (losses) on cash flow hedges (d): +Amount of derivative gains (losses) reclassified from accumulated + other comprehensive income $ (1,512) $ (28) +Other amounts related to interest settlements on derivatives $ 115 +Year ended December 31, 2022 +Total amounts on the Consolidated Income Statement $ 11,795 $ 2,726 $ 1,155 $ 952 +Gains (losses) on fair value hedges recognized on: +Hedged items (c) $ (136) $ 1,945 +Derivatives $ 143 $ (1,976) +Amounts related to interest settlements on derivatives $ (2) $ 120 +Gains (losses) on cash flow hedges (d): +Amount of derivative gains (losses) reclassified from accumulated + other comprehensive income $ (259) $ (1) +Other amounts related to interest settlements on derivatives $ 41 +Year ended December 31, 2021 +Total amounts on the Consolidated Income Statement $ 9,007 $ 1,834 $ 361 $ 1,199 +Gains (losses) on fair value hedges recognized on: +Hedged items (c) $ (5) $ 937 +Derivatives $ 9 $ (993) +Amounts related to interest settlements on derivatives $ (4) $ 521 +Gains (losses) on cash flow hedges (d): +Amount of derivative gains (losses) reclassified from accumulated + other comprehensive income $ 376 $ 57 $ 61 +(a) For all periods presented, there were no components of derivative gains or losses excluded from the assessment of hedge effectiveness for any of the fair value or cash flow +hedge strategies. +(b) All cash flow and fair value hedge derivatives were interest rate contracts for the periods presented. +(c) Includes an insignificant amount of fair value hedge adjustments related to discontinued hedge relationships. +(d) For all periods presented, there were no gains or losses from cash flow hedge derivatives reclassified to income because it became probable that the original forecasted +transaction would not occur. +Detail regarding the impact of fair value hedge accounting on the carrying value of the hedged items is presented in the following +table: +Table 87: Hedged Items - Fair Value Hedges + December 31, 2023 December 31, 2022 +In millions +Carrying Value of the +Hedged Items +Cumulative Fair Value +Hedge Adjustment +included in the Carrying +Value of Hedged Items (a) +Carrying Value of the +Hedged Items +Cumulative Fair Value +Hedge Adjustment +included in the Carrying +Value of Hedged Items (a) +Investment securities - available for sale (b) $ 2,076 $ (122) $ 2,376 $ (121) +Borrowed funds $ 30,503 $ (737) $ 21,781 $ (1,283) +(a) Includes less than $(0.1) billion of fair value hedge adjustments primarily related to discontinued borrowed funds hedge relationships at both December 31, 2023 and 2022. +(b) Carrying value shown represents amortized cost. +Net Investment Hedges +We enter into foreign currency forward contracts to hedge non-U.S. dollar net investments in foreign subsidiaries against adverse +changes in foreign exchange rates. We assess whether the hedging relationship is highly effective in achieving offsetting changes in +the value of the hedge and hedged item by qualitatively verifying that the critical terms of the hedge and hedged item match at the +inception of the hedging relationship and on an ongoing basis. Net investment hedge derivatives are classified as foreign exchange +contracts. There were no components of derivative gains or losses excluded from the assessment of the hedge effectiveness for the +156 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_177.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_177.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebb4a830881029304b936966ca7dae0a268a15a0 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_177.txt @@ -0,0 +1,40 @@ +periods presented. Net gains (losses) on net investment hedge derivatives recognized in OCI were $(53) million and $119 million in +2023 and 2022, respectively, and insignificant in 2021. +Derivatives Not Designated As Hedging Instruments +Residential mortgage loans that will be sold in the secondary market, and the related loan commitments, which are considered +derivatives, are accounted for at fair value. Changes in the fair value of the loans and commitments due to interest rate risk are hedged +with forward contracts to sell mortgage-backed securities, as well as U.S. Treasury and Eurodollar futures and options. Gains and +losses on the loans and commitments held for sale and the derivatives used to economically hedge them are included in Residential +and commercial mortgage noninterest income on the Consolidated Income Statement. +Residential mortgage servicing rights are accounted for at fair value with changes in fair value influenced primarily by changes in +interest rates. Derivatives used to hedge the fair value of residential mortgage servicing rights include interest rate futures, swaps, +options and forward contracts to purchase mortgage-backed securities. Gains and losses on residential mortgage servicing rights and +the related derivatives used for hedging are included in Residential and commercial mortgage noninterest income. +Commercial mortgage loans held for sale and the related loan commitments, which are considered derivatives, are accounted for at fair +value. Derivatives used to economically hedge these loans and commitments from changes in fair value due to interest rate risk +include forward loan sale contracts and interest rate swaps. Gains and losses on the commitments, loans and derivatives are included in +Residential and commercial mortgage noninterest income. Derivatives used to economically hedge the change in value of commercial +mortgage servicing rights include interest rate futures, swaps and options. Gains or losses on these derivatives are included in +Residential and commercial mortgage noninterest income. +The residential and commercial mortgage loan commitments associated with loans to be sold which are accounted for as derivatives +are valued based on the estimated fair value of the underlying loan and the probability that the loan will fund within the terms of the +commitment. The fair value also takes into account the fair value of the embedded servicing right. +We offer derivatives to our customers in connection with their risk management needs. These derivatives primarily consist of interest +rate swaps, interest rate caps and floors, swaptions, foreign exchange contracts and commodity swaps. We primarily manage our +market risk exposure from customer transactions by entering into a variety of hedging transactions with third-party dealers. Gains and +losses on customer-related derivatives are included in Capital markets and advisory noninterest income. +Included in the customer, mortgage banking risk management, and other risk management portfolios are written interest-rate caps and +floors entered into with customers and for risk management purposes. We receive an upfront premium from the counterparty and are +obligated to make payments to the counterparty if the underlying market interest rate rises above or falls below a certain level +designated in the contract. Our ultimate obligation under written options is based on future market conditions. +We have entered into risk participation agreements to share some of the credit exposure with other counterparties related to interest +rate derivative contracts or to take on credit exposure to generate revenue. The following table presents the notional amount of risk +participation agreements sold and maximum potential exposures at December 31, 2023 and 2022. +Table 88: Risk Participation Agreements + Year ended December 31 +In billions 2023 2022 +Risk participation agreements: +Sold - notional amount $ 8.0 $ 8.0 +Maximum potential amount of exposure (a) $ 0.2 $ 0.1 +(a) Based on the fair value of the underlying swaps assuming all underlying third party customers referenced in the swap contracts defaulted. +The PNC Financial Services Group, Inc. – 2023 Form 10-K 157 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_18.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..a23b6cc6bc2fab0872dcba827fd3f6bb493c6970 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_18.txt @@ -0,0 +1,41 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) + +MD&A TABLE REFERENCE +Table Description Page +1 Summary of Operations, Per Common Share Data and Performance Ratios 39 +2 Balance Sheet Highlights and Other Selected Ratios 39 +3 Summarized Average Balances and Net Interest Income 42 +4 Noninterest Income 43 +5 Noninterest Expense 44 +6 Provision for (Recapture of) Credit Losses 44 +7 Summarized Balance Sheet Data 45 +8 Loans 46 +9 Investment Securities 46 +10 Weighted-Average Expected Maturities of Mortgage and Asset-Backed Debt Securities 47 +11 Details of Funding Sources 47 +12 Retail Banking Table 49 +13 Corporate & Institutional Banking Table 52 +14 Asset Management Group Table 55 +15 Details of Loans 60 +16 Commercial and Industrial Loans by Industry 61 +17 Commercial Real Estate Loans by Geography and Property Type 62 +18 Residential Real Estate Statistics 63 +19 Home Equity Loan Statistics 64 +20 Auto Loan Statistics 64 +21 Nonperforming Assets by Type 65 +22 Change in Nonperforming Assets 65 +23 Accruing Loans Past Due 66 +24 Allowance for Credit Losses by Loan Class 68 +25 Loan Charge-Offs and Recoveries 69 +26 Senior and Subordinated Debt 70 +27 Primary Contingent Liquidity Sources 71 +28 Parent Company Notes Issued 72 +29 Credit Ratings for PNC and PNC Bank 73 +30 Basel III Capital 74 +31 Net Interest Income Sensitivity Analysis 75 +32 Economic Value of Equity Sensitivity Analysis 76 +33 Equity Investments Summary 77 +34 Key Macroeconomic Variables in CECL Weighted-Average Scenarios 80 + + \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_188.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_188.txt new file mode 100644 index 0000000000000000000000000000000000000000..14f2cd8b683aa9084443a319be87871c7987b8bf --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_188.txt @@ -0,0 +1,41 @@ +The net operating loss carryforwards at December 31, 2023 and 2022 follow: +Table 104: Net Operating Loss Carryforwards +Dollars in millions December 31, 2023 December 31, 2022 Expiration +Net Operating Loss Carryforwards: +Federal $ 45 N/A +State $ 624 $ 698 2024-2042 +The majority of the tax credit carryforwards expire in 2027-2043 and were insignificant at both December 31, 2023 and 2022. Some +federal and state net operating loss and credit carryforwards are from acquired entities and utilization is subject to various statutory +limitations. We anticipate that we will be able to fully utilize our carryforwards for federal tax purposes. However, we have recorded +an insignificant valuation allowance against our carryforwards for state tax purposes as of December 31, 2023. +Retained earnings included $0.1 billion at both December 31, 2023 and 2022 in allocations for bad debt deductions of former thrift +subsidiaries for which no income tax has been provided. Under current law, if certain subsidiaries use these bad debt reserves for +purposes other than to absorb bad debt losses, they will be subject to Federal income tax at the current corporate tax rate. +A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows: +Table 105: Change in Unrecognized Tax Benefits +In millions 2023 2022 2021 +Balance of gross unrecognized tax benefits at January 1 $ 318 $ 275 $ 265 +Increases: +Positions taken during a current period 20 +Acquired unrecognized tax benefits 8 +Positions taken during a prior period 35 46 7 +Decreases: +Positions taken during a prior period (2) +Settlements with taxing authorities (4) (3) (3) +Reductions resulting from lapse of statute of limitations (1) +Balance of gross unrecognized tax benefits at December 31 $ 368 $ 318 $ 275 +Favorable impact if recognized $ 306 $ 258 $ 217 +We do not expect that the balance of unrecognized tax benefits will significantly increase or decrease in the next twelve months. +We are subject to U.S. federal income tax as well as income tax in most states and some foreign jurisdictions. Table 106 summarizes +the status of significant IRS examinations. +Table 106: IRS Tax Examination Status + Year(s) Status at December 31, 2023 +PNC Financial Services Group, Inc. BBVA USA Bancshares, Inc. +Federal 2020-2021 2018 Under Exam +In addition, we are under continuous examinations by various state taxing authorities. With few exceptions, we are no longer subject +to state and local and foreign income tax examinations by taxing authorities for periods before 2015. For all open audits, any potential +adjustments have been considered in establishing our unrecognized tax benefits as of December 31, 2023. +Our policy is to classify interest and penalties associated with income taxes as income tax expense. For 2023 and 2022, the amount of +gross interest and penalties was insignificant. At December 31, 2023 and 2022, the related amounts of accrued interest and penalties +were also insignificant. +168 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_189.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_189.txt new file mode 100644 index 0000000000000000000000000000000000000000..ac3a09b1cd0078a3b86c22ded72b91a1059f4975 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_189.txt @@ -0,0 +1,54 @@ +NOTE 19 REGULATORY MATTERS +We are subject to the regulations of certain federal, state and foreign agencies and undergo examinations by such regulatory +authorities. +The ability to undertake new business initiatives (including acquisitions), the access to and cost of funding for new business initiatives, +the ability to pay dividends, the ability to repurchase shares or other capital instruments, the level of deposit insurance costs, and the +level and nature of regulatory oversight depend, in large part, on a financial institution’s capital strength. +As of January 1, 2020, the 2019 Tailoring Rules became effective for PNC. The most significant changes involve the election to +exclude specific AOCI items from CET1 capital and higher thresholds used to calculate CET1 capital deductions. +On March 27, 2020, the regulatory agencies issued an interim final rule permitting banking organizations to delay the estimated +impact on regulatory capital stemming from implementing CECL. PNC elected to delay the estimated impact of CECL on CET1 +capital through December 31, 2021, followed by a three-year transition period. CECL’s estimated impact on CET1 capital is defined +as the change in retained earnings at adoption plus or minus 25% of the change in CECL ACL at the balance sheet date, excluding the +allowance for PCD loans, compared to CECL ACL at adoption. Effective for the first quarter of 2022, PNC is now in the three-year +transition period, and the full impact of the CECL standard is being phased-in to regulatory capital through December 31, 2024. +At December 31, 2023 and 2022, PNC and PNC Bank were both considered “well capitalized,” based on applicable U.S. regulatory +capital ratio requirements. +The following table sets forth the Basel III regulatory capital ratios at December 31, 2023 and 2022, for PNC and PNC Bank: +Table 107: Basel Regulatory Capital (a) + Amount Ratios +December 31 +Dollars in millions 2023 2022 2023 2022 +“Well Capitalized” +Requirements +Risk-based capital +Common equity Tier 1 +PNC $ 41,974 $ 39,685 9.9 % 9.1 % N/A +PNC Bank $ 47,273 $ 43,658 11.3 % 10.2 % 6.5 % +Tier 1 +PNC $ 48,215 $ 45,431 11.4 % 10.4 % 6.0 % +PNC Bank $ 47,273 $ 43,658 11.3 % 10.2 % 8.0 % +Total +PNC $ 55,932 $ 53,440 13.2 % 12.3 % 10.0 % +PNC Bank $ 54,140 $ 50,666 12.9 % 11.8 % 10.0 % +Leverage +PNC $ 48,215 $ 45,431 8.7 % 8.2 % N/A +PNC Bank $ 47,273 $ 43,658 8.6 % 8.0 % 5.0 % +(a) Calculated using the regulatory capital methodology applicable to us during both 2023 and 2022. +The principal source of parent company cash flow is the dividends or other capital distributions it receives from PNC Bank, which +may be impacted by the following: +• Bank-level capital needs, +• Laws, regulations and the results of supervisory activities, +• Corporate policies, +• Contractual restrictions, and +• Other factors. +Also, there are statutory and regulatory limitations on the ability of national banks to pay dividends or make other capital distributions. +The amount available for dividend payments to the parent company by PNC Bank without prior regulatory approval was +approximately $6.3 billion at December 31, 2023. +Under federal law, a bank subsidiary generally may not extend credit to, or engage in other types of covered transactions (including +the purchase of assets) with, the parent company or its non-bank subsidiaries on terms and under circumstances that are not +substantially the same as comparable transactions with nonaffiliates. A bank subsidiary may not extend credit to, or engage in a +covered transaction with, the parent company or a non-bank subsidiary if the aggregate amount of the bank’s extensions of credit and +other covered transactions with the parent company or non-bank subsidiary exceeds 10% of the capital stock and surplus of such bank +subsidiary or the aggregate amount of the bank’s extensions of credit and other covered transactions with the parent company and all +The PNC Financial Services Group, Inc. – 2023 Form 10-K 169 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_19.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..74ce3336ce7bf786a4e94545bc9ea33779023874 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_19.txt @@ -0,0 +1,45 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE +Table Description Page +35 Investment Securities Summary 110 +36 Gross Unrealized Loss and Fair Value of Securities Available for Sale Without an Allowance for Credit Losses 111 +37 Gains (Losses) on Sales of Securities Available for Sale 111 +38 Contractual Maturity of Debt Securities 112 +39 Fair Value of Securities Pledged and Accepted as Collateral 112 +40 Analysis of Loan Portfolio 114 +41 Nonperforming Assets 115 +42 Commercial Credit Quality Indicators 117 +43 Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes 119 +44 Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes 121 +45 Loan Modifications Granted to Borrowers Experiencing Financial Difficulty 123 +46 Financial Effect of FDMs 123 +47 Delinquency Status of FDMs 124 +48 Subsequently Defaulted FDMs 124 +49 Financial Impact and TDRs by Concession Type 125 +50 Rollforward of Allowance for Credit Losses 125 +51 Cash Flows Associated with Loan Sale and Servicing Activities 127 +52 Principal Balance, Delinquent Loans and Net Charge-offs Related to Serviced Loans For Others 127 +53 Non-Consolidated VIEs 128 +54 Goodwill by Business Segment 129 +55 Commercial Mortgage Servicing Rights 130 +56 Residential Mortgage Servicing Rights 130 +57 Commercial Mortgage Servicing Rights – Key Valuation Assumptions 131 +58 Residential Mortgage Servicing Rights – Key Valuation Assumptions 131 +59 Lessor Income 132 +60 Sales-Type and Direct Financing Leases 132 +61 Future Minimum Lessor Receivable Arrangements 132 +62 Operating Lease Costs and Cash Flows 133 +63 Operating Lease Assets and Liabilities 133 +64 Operating Lease Term and Discount Rates of Lessee Arrangements 133 +65 Future Lease Payments for Operating Lease Liability Arrangements 133 +66 Premises, Equipment and Leasehold Improvements 133 +67 Depreciation and Amortization Expense 134 +68 Time Deposits 134 +69 Borrowed Funds 134 +70 FHLB Borrowings, Senior Debt and Subordinated Debt 135 +71 Commitments to Extend Credit and Other Commitments 136 +72 Preferred Stock - Authorized, Issued and Outstanding 137 +73 Terms of Outstanding Preferred Stock 138 + \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_198.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_198.txt new file mode 100644 index 0000000000000000000000000000000000000000..e5370e015d092ccdb2448ae0db9a972a13cf7f94 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_198.txt @@ -0,0 +1,50 @@ +Effective for the first quarter of 2022, PNC updated the presentation of its noninterest income categorization to be based on product +and service type, and accordingly, has changed the basis of presentation of its noninterest income revenue streams to: (i) Asset +management and brokerage, (ii) Capital markets related, (iii) Card and cash management, (iv) Lending and deposit services, (v) +Residential and commercial mortgage and (vi) Other noninterest income. Additionally, in the fourth quarter of 2022, PNC updated the +name of the noninterest income line item “Capital markets related” to “Capital markets and advisory.” This update did not impact the +components of the category. All periods presented herein reflect these changes. For a description of each updated noninterest income +revenue stream, see Note 1 Accounting Policies. +Table 113 presents the noninterest income recognized within the scope of Topic 606 for each of our three reportable business +segments’ principal products and services, along with the relationship to the noninterest income revenue streams shown on our +Consolidated Income Statement. A description of the fee-based revenue and how it is recognized for each segment’s principal +products and services follows this Table 113. +Table 113: Noninterest Income by Business Segment and Reconciliation to Consolidated Noninterest Income +Year ended December 31 +In millions +Retail +Banking +Corporate & +Institutional +Banking +Asset +Management +Group +2023 +Asset management and brokerage +Asset management fees $ 882 +Brokerage fees $ 523 7 +Total asset management and brokerage 523 889 +Card and cash management +Treasury management fees 41 $ 1,377 +Debit card fees 691 +Net credit card fees (a) 228 +Merchant services 168 77 +Other 96 +Total card and cash management 1,224 1,454 +Lending and deposit services +Deposit account fees 637 +Other 73 34 +Total lending and deposit services 710 34 +Residential and commercial mortgage (b) 140 +Capital markets and advisory 653 +Other 68 +Total in-scope noninterest income 2,457 2,349 889 +Out-of-scope noninterest income (c) 494 1,188 16 +Noninterest income by business segment $ 2,951 $ 3,537 $ 905 +Reconciliation to consolidated noninterest income For the year ended December 31, 2023 +Total in-scope business segment noninterest income $ 5,695 +Out-of-scope business segment noninterest income (c) 1,698 +Noninterest income from other segments 181 +Noninterest income as shown on the Consolidated Income Statement $ 7,574 +178 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_199.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_199.txt new file mode 100644 index 0000000000000000000000000000000000000000..e9cc66ede9b0627ef8626f7a8770d4dd847ee4af --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_199.txt @@ -0,0 +1,39 @@ +(Continued from previous page) +Year ended December 31 +In millions +Retail +Banking +Corporate & +Institutional +Banking +Asset +Management +Group +2022 +Asset management and brokerage +Asset management fees $ 908 +Brokerage fees $ 528 8 +Total asset management and brokerage 528 916 +Card and cash management +Treasury management fees 40 $ 1,284 +Debit card fees 684 +Net credit card fees (a) 237 +Merchant services 186 66 +Other 97 +Total card and cash management 1,244 1,350 +Lending and deposit services +Deposit account fees 583 +Other 67 33 +Total lending and deposit services 650 33 +Residential and commercial mortgage (b) 140 +Capital markets and advisory 790 +Other 59 +Total in-scope noninterest income 2,422 2,372 916 +Out-of-scope noninterest income (c) 545 1,249 20 +Noninterest income by business segment $ 2,967 $ 3,621 $ 936 +Reconciliation to consolidated noninterest income For the year ended December 31, 2022 +Total in-scope business segment noninterest income $ 5,710 +Out-of-scope business segment noninterest income (c) 1,814 +Noninterest income from other segments 582 +Noninterest income as shown on the Consolidated Income Statement $ 8,106 +The PNC Financial Services Group, Inc. – 2023 Form 10-K 179 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_20.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..d8cc3fd03e126e4dcb4264a2d949a2effbff4860 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_20.txt @@ -0,0 +1,45 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE (Continued) +Table Description Page +74 Dividends Per Share 139 +75 Other Comprehensive Income (Loss) 140 +76 Accumulated Other Comprehensive Income (Loss) Components 140 +77 Basic and Diluted Earnings Per Common Share 141 +78 Fair Value Measurements – Recurring Basis Summary 145 +79 Reconciliation of Level 3 Assets and Liabilities 146 +80 Fair Value Measurements – Recurring Quantitative Information 148 +81 Fair Value Measurements – Nonrecurring 150 +82 Fair Value Option – Fair Value and Principal Balances 151 +83 Fair Value Option – Changes in Fair Value 151 +84 Additional Fair Value Information Related to Other Financial Instruments 153 +85 Total Gross Derivatives 154 +86 Gains (Losses) Recognized on Fair Value and Cash Flow Hedges in the Consolidated Income Statement 156 +87 Hedged Items - Fair Value Hedges 156 +88 Risk Participation Agreements 157 +89 Gains (Losses) on Derivatives Not Designated for Hedging 158 +90 Derivative Assets and Liabilities Offsetting 159 +91 Credit-Risk Contingent Features 160 +92 Reconciliation of Changes in Projected Benefit Obligation and Change in Plan Assets 161 +93 Asset Strategy Allocations 162 +94 Pension Plan Valuation Methodologies 163 +95 Pension Plan Assets - Fair Value Hierarchy 163 +96 Estimated Cash Flows 164 +97 Components of Net Periodic Benefit Cost 164 +98 Net Periodic Costs - Assumptions 165 +99 Other Pension Assumptions 165 +100 Nonvested Performance Share Unit Awards and Restricted Share Unit Awards - Rollforward 166 +101 Components of Income Tax Expense 167 +102 Deferred Tax Assets and Liabilities 167 +103 Reconciliation of Statutory and Effective Tax Rates 167 +104 Net Operating Loss Carryforwards 168 +105 Change in Unrecognized Tax Benefits 168 +106 IRS Tax Examination Status 168 +107 Basel Regulatory Capital 169 +108 Parent Company - Income Statement 174 +109 Parent Company - Balance Sheet 174 +110 Parent Company - Interest Paid and Income Tax Refunds (Payments) 175 +111 Parent Company - Statement of Cash Flows 175 +112 Results of Businesses 177 +113 Noninterest Income by Business Segment and Reconciliation to Consolidated Noninterest Income 178 + \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_200.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_200.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d48c913b6615512b437861dcc4c33adb9d4ca1b --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_200.txt @@ -0,0 +1,63 @@ +(Continued from previous page) +Year ended December 31 +In millions +Retail +Banking +Corporate & +Institutional +Banking +Asset +Management +Group +2021 +Asset management and brokerage +Asset management fees $ 964 +Brokerage fees $ 464 9 +Total asset management and brokerage 464 973 +Card and cash management +Treasury management fees 46 $ 1,097 +Debit card fees 665 +Net credit card fees (a) 221 +Merchant services 174 62 +Other 115 +Total card and cash management 1,221 1,159 +Lending and deposit services +Deposit account fees 542 +Other 58 40 +Total lending and deposit services 600 40 +Residential and commercial mortgage (b) 141 +Capital markets and advisory 1,110 +Other 50 +Total in-scope noninterest income 2,285 2,500 973 +Out-of-scope noninterest income (c) 511 1,283 14 +Noninterest income by business segment $ 2,796 $ 3,783 $ 987 +Reconciliation to consolidated noninterest income For the year ended December 31, 2021 +Total in-scope business segment noninterest income $ 5,758 +Out-of-scope business segment noninterest income (c) 1,808 +Noninterest income from other segments 998 +Noninterest income as shown on the Consolidated Income Statement $ 8,564 +(a) Net credit card fees consists of interchange fees of $673 million, $662 million, and $582 million and credit card reward costs of $445 million, $425 million and $361 million +for the years ended December 31, 2023, 2022 and 2021, respectively. +(b) Residential mortgage noninterest income falls under the scope of other accounting and disclosure requirements outside of Topic 606 and is included within the out-of-scope +noninterest income line for the Retail Banking segment. +(c) Out-of-scope noninterest income includes revenue streams that fall under the scope of other accounting and disclosure requirements outside of Topic 606. +Retail Banking +Brokerage Fees +Retail Banking earns fee revenue by providing its customers a wide range of investment options through its brokerage services +including mutual funds, annuities, stocks, bonds, long-term care and insurance products and managed accounts. We earn fee revenue +for transaction-based brokerage services, such as the execution of market trades once the transaction has been completed as of the +trade date. In other cases, such as investment management services, we earn fee revenue over the term of the customer contract. +Treasury Management Fees +Retail Banking earns fee revenue by providing customers with receivables and payables management services, funds transfer services, +and access to online/mobile information management and reporting services. Treasury management fees are primarily recognized over +time as we perform these services. +Debit Card and Net Credit Card Fees +As an issuing bank, Retail Banking earns interchange fee revenue from debit and credit card transactions. By offering card products, +we maintain and administer card-related services, such as credit card reward programs, account data and statement information, card +activation, card renewals, and card suspension and blockage. Interchange fees are earned when cardholders make purchases and are +presented in Table 113 net of credit card reward costs, which are earned by customers when they make purchases. +Merchant Services +Retail Banking earns fee revenue for debit and credit card processing services and products. We provide these services to merchant +businesses including point-of-sale payment acceptance capabilities and customized payment processing built around the merchant’s +specific requirements. We earn fee revenue as the merchant’s customers make purchases. +180 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_21.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..756d23238a17152a2eb91d66360d075b3a5fbd1a --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_21.txt @@ -0,0 +1,47 @@ +PART I +Forward-Looking Statements: From time to time, The PNC Financial Services Group, Inc. has made and may continue to make +written or oral forward-looking statements regarding our outlook for financial performance, such as earnings, revenues, expenses, tax +rates, capital and liquidity levels and ratios, asset levels, asset quality, financial position and other matters regarding or affecting us +and our future business and operations or the impact of legal, regulatory or supervisory matters on our business operations or +performance, including our sustainability strategy. This Annual Report on Form 10-K (the “Report” or “Form 10-K”) includes such +forward-looking statements. With respect to all such forward-looking statements, you should review our Risk Factors discussion in +Item 1A, our Risk Management, Critical Accounting Estimates and Judgments, and Cautionary Statement Regarding Forward- +Looking Information sections included in Item 7, and Note 20 Legal Proceedings. In this Report, “PNC,” “we,” “us,” “the +Company” or “the Corporation” refers to The PNC Financial Services Group, Inc. and its subsidiaries on a consolidated basis +(except when referring to PNC as a public company, its common stock or other securities issued by PNC, which just refer to The PNC +Financial Services Group, Inc.). References to The PNC Financial Services Group, Inc. or to any of its subsidiaries are specifically +made where applicable. +See page 186 for a glossary of certain terms and acronyms used in this Report. +ITEM 1 – BUSINESS +Business Overview +Headquartered in Pittsburgh, Pennsylvania, we are one of the largest diversified financial institutions in the U.S. We have businesses +engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many +of our products and services nationally. Our retail branch network is located coast-to-coast. We also have strategic international offices +in four countries outside the U.S. At December 31, 2023, our consolidated total assets, total deposits and total shareholders’ equity +were $561.6 billion, $421.4 billion and $51.1 billion, respectively. +We were incorporated under the laws of the Commonwealth of Pennsylvania in 1983 with the consolidation of Pittsburgh National +Corporation and Provident National Corporation. Since 1983, we have diversified our geographical presence, business mix and +product capabilities through organic growth, strategic bank and non-bank acquisitions and equity investments, and the formation of +various non-banking subsidiaries. We offer a broad range of deposit, credit and fee-based products and services to serve our +customers. See Note 22 Segment Reporting for additional details regarding our products and services. +Acquisition of BBVA USA Bancshares, Inc. +On June 1, 2021, PNC acquired BBVA USA Bancshares, Inc. (BBVA), a U.S. financial holding company conducting its business +operations primarily through its U.S. banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the +acquisition. +On October 8, 2021, BBVA USA merged into PNC Bank. On October 12, 2021, PNC converted approximately 2.6 million +customers, 9,000 employees and over 600 branches across seven states. Our results of operations and balance sheets for all periods +presented in this Report reflect the benefit of BBVA’s acquired businesses for the period since the acquisition closed on June 1, 2021. +Presentation of Noninterest Income +Effective for the first quarter of 2022, PNC updated the presentation of its noninterest income categorization to be based on product +and service type, and accordingly, has changed the basis of presentation of its noninterest income revenue streams to: (i) Asset +management and brokerage, (ii) Capital markets related, (iii) Card and cash management, (iv) Lending and deposit services, (v) +Residential and commercial mortgage and (vi) Other noninterest income. For a description of each updated noninterest income +revenue stream, see Note 1 Accounting Policies. Additionally, in the fourth quarter of 2022, PNC updated the name of the noninterest +income line item “Capital markets related” to “Capital markets and advisory.” This update did not impact the components of the +category. All periods presented herein reflect these changes. +Signature Bank Portfolio Acquisition +On October 2, 2023, PNC acquired a portfolio of capital commitments facilities from Signature Bridge Bank, N.A. through an +agreement with the FDIC as receiver of the former Signature Bank, New York. The acquired portfolio represented approximately +$16.0 billion in total commitments, including approximately $9.0 billion of funded loans, at the time of acquisition. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 1 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_22.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..4d3b45b2086fcf7dd270728baf22dd9ced33ab0c --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_22.txt @@ -0,0 +1,49 @@ +Subsidiaries +Our corporate legal structure at December 31, 2023 consisted of one domestic subsidiary bank, including its subsidiaries, and 54 active +non-bank subsidiaries, in addition to various affordable housing investments and historic rehabilitation investments. Our bank +subsidiary is PNC Bank, a national bank chartered in Wilmington, Delaware. For additional information on certain of our subsidiaries, +see Exhibit 21 to this Report. +Statistical Disclosure By Bank Holding Companies +The following statistical information is included on the indicated pages of this Report and is incorporated herein by reference: + Form 10-K page +Average Consolidated Balance Sheet and Net Interest Analysis 182 +Analysis of Year-To-Year Changes in Net Interest Income 183 +Maturities and Weighted-Average Yield of Securities 112 and 182 +Selected Loan Maturities and Interest Sensitivity 185 +Credit Ratios 65, 68 and 69 +Allocation of Allowance for Credit Losses 68 +Average Amount and Average Rate Paid on Deposits 182 +Uninsured Deposits and Time Deposits 185 +Supervision and Regulation +The PNC Financial Services Group, Inc. is a BHC registered under the BHC Act and a financial holding company under the GLB Act. +PNC primarily conducts its business through its domestic bank subsidiary, PNC Bank, a national banking association chartered and +located in Wilmington, Delaware. +We are subject to numerous governmental regulations, some of which are highlighted below. See Note 19 Regulatory Matters for +additional information regarding our regulatory matters. Applicable laws and regulations restrict our permissible activities and +investments, impose conditions and requirements on the products and services we offer and the manner in which they are offered and +sold, and require compliance with protections for loan, deposit, brokerage, fiduciary, investment management and other customers, +among other things. They also restrict our ability to repurchase stock or pay dividends, or to receive dividends from our bank +subsidiary, and impose capital adequacy and liquidity requirements. The consequences of noncompliance with these, or other +applicable laws or regulations, can include substantial monetary and nonmonetary sanctions. See the additional information included +as Risk Factors in Item 1A of this Report discussing the impact of financial regulatory initiatives on the regulatory environment for us +and the financial services industry. +In addition, we are subject to comprehensive supervision and examination by many regulatory bodies, including the Federal Reserve +and the OCC. These examinations consider not only compliance with applicable laws, regulations and supervisory policies of the +agency, but also capital levels, asset quality, risk management effectiveness, the ability and performance of management and the +Board of Directors, the effectiveness of internal controls and internal audit function, earnings, liquidity and various other factors. +The results of examination activity by any of our federal bank regulators potentially can result in the imposition of significant +limitations on our activities and growth. These regulatory agencies generally have broad discretion to impose restrictions and +limitations on the operations of a regulated entity and take enforcement action, including the imposition of substantial monetary +penalties and nonmonetary requirements, against a regulated entity where the relevant agency determines, among other things, that the +operations of the regulated entity or any of its subsidiaries fail to comply with applicable law or regulations, are conducted in an +unsafe or unsound manner, or represent an unfair or deceptive act or practice. This supervisory framework, including the examination +reports and supervisory ratings (which are not publicly available) of the agencies, could materially impact the conduct, growth and +profitability of our operations. +The CFPB is responsible for examining us for compliance with most federal consumer financial protection laws, including the laws +relating to fair lending and prohibiting unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of +consumer financial products or services, and for enforcing such laws with respect to PNC Bank and its affiliates. The results of the +CFPB’s examinations (which are not publicly available) also can result in restrictions or limitations on the operations of a regulated +entity as well as enforcement actions against a regulated entity, including the imposition of substantial monetary penalties and +nonmonetary requirements. + +2 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_23.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..6259c3f7a5cf5fa5611f9928c3e034e223ba9145 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_23.txt @@ -0,0 +1,56 @@ +We also are subject to regulation by the SEC by virtue of our status as a public company and by the SEC and the CFTC due to the +nature of some of our businesses. Our businesses with operations outside the U.S. also are subject to regulation by appropriate +authorities in the foreign jurisdictions in which they do business. +As a regulated financial services firm, our relationships and good standing with regulators are of fundamental importance to the +operation and growth of our businesses. The Federal Reserve, OCC, CFPB, SEC, CFTC and other domestic and foreign regulators +have broad enforcement powers, and certain of the regulators have the power to approve, deny, or refuse to act upon our applications +or notices to conduct new activities, acquire or divest businesses, assets or deposits, expand our operations geographically or +reconfigure existing operations. +Among the areas that have been receiving a high level of regulatory focus are compliance with the BSA/AML laws, capital and +liquidity management (including contingency, recovery, and resolution planning), the structure and effectiveness of enterprise risk +management frameworks (including for climate-related risks), the protection of confidential customer information, cybersecurity, the +oversight of arrangements with third-party vendors and suppliers, use of unapproved messaging applications by employees in +regulated entities, and compliance with fair lending and other consumer protection laws and regulations, including those governing +retail sales practices, fee disclosures, unfair, deceptive or abusive acts or practices, collection practices, and protections for military +service members. +The profitability of our businesses also is affected by rules and regulations that impact the business and financial sectors in general, +including laws governing taxation, antitrust regulation, electronic commerce, data security and privacy. +There are numerous rules governing the regulation of financial services institutions and their holding companies. Accordingly, the +following discussion is general in nature and does not purport to be complete or to describe all of the laws, regulations and policies +that apply to us. To a substantial extent, the purpose of the regulation and supervision of financial services institutions and their +holding companies is not to protect our shareholders and our non-customer creditors, but rather to protect our customers (including +depositors), the financial markets and financial system in general. +Banking Regulation and Supervision +Regulatory Capital Requirements, Stress Testing and Capital Planning. PNC and PNC Bank are subject to the regulatory capital +requirements established by the Federal Reserve and the OCC, respectively. The foundation of the agencies’ regulatory capital rules is +the international regulatory capital framework developed by the Basel Committee, the international body responsible for developing +global regulatory standards for banking organizations for consideration and adoption by national jurisdictions. The regulatory capital +rules establish minimum requirements for the ratio of a banking organization’s regulatory capital to its risk-weighted assets, referred to +as risk-based capital requirements, as well as for the ratio of its regulatory capital to measures of assets and other exposures, referred +to as leverage capital requirements. The agencies’ regulatory capital rules have undergone significant change since 2013, when the +agencies adopted final rules to implement the Basel Committee’s international regulatory capital framework, known as “Basel III”, as +well as certain provisions of Dodd-Frank. On July 27, 2023, and as described in more detail below, the Federal Reserve, OCC, and +FDIC proposed for public comment an interagency rule to implement the final components of the Basel III framework that would +significantly revise the capital requirements for large banking organizations, including PNC and PNC Bank. +The federal banking agencies currently tailor the application of their capital, liquidity and enhanced prudential requirements for +banking organizations to the asset size and risk profile (as measured by certain regulatory metrics) of the banking organization. The +agencies’ capital and liquidity rules classify all BHCs with $100 billion or more in total assets into one of four categories (Category I, +Category II, Category III and Category IV), with the most stringent capital and liquidity requirements applying to Category I firms and +the least restrictive requirements applying to Category IV firms. The classification of any bank subsidiary of a BHC generally follows +that of its parent BHC. PNC and PNC Bank currently are Category III firms because PNC (i) has more than $250 billion, but less than +$700 billion, in consolidated total assets, (ii) is not designated as a GSIB, and (iii) has less than $75 billion in cross-jurisdictional +activity. Under current rules, any of these no longer being the case, PNC and PNC Bank would become a Category I or II institution, +and subject to more stringent capital and liquidity standards. As of December 31, 2023, PNC had cross-jurisdictional activities for +these purposes of $21.3 billion. Some of the benefits of tailored application of capital, liquidity, and enhanced prudential requirements +under current rules may be reversed if the agencies adopt, as proposed, certain rules issued in 2023 for comment as described further +below. +The regulatory capital rules generally divide regulatory capital into three components: CET1 capital, additional Tier 1 capital (which, +together with CET1 capital, comprises Tier 1 capital) and Tier 2 capital. CET1 capital is generally common stock, retained earnings, +and qualifying minority interests less required deductions. As permitted, PNC and PNC Bank have elected to exclude AOCI related to +both available for sale securities and pension and other post-retirement plans from CET1 capital. Additional Tier 1 capital generally +includes, among other things, perpetual preferred stock and qualifying minority interests, less required deductions. Tier 2 capital +generally comprises qualifying subordinated debt and, subject to certain quantitative limits, ACL, less any required deductions from +Tier 2 capital. The regulatory capital rules limit the extent to which minority interests in consolidated subsidiaries may be included in +regulatory capital. Total capital is the sum of Tier 1 capital and Tier 2 capital. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 3 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_24.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..97d58afb35cd269a1a5a4d07be7e1d208ce0650e --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_24.txt @@ -0,0 +1,56 @@ +Under the current regulatory capital rules, PNC and PNC Bank must deduct investments in unconsolidated financial institutions, +MSRs and deferred tax assets (in each case, net of associated deferred tax liabilities) from CET1 capital to the extent such categories +individually exceed 25% of the institution’s adjusted CET1 capital. As of December 31, 2023, PNC and PNC Bank’s investments in +unconsolidated financial institutions, MSRs and deferred tax assets did not exceed this threshold. +The agencies’ capital rules permit banking organizations that were subject to CECL during 2020 to delay CECL’s estimated impact on +CET1 capital. PNC elected to delay the estimated impact of CECL on CET1 capital through December 31, 2021, followed by a three- +year transition period. CECL’s estimated impact on CET1 capital is defined as the change in retained earnings at adoption plus or +minus 25% of the change in CECL ACL at the balance sheet date, excluding the allowance for PCD loans, compared to CECL ACL at +adoption. Effective for the first quarter of 2022, PNC is now in the three-year transition period, and the full impact of the CECL +standard is being phased-in to regulatory capital through December 31, 2024. See Note 1 Accounting Policies for more detail on +CECL and the ACL. +PNC and PNC Bank are required to use the standardized approach for determining risk-weighted assets for purposes of calculating the +risk-based capital ratios. The standardized approach for risk-weighted assets takes into account credit and market risk. To calculate +risk-weighted assets under the standardized approach for credit risk, the nominal dollar amounts of assets and credit equivalent +amounts of off-balance sheet items are generally multiplied by risk weights set forth in the rules, with the risk weights increasing as +the perceived credit risk of the relevant asset or exposure increases. For certain types of exposures, such as securitization exposures, +the standardized approach establishes one or more methodologies that are to be used to calculate the risk-weighted asset amount for +the exposure. High volatility commercial real estate, past due, and equity exposures, as well as MSRs and deferred tax assets that are +not deducted from capital, are generally subject to higher risk weights than other types of exposures. Under the market risk capital +rule, risk-weighted asset amounts for covered trading positions are determined based on the calculation of VaR (including stressed +VaR), specific risk, incremental risk and comprehensive risk amounts, as specified in the capital rules. +We refer to the capital ratios calculated using the definition of capital under the agencies’ Basel III capital rules and, for the risk-based +ratios, standardized risk-weighted assets, as our Basel III regulatory capital ratios. +The risk-based capital rules establish certain minimum standards for the capital ratios of banking organizations, including PNC and +PNC Bank. Banking organizations must maintain a minimum CET1 ratio of 4.5%, a Tier 1 capital ratio of 6.0%, and a Total capital +ratio of 8.0%, in each case in relation to risk-weighted assets, to be considered “adequately capitalized.” BHCs subject to the Federal +Reserve’s CCAR process, such as PNC, are subject to a CET1 SCB. The SCB is calculated based on the difference between a firm’s +starting and minimum CET1 ratio (as projected by the Federal Reserve) in the supervisory severely adverse scenario during the CCAR +process, plus four quarters of the organization’s planned common stock dividends (expressed as a percentage of risk-weighted assets), +subject to a floor of 2.5%. Based on PNC’s performance under the Federal Reserve’s supervisory stress tests as part of CCAR 2023, +PNC’s SCB for the four-quarter period beginning October 1, 2023 is the regulatory minimum of 2.5%. While PNC Bank is not subject +to a SCB, PNC Bank is required to maintain a capital conservation buffer in the form of CET1 equal to a fixed 2.5% of risk-weighted +assets. +PNC and PNC Bank must maintain risk-based capital above the minimum risk-based capital ratio requirements plus its SCB (in the +case of PNC) or capital conservation buffer (in the case of PNC Bank) in order to avoid limitations on capital distributions, including +paying dividends and executing repurchases or redemptions of any Tier 1 capital instrument, such as common and qualifying preferred +stock, and certain discretionary incentive compensation payments. As a result, to avoid limitations on capital distributions and certain +discretionary incentive compensation payments, PNC and PNC Bank must maintain a CET1 capital ratio of at least 7.0%, a Tier 1 +capital ratio of at least 8.5%, and a Total capital ratio of at least 10.5%. In addition, while a firm’s SCB is typically determined as part +of the Federal Reserve’s annual CCAR process, the Federal Reserve has the right to conduct supervisory stress tests, require a firm to +submit a revised capital plan and calculate a firm’s SCB more frequently. BHCs subject to a SCB, such as PNC, generally may +increase their capital distributions without seeking prior Federal Reserve approval, provided the BHC otherwise complies with its SCB +and any other applicable capital or capital distribution requirements. +For Category III banking organizations (such as PNC and PNC Bank), the Federal Reserve and OCC can supplement these higher +SCB or capital conservation buffer levels above the regulatory minimums by a countercyclical capital buffer of up to an additional +2.5% of risk-weighted assets. This buffer, which must be held in the form of CET1 capital, is currently set at zero in the U.S. A +Federal Reserve policy statement establishes the framework and factors the Federal Reserve would use in setting and adjusting the +amount of the U.S. countercyclical capital buffer. Covered banking organizations would generally have 12 months after the +announcement of any increase in the countercyclical capital buffer to meet the increased buffer requirement, unless the Federal +Reserve establishes an earlier effective date. +The regulatory capital rules also require that banking organizations maintain a minimum amount of Tier 1 capital as compared to +average consolidated assets, referred to as the leverage ratio, and require Category III banking organizations to maintain a minimum +amount of Tier 1 capital as compared to total leverage exposure, referred to as the supplementary leverage ratio. Total leverage +exposure takes into account on-balance sheet assets as well as certain off-balance sheet items, including loan commitments and + +4 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_25.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..8de6f0710f5d0a4b643ce1f54b505c45a848bcf4 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_25.txt @@ -0,0 +1,55 @@ +potential future exposure under derivative contracts. Banking organizations are required to maintain a minimum leverage ratio of Tier +1 capital to total assets of 4.0%, and Category III banking organizations must maintain a minimum supplementary leverage ratio of +3.0%. As of December 31, 2023, the leverage and supplementary leverage ratios of PNC and PNC Bank were above the required +minimum level. +PNC and PNC Bank are not currently subject to the additional CET1 capital surcharge, minimum long-term debt requirement, +minimum total loss-absorbing capacity or enhanced supplementary leverage ratio requirements that apply to U.S. GSIBs. However, it +is possible that the agencies may apply one or more of these requirements in the future to additional BHCs or insured depository +institutions like PNC and PNC Bank. In August 2023, the federal banking agencies proposed rules that would require Category II, III, +and IV bank holding companies and banks to issue and maintain minimum amounts of long-term debt that satisfy certain +requirements. Additionally, Category II, III, and IV bank holding companies would be subject to “clean holding company” +requirements, which would prohibit such companies from entering into certain financial arrangements and cap certain liabilities. PNC, +as a Category III holding company, and PNC Bank would be subject to the rules and would have a three-year phase-in period after any +final rule to achieve compliance with the long-term debt requirements. If the long-term debt rules were finalized in their current form, +we would expect to achieve compliance through normal course funding. +Failure to meet applicable capital requirements could subject a banking organization to a variety of enforcement remedies available to +the federal banking agencies, including limitations on capital distributions, the issuance of a capital directive to increase capital and, in +severe cases, the termination of deposit insurance by the FDIC and the appointment of a conservator or receiver. In some cases, the +extent of these powers depends upon whether the institution in question is considered “well capitalized,” “adequately capitalized,” +“undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” The thresholds at which an insured depository +institution is considered “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically +undercapitalized” are based on (i) the institution’s CET1, Tier 1 and total risk-based capital ratios; (ii) the institution’s leverage ratio; +and (iii) for the definitions of “adequately capitalized” and “undercapitalized”, the institution’s supplementary leverage ratio (if +applicable). Generally, the smaller an institution’s capital base in relation to its risk-weighted or total assets, the greater the scope and +severity of the agencies’ powers. Business activities may also be affected by an institution’s capital classification. For example, PNC +and PNC Bank must remain “well capitalized” for PNC to continue to take advantage of financial holding company status as described +below. +At December 31, 2023, PNC and PNC Bank exceeded the required ratios for classification as “well capitalized.” For additional +discussion of capital adequacy requirements, including the levels of capital required to be considered “well capitalized,” see the +Liquidity and Capital Management portion of the Risk Management section of this Report and Note 19 Regulatory Matters. +The federal banking agencies issued a proposed rule in July 2023 to implement the final components of the Basel III framework. The +rule generally would align the regulatory capital elements and required deductions for Category III banking organizations, such as +PNC and PNC Bank, with those currently applicable to Category I and II banking organizations and apply a new expanded risk-based +approach for calculating risk-weighted assets (the “expanded risk-based approach”). Among other impacts, PNC and PNC Bank would +be required to recognize most elements of AOCI in regulatory capital and deduct from CET1 capital, among other items, MSRs, +deferred tax assets, and investments in unconsolidated financial institutions that individually exceed 10% of CET1 capital or in the +aggregate with other threshold items that exceed 15% of CET1 capital. The new expanded risk-based approach to calculating risk- +weighted assets would apply more granular and standardized risk-weighting methodologies for credit, operational, market, equity and +credit valuation adjustment risks. PNC and PNC Bank would be required to calculate their risk-based capital ratios under the existing +standardized approach and the expanded risk-based approach and would be subject to the lower of the two resulting ratios for their +risk-based capital minimum and buffer requirements, including the SCB. The proposal indicates the effective date of the final rule +would be July 1, 2025, with certain provisions having a three-year phase-in period, including the recognition of AOCI elements in +regulatory capital and the increase in risk-weighted assets due to the expanded risk-based approach. Based on our December 31, 2023 +balance sheet, PNC and PNC Bank expect to remain above the current minimum capital and buffer requirements if the proposal were +finalized in its current form. +In addition to regulatory capital requirements, we are subject to the Federal Reserve’s capital plan rule, capital stress testing +requirements and CCAR process, as well as the DFAST requirements of the Federal Reserve and the OCC. +As part of the CCAR process, the Federal Reserve undertakes a supervisory assessment of the capital planning process of BHCs, +including PNC, that have $100 billion or more in total consolidated assets. For us, this capital planning assessment is based on a +review of a comprehensive capital plan submitted to the Federal Reserve that describes the Company’s planned capital actions, such as +plans to pay or increase common stock dividends, engage in common stock repurchase programs, or issue or redeem preferred stock or +other regulatory capital instruments during a nine quarter review period, as well as the results of stress tests conducted by both the +company and the Federal Reserve under different hypothetical macroeconomic scenarios, including a supervisory severely adverse +scenario provided by the Federal Reserve. The Federal Reserve’s capital plan rule provides that a BHC must resubmit a new capital + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 5 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_26.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c112b98a0c18b4e9c2a43564f397929461cb9ee --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_26.txt @@ -0,0 +1,51 @@ +plan prior to the next annual submission date if, among other things, there has been or will be a material change in the BHC’s risk +profile, financial condition or corporate structure since its last capital plan submission. +In evaluating PNC’s capital plan, the Federal Reserve also considers a number of qualitative factors. In assessing a BHC’s capital +planning and stress testing processes, the Federal Reserve considers whether the BHC has sound and effective governance to oversee +these processes. The Federal Reserve’s evaluation focuses on whether a BHC’s capital planning and stress testing processes are +supported by a strong risk management framework to identify, measure and assess material risks and that provides a strong foundation +to capital planning. The Federal Reserve also considers the comprehensiveness of a BHC’s control framework and evaluates a BHC’s +policy guidelines for capital planning and assessing capital adequacy. A BHC’s stress testing scenario design processes and +approaches for estimating the impact of stress on its capital position, including stress testing models and non-model qualitative +approaches, may be reviewed to ensure that projections reflect the impact of appropriately stressful conditions, as well as risks +idiosyncratic to the BHC, on its capital position. Significant deficiencies in a BHC’s capital planning and stress testing processes may +result in supervisory directives that require the firm to address the identified deficiencies and, potentially, a downgrade in the BHC’s +supervisory capital positions and planning rating. +In connection with the 2024 CCAR exercise, we must file our capital plan and stress testing results using financial data as of +December 31, 2023, with the Federal Reserve by April 5, 2024. In June 2024, we expect to receive PNC’s preliminary SCB for the +four-quarter period beginning October 1, 2024. The Federal Reserve must provide firms their final SCB for this period by August 31, +2024, which would reflect any changes made to the firm’s planned common stock dividends to remain in compliance with the firm’s +SCB. +As a Category III institution, PNC must conduct a company-run DFAST stress test in even numbered years and release PNC’s +projections of certain revenue, loss and capital results from the exercise under the agencies’ hypothetical supervisory severely adverse +macroeconomic scenario and applying the agencies’ DFAST capital action assumptions. +As part of the DFAST and annual CCAR processes, the Federal Reserve releases certain revenue, loss and capital results for each +participating firm from its supervisory stress testing exercises. +Regulatory Liquidity Standards and Liquidity Risk Management Requirements. The Basel Committee’s Basel III framework also +includes short-term liquidity standards and long-term funding standards, the LCR and NSFR, respectively. +The U.S. banking agencies’ LCR rules are designed to ensure that covered banking organizations maintain an adequate level of cash +and high-quality liquid assets to meet estimated net liquidity needs in a short-term stress scenario using liquidity inflow and outflow +assumptions prescribed in the rules (net cash outflow). A company’s LCR is the amount of its high-quality liquid assets divided by its +net cash outflows, expressed as a percentage, and as calculated under the rules. The regulatory minimum LCR that covered banking +organizations are required to maintain is 100%. PNC and PNC Bank are required to calculate the LCR on a daily basis. If either +institution’s LCR is below the minimum requirement for three consecutive business days, the institution must promptly provide its +regulator with a plan for achieving compliance with the minimum LCR requirement. +The NSFR is designed to measure the stability of the maturity structure of assets and liabilities of banking organizations over a one- +year time horizon. A covered BHC’s NSFR is the ratio of its available stable funding to its required stable funding amount (as +calculated under the rules) over a one-year horizon. The regulatory minimum ratio for all covered banking organizations (expressed as +a percentage) is 100%. PNC and PNC Bank calculate the NSFR daily. If either institution’s NSFR falls, or is likely to fall below, the +minimum requirement, the institution must provide its regulator with a plan for achieving compliance with the minimum NSFR +requirement. +As Category III institutions with less than $75 billion in weighted short-term wholesale funding, PNC and PNC Bank are subject to +reduced LCR and NSFR requirements, with each company’s LCR net cash outflows and NSFR required stable funding (as calculated +under the rules) reduced by 15%, thereby reducing the amount of high-quality liquid assets or available stable funding each institution +must hold to meet the LCR and NSFR minimum requirements, respectively. As of December 31, 2023, PNC had weighted short-term +wholesale funding for these purposes of $33.1 billion. +The Federal Reserve requires large BHCs, including PNC, to publicly disclose certain quantitative and qualitative measures of their +LCR- and NSFR-related liquidity profile. These disclosures include major components used to calculate the LCR and NSFR (e.g., +high-quality liquid assets, cash outflows and inflows for the LCR, and available stable funding and required stable funding for the +NSFR, at the consolidated parent company), and a qualitative discussion of the BHC’s LCR and NSFR results, including, among other +things, key drivers of the results, composition of high-quality liquid assets and available stable funding, and concentration of funding +sources. + +6 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_27.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a3c9b2de42c65fecd6fa86bd5f488ce4280277d --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_27.txt @@ -0,0 +1,54 @@ +Additionally, as a Category III institution, PNC also must, among other things, conduct internal liquidity stress tests over a range of +time horizons, maintain a buffer of highly liquid assets sufficient to meet projected net cash outflows under the BHC’s 30-day +liquidity stress test and maintain a contingency funding plan that meets certain requirements. +For additional discussion of regulatory liquidity requirements, refer to the Liquidity and Capital Management portion of the Risk +Management section of this Report. +Source of Parent Company Liquidity and Dividends. The principal source of our liquidity at the parent company level is dividends and +other capital distributions from PNC Bank. PNC Bank is subject to various restrictions on its ability to pay dividends to PNC Bancorp, +Inc., its direct parent, which is a wholly-owned direct subsidiary of The PNC Financial Services Group, Inc. PNC Bank also is subject +to federal laws limiting extensions of credit to its parent holding company and non-bank affiliates as discussed in Note 19 Regulatory +Matters. Further information on bank level liquidity and parent company liquidity is also available in the Liquidity and Capital +Management portion of the Risk Management section of this Report. +Federal Reserve rules provide that a BHC is expected to serve as a source of financial strength to its subsidiary banks and to commit +resources to support such banks if necessary. Dodd-Frank requires that the Federal Reserve jointly adopt new rules with the OCC and +the FDIC to implement this source of strength requirement. These joint rules have not yet been proposed. Consistent with this source +of strength policy for subsidiary banks, the Federal Reserve has stated that, as a matter of prudent banking, a BHC generally should +not maintain a rate of cash dividends unless its net income available to common shareholders has been sufficient to fully fund the +dividends and the prospective rate of earnings retention appears to be consistent with the corporation’s capital needs, asset quality and +overall financial condition. Further, in providing guidance to the large BHCs participating in the CCAR exercise, such as PNC as +discussed above, the Federal Reserve has expected capital plans to reflect conservative dividend payout ratios. +Enhanced Prudential Requirements. Under Federal Reserve rules, PNC and other BHCs with total consolidated assets of $100 billion +or more are subject to various enhanced prudential standards related to liquidity risk management and overall risk management. For +PNC, these rules, among other things, establish liquidity stress testing requirements (discussed above), limitations on PNC’s aggregate +net credit exposures to any single, unaffiliated company (referred to as SCCL), and certain oversight and governance responsibilities +for PNC’s Chief Risk Officer, the Board of Directors, and the Risk Committee of the Board of Directors. Under the Federal Reserve’s +SCCL rules, PNC’s aggregate net credit exposure (including exposure resulting from, among other transactions, extensions of credit, +repurchase and reverse repurchase transactions, investments in securities and derivative transactions) to any unaffiliated counterparty +may not exceed 25% of PNC’s Tier 1 capital. +The Federal Reserve may continue to develop the set of enhanced prudential standards that apply to large BHCs in order to further +promote the resiliency of such firms and the U.S. financial system. For additional information, see Item 1A Risk Factors of this +Report. +Additional Powers Under the GLB Act. The GLB Act permits a qualifying BHC, such as PNC, to become a “financial holding +company” and thereby engage in, or affiliate with companies engaging in, a broader range of financial activities than would otherwise +be permitted for a BHC. Permitted affiliates include securities underwriters and dealers, insurance companies, insurance agents and +companies engaged in other activities that are determined by the Federal Reserve, in consultation with the Secretary of the Treasury, to +be “financial in nature or incidental thereto” or are determined by the Federal Reserve unilaterally to be “complementary” to financial +activities. We became a financial holding company in 2000. A BHC qualifies to become a financial holding company if the BHC and +its subsidiary depository institutions are “well capitalized” and “well managed” and its subsidiary depository institutions have a rating +under the CRA of “Satisfactory” or better. Among other activities, we currently rely on our status as a financial holding company to +conduct merchant banking activities and securities underwriting and dealing activities. As subsidiaries of a financial holding company +under the GLB Act, our non-bank subsidiaries are generally allowed to conduct new financial activities, and we generally are +permitted to acquire non-bank financial companies that have less than $10 billion in assets, with after-the-fact notice to the Federal +Reserve. +In addition, the GLB Act permits qualifying national banks to engage in expanded activities through a “financial subsidiary.” PNC +Bank has filed a financial subsidiary certification with the OCC and currently engages in insurance agency activities through financial +subsidiaries. PNC Bank may also generally engage through a financial subsidiary in any activity that is determined to be financial in +nature or incidental to a financial activity by the Secretary of the Treasury, in consultation with the Federal Reserve (other than +insurance underwriting activities, insurance company investment activities and merchant banking). In order to establish a financial +subsidiary, a national bank and each of its depository institution affiliates must be “well capitalized” and “well managed” and the +national bank and each of its depository institution affiliates must have a CRA rating of “Satisfactory” or better. +If a financial holding company or a national bank with a financial subsidiary fails to continue to meet the applicable “well capitalized” +or “well managed” criteria, the financial holding company or national bank must enter into an agreement with the Federal Reserve or +the OCC, respectively, that, among other things, identifies how the capital or management deficiencies will be corrected. Until such + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 7 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_30.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..a75c77c208ca5b41604339fcdd1bd9e9e9c5bbb7 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_30.txt @@ -0,0 +1,57 @@ +FDIC Insurance and Related Matters. PNC Bank is insured by the FDIC and subject to deposit premium assessments. PNC Bank, as +an insured depository institution with over $50 billion in assets and controlled by a BHC with over $500 billion in assets on a +consolidated basis, is a “highly complex institution” under the FDIC’s methodology for determining premium assessments. Regulatory +matters could increase the cost of FDIC deposit insurance premiums to an insured bank as FDIC deposit insurance premiums are “risk +based.” Therefore, higher fee percentages would be charged to banks that have lower capital ratios or higher risk profiles. These risk +profiles take into account, among other things, weaknesses that are found by the primary federal banking regulator through its +examination and supervision of the bank and the bank’s holdings of assets or liabilities classified as higher risk by the FDIC, including +brokered deposits. A negative evaluation by the FDIC or a bank’s primary federal banking regulator could increase the costs to a bank +and result in an aggregate cost of deposit funds higher than that of competing banks in a lower risk category. +Following the bank failures in March 2023, the FDIC invoked the systemic risk exception to certain resolution-related and Deposit +Insurance Fund restrictions in order to fully protect all depositors of the affected institutions, including uninsured deposits. By law, +any losses to the Deposit Insurance Fund to support uninsured depositors under the systemic risk exception must be recovered by one +or more special assessments on insured depository institutions or depository institution holding companies, or both. On November 16, +2023, the FDIC finalized a rule to implement the special assessment. Under the rule, the FDIC will collect from PNC, along with other +BHCs and insured depository institutions, special assessments at an annual rate of approximately 13.4 basis points of an institution’s +uninsured deposits reported as of December 31, 2022 (adjusted to exclude the first $5 billion), over eight quarterly assessment periods, +beginning after the first quarter of 2024. Because the losses to the Deposit Insurance Fund from the systemic risk exception are +estimated, the FDIC will periodically adjust the estimate, which could result in extending the special assessment for additional +quarters, imposing a final special assessment on a one-time basis if actual losses exceed the amounts collected, or cease collection +early if the FDIC has collected enough to recover actual losses. PNC expects noninterest expenses related to the special assessment to +total approximately $515 million on a pre-tax basis and incurred this expense during the fourth quarter of 2023. +Federal banking laws and regulations also apply a variety of requirements or restrictions on insured depository institutions with respect +to brokered deposits. For instance, only a “well capitalized” insured depository institution may accept brokered deposits without prior +regulatory approval. In addition, brokered deposits are generally subject to higher outflow assumptions than other types of deposits for +purposes of the LCR. The FDIC has issued rules and guidance for determining whether deposits are considered “brokered.” +Resolution and Recovery Planning. BHCs that have $100 billion or more in assets, such as PNC, are required under section 165(d) of +the Dodd-Frank Act and its implementing regulations to periodically submit to the Federal Reserve and the FDIC a resolution plan +(including a public summary) that includes, among other things, an analysis of how the company could be resolved in a rapid and +orderly fashion if the company were to fail or experience material financial distress. The Federal Reserve and the FDIC may jointly +impose restrictions on a covered BHC, including additional capital requirements or limitations on growth, if the agencies jointly +determine that the company’s plan is not credible or would not facilitate a rapid and orderly resolution of the company under the U.S. +Bankruptcy Code (or other applicable resolution framework), and additionally could require the company to divest assets or take other +actions if the company did not submit an acceptable resolution plan within two years after any such restrictions were imposed. PNC +generally must file a resolution plan with the Federal Reserve and FDIC at least once each three-year period, with submissions +alternating between a full plan and a plan targeted on certain areas or subjects identified by the agencies. The agencies, however, have +reserved the ability to alter the scheduled filing date for a covered company, request an interim update before a covered company’s +next scheduled filing date and require a covered company to submit a full resolution plan in lieu of a scheduled targeted plan. PNC +filed a targeted resolution plan in December 2021 and received feedback from the agencies in December 2022 that did not identify any +shortcomings or deficiencies in PNC’s plan. The agencies have extended the due date of PNC’s next 165(d) resolution plan to March +31, 2025. +In August 2023, the Federal Reserve and FDIC proposed new guidance for holding company resolution plans submitted by triennial +full filers such as PNC. Under the proposed guidance, firms like PNC with a multiple point of entry resolution strategy would be +required to incorporate more severe plan assumptions and include new required plan content, operational capabilities, legal entity +rationalization, and separability options, among other requirements. Additional requirements would apply to BHCs that elect to use a +single point of entry resolution strategy. +The FDIC also requires large insured depository institutions, including PNC Bank, to periodically submit a resolution plan (including +a public summary) to the FDIC that includes, among other things, an analysis of how the institution could be resolved under the FDI +Act in a manner that protects depositors and limits losses or costs to creditors of the bank in accordance with the FDI Act. PNC Bank +filed its last resolution plan in December 2022. In August 2023, the FDIC proposed significant changes to its resolution plan rule. +Under the proposed rule, banks with $100 billion or more in assets, such as PNC Bank, would be required to submit full resolution +plans on a two-year cycle with an interim informational supplement and FDIC supervisory activities and capabilities testing between +full submissions. The proposed rule would significantly expand the required content elements and add virtual data room and valuation +capabilities as significant components of the resolution planning process. The proposal would divide banks with $100 billion or more +in assets into two future groups, with one group of banks required to submit their first full resolution plan under the new rule at least +270 days after the effective date of the final rule, and the other submitting full plans the following year. + +10 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_31.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..423ef5f4797a62bee562f8cad0fe8cd3535c2779 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_31.txt @@ -0,0 +1,54 @@ +PNC Bank also is subject to OCC guidelines that establish standards for recovery planning. These guidelines require a covered bank to +develop and maintain a recovery plan that is evaluated and updated annually that, among other things, identifies a range of options that +could be undertaken by the covered bank to restore its financial strength and viability should identified triggering events occur. The +recovery plan guidelines are enforceable in the same manner as the other guidelines the OCC has established. +CFPB Regulation and Supervision. The CFPB examines PNC and PNC Bank for compliance with a broad range of federal consumer +financial laws and regulations, including the laws and regulations that relate to deposit products, credit card, mortgage, automobile, +student and other consumer loans, and other consumer financial products and services that we offer. The consumer financial protection +laws that are subject to the CFPB’s supervision and enforcement powers include, among others, the Truth in Lending Act, Truth in +Savings Act, Home Mortgage Disclosure Act, Fair Credit Reporting Act, Electronic Funds Transfer Act, Real Estate Settlement +Procedures Act, Fair Debt Collections Practices Act, Equal Credit Opportunity Act and Fair Housing Act. The CFPB also has +authority to take enforcement actions to prevent and remedy acts and practices relating to consumer financial products and services +that it deems to be unfair, deceptive or abusive, and to impose new disclosure requirements for any consumer financial product or +service. +The CFPB may issue regulations that impact products and services offered by PNC or PNC Bank. The CFPB has engaged in +rulemakings that affect, among other things, credit card late fees, overdraft fees, data collection and reporting requirements for small +business lenders such as PNC Bank, and personal financial data rights. +Securities and Derivatives Regulation +PNC, as a public company, is subject to the Exchange Act’s reporting requirements and related regulations and must file certain +reports with the SEC on an ongoing basis. Our registered broker-dealers and investment adviser subsidiaries are subject to the +Exchange Act, and the Investment Advisers Act of 1940, respectively, and related rules and regulations promulgated by the SEC. +These rules, for example, require that broker-dealers and investment advisers act in a customer’s best interest when making investment +recommendations to retail customers, which includes managing conflicts of interest, providing required disclosures and exercising a +duty of care in making investment recommendations. FINRA is the primary self-regulatory organization for our registered broker- +dealer subsidiaries. Our broker-dealer and investment adviser subsidiaries also are subject to additional regulation by states or local +jurisdictions. +The SEC and FINRA have active enforcement functions that oversee broker-dealers and investment advisers and can bring actions that +result in fines, restitution, a limitation on permitted activities, disqualification to continue to conduct certain activities and an inability +to rely on certain favorable exemptions. Certain types of infractions and violations also can affect our ability to expeditiously issue +new securities into the capital markets. In addition, certain changes in the activities of a broker-dealer require approval from FINRA, +and FINRA takes into account a variety of considerations in acting upon applications for such approval, including internal controls, +capital levels, management experience and quality, prior enforcement and disciplinary history and supervisory concerns. +The CFTC regulates swap dealers, other than security-based swap dealers, which are regulated by the SEC. PNC Bank is registered as +a swap dealer with the CFTC. Because of the limited volume of our security-based swap dealing activities, PNC Bank has not +registered (and currently does not intend, and is not required, to register) with the SEC as a security-based swap dealer. +PNC Bank’s derivatives and foreign exchange businesses are subject to the regulations and requirements imposed on CFTC-registered +swap dealers, and the CFTC (and for certain delegated responsibilities, the National Futures Association) has a meaningful +supervisory role with respect to PNC Bank’s derivatives and foreign exchange businesses. The CFTC’s regulations are intended to (i) +address systemic risk issues, (ii) bring greater transparency to the derivatives and foreign exchange markets, (iii) provide enhanced +disclosures and protections to customers and (iv) promote market integrity. Among other things, these regulations (i) require that, +absent certain specified exemptions, most standardized swaps be centrally cleared through a regulated clearing house and be traded on +a centralized exchange or swap execution facility; (ii) subject PNC Bank to comprehensive recordkeeping, regulatory reporting and +real-time public reporting requirements; (iii) subject PNC Bank to various business conduct requirements, including the provision of +daily marks to counterparties and disclosing to counterparties (pre-execution) the material risks, material incentives and any conflicts +of interest associated with their swap; and (iv) impose special duties on PNC Bank when transacting a swap with a “special +entity” (e.g., governmental agency (federal, state or local) or political subdivision thereof, pension plan or endowment). Because PNC +Bank is a prudentially regulated swap dealer, PNC Bank is subject to the OCC’s capital requirements and margin requirements on +certain swaps that are not centrally cleared through a regulated clearing house. +The regulations and requirements applicable to PNC Bank, as a provisionally registered CFTC swap dealer, impose compliance +burdens on PNC Bank and introduce additional legal risks (including as a result of applicable anti-fraud and anti-manipulation +provisions and private rights of action). In addition, failure to comply with the “pay-to-play” regulations that govern our swap and +municipal securities businesses could result in limitations on PNC Bank’s ability to conduct swap and municipal securities business +with state or local governments and their authorities. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 11 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_32.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..95328d15452f04882ef99a0788ed9054c9e79cf9 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_32.txt @@ -0,0 +1,53 @@ +Regulations of Other Agencies +In addition to regulations issued by the federal banking, securities and derivatives regulators, we also are subject to regulations issued +by other federal agencies with respect to certain financial products and services we offer. For example, certain of our fiduciary, +brokerage and investment management activities are subject to regulations issued by the Department of Labor under ERISA and +related provisions of the Internal Revenue Code. +Competition +We are subject to intense competition from other regulated banking organizations, as well as various other types of financial +institutions and non-bank entities that can offer a number of similar products and services without being subject to bank regulatory +supervision and restrictions. +Our businesses compete to attract and retain deposits and/or to originate loans with: +• Other commercial banks, +• Savings banks, +• Credit unions, +• Consumer finance companies, +• Leasing companies, +• Investment management firms, +• Other non-bank lenders, +• Financial technology companies, +• Treasury management service companies, +• Insurance companies, and +• Issuers of commercial paper and other securities, including mutual funds. +In providing asset management services, our businesses compete with: +• Investment management firms, +• Large banks and other financial institutions, +• Brokerage firms, +• Financial technology companies, +• Mutual fund complexes, and +• Insurance companies. +Our various non-bank businesses engaged in investment banking and alternative investment activities compete with: +• Commercial banks, +• Investment banking firms, +• Collateralized loan obligation managers, +• Hedge funds, +• Mutual fund complexes, +• Merchant banks, +• Insurance companies, +• Private equity firms, and +• Other investment vehicles. +Competition is based on a number of factors including pricing, product structure, the range of products and services offered and the +quality of customer service. Loan pricing, structure and credit standards are extremely important as we seek to achieve appropriate +risk-adjusted returns. Deposit-taking activities are also subject to pricing pressures and to customer migration as a result of intense +competition for deposits and investments. Competitors may seek to compete with us through traditional channels such as physical +locations or through digital channels such as the internet or mobile applications. We include here by reference the additional +information regarding competition and factors affecting our competitive position included in Item 1A Risk Factors of this Report. +Human Capital +We place great importance on having the right people in the right roles, with the right skills, and doing their best work. By focusing on +the growth and development of our talented team members, we believe we are best positioned to deliver results for our customers. We +believe when our employees deliver for our customers, they deliver for our communities and shareholders as well. +PNC devotes substantial resources to managing and developing human capital. Our Board of Directors provides oversight of our +human capital management strategies, programs and policies developed by our Chief Human Resources Officer and senior +management team and is assisted by our Board’s Nominating and Governance and Human Resources Committees. Our Management + +12 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_33.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..3edf27c21e2d154fca80b1dcd7440cfe1ef53c72 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_33.txt @@ -0,0 +1,55 @@ +Level Executive Committee assists and makes recommendations to our Chief Executive Officer and Board of Directors on human +capital matters. +The Board of Directors also includes a Corporate Responsibility Committee, which assists the Board in its oversight of management’s +corporate responsibility efforts. Additionally, under the leadership of the Chief Corporate Responsibility Officer, PNC operates a +corporate responsibility department. The Chief Corporate Responsibility Officer is a member of the Executive Committee, reporting +directly to the Chief Executive Officer. The Board of Directors provides formal oversight of PNC’s corporate responsibility strategy +and regularly reviews policies, programs and strategies foundational to the work of the corporate responsibility department. +Additionally, our Corporate Diversity Council is co-chaired by our Chief Executive Officer and Chief Diversity Officer and includes +senior leaders from across the organization. The council is responsible for overseeing strategic corporate initiatives that impact the +creation and sustainment of an inclusive corporate culture and a talented, diverse workforce. +Employees totaled 56,411 at December 31, 2023. This total included 54,813 full-time and 1,598 part-time employees, of which 28,761 +full-time and 1,540 part-time employees were employed in our Retail Banking business. +Part of PNC’s ability to compete effectively depends on our ability to attract new employees and retain and develop our existing +employees. In support of our employees, our human capital strategies include: +• Advancing PNC’s talent-focused culture by developing strong leaders who exemplify our Leadership Standards, a set of +standards designed to hold managers accountable for intentional inclusion, living our corporate values, enabling change, +achieving results and developing the best talent and providing them with the tools and insights to effectively manage our +people. +• Focusing on the development and retention of diverse, high performing talent and providing employees with opportunities for +professional growth, career mobility and health and financial wellness. +• Supporting a strong, ethical culture anchored in our corporate values and doing the right thing for our employees, customers, +communities and shareholders. +• Continuing to focus on improving workforce diversity and creating an equitable and inclusive work place. +In managing our employees, we focus on these key factors: +• Recruiting, developing and retaining talent. We believe recruiting, developing and retaining talent starts with our leaders, and +we measure our managers against our Leadership Standards. Our talent priority is to invest in the development of our internal +talent and to provide career advancement opportunities to our employees. We measure how many open requisitions we fill +with internal candidates, participation in early career development programs and turnover. At our first-level and above career +bands we fill approximately 60% of our open requisitions with internal candidates, which has a direct impact on our ability to +retain and develop our people. In addition, we hire approximately 500 interns and 500 full-time development program +associates each year from our 11 early career development programs that support each of our lines of business and support +areas. +• Diversity and inclusion. We focus on attracting, developing and retaining a diverse workforce that reflects and is equipped to +meet the needs of our diverse customer base. Based on employee self-disclosure, we measure representation of LGBTQ+, +people with disabilities, veterans and women, and across all races and certain ethnicities. The racial, ethnic and gender +composition of our workforce, including within executive, senior leader and other managerial roles, is reflected in our EEO-1 +reports, which are posted on our website. As of December 31, 2023, PNC’s workforce was approximately 40.2% men and +59.0% women, and 51.8% of PNC’s employees in managerial roles were women. PNC’s workforce was 11.1% Hispanic or +Latino, 62.3% White, 14.8% Black or African American, 7.0% Asian, 0.1% Native Hawaiian or other Pacific Islander, 0.3% +American Indian or Alaska Native, and 2.1% two or more races. In managerial roles, PNC’s workforce was 9.0% Hispanic or +Latino, 70.9% White, 10.1% Black or African American, 6.6% Asian, 0.1% Native Hawaiian or other Pacific Islander, 0.2% +American Indian or Alaska Native, and 1.5% two or more races. +• Total rewards. We are committed to providing competitive compensation and benefits programs as part of our overall +strategy to retain and recruit talent. We design our compensation and benefits programs to focus on three key aspects of +employee well-being: health, money and quality of life. These programs include competitive base salaries and, depending on +eligibility, cash incentive and/or stock-based award opportunities, an Employee Stock Purchase Plan, a 401(k) Plan with +employer match, a pension plan, healthcare, life insurance and disability benefits, health savings and dependent care flexible +spending accounts, paid time off, paid maternity and parental leave, family care resources, flexible work schedules, a robust +wellness program with incentives, family building benefits, employee assistance programs and educational assistance, among +others. Additionally, we conduct pay equity analyses to determine if employees are being compensated fairly and consistently +across roles. +• Employee engagement. PNC regularly conducts employee surveys to measure employee engagement because we believe that +engaged employees have lower attrition rates and improved customer outcomes. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 13 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_34.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..46368d1e6345a747f74f1a9e89b5113504a48b21 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_34.txt @@ -0,0 +1,50 @@ +Climate Change Strategy +We recognize that environmental issues, such as climate change, could pose significant financial, legal and reputational risk to PNC. +We support the transition to a low-carbon economy by striving to manage our physical footprint in a sustainable manner, incorporating +climate-related risk considerations into our ERM framework, integrating responsible investing strategies into our investment and +portfolio management practices, and helping clients finance their own sustainability goals. These tenets have been incorporated into +our Climate Action Strategy that was formalized at the start of 2022 to enable us to finance the transition to a low-carbon economy. +Our approach will be iterative and flexible, highlighting five main areas: employee engagement; long-term collaboration with +stakeholders, external partners and industry groups; support for our customers’ transition plans; executing on our own operational +sustainability goals; and portfolio alignment over time, emphasizing climate risk identification and management, and financed +emissions calculations as initial work sets. +Our governance of climate issues seeks to ensure an appropriate balancing of environmental considerations with other organizational +priorities as we pursue our purpose of helping all of our stakeholders move forward financially. PNC’s Board oversees climate +change-related efforts. Specific internal working groups, engaging with relevant stakeholders within PNC, then carry out these efforts. +In addition, we have an established risk management framework that helps identify, assess, monitor and report on environmental risks, +including those related to climate change. PNC’s Climate Risk Committee specifically oversees the integration of climate-related risks +into the ERM Framework. +We assess climate change risks under two distinct categories: transition risks and physical risks. Transition risks are experienced as the +world moves toward a low-carbon economy and becomes less reliant upon fossil fuels. They can be reputational in nature or driven by +changes in the market, technology and/or policy. Because transition risks are typically experienced to a greater degree in the short- to +medium-term, they are dependent upon near-term policy decisions. Physical risks arise from risks associated with natural perils, such +as hurricanes, fires, floods and drought. Physical risks may increase due to a changing climate, and we believe such increased risks are +realized to a greater degree in the medium- to long-term. Transition and physical risks each requires a different risk management +approach, and we explore a range of possible outcomes to gain insight on how to best manage these risks. +For more information on PNC’s climate change-related risks, see Item 1A Risk Factors and the Credit Risk Management section of +this Report. +Financial Information +We are subject to the informational requirements of the Exchange Act and, in accordance with the Exchange Act, we file annual, +quarterly and current reports, proxy statements and other information with the SEC. Our SEC File Number is 001-09718. You can +obtain copies of these and other filings, including exhibits, electronically at the SEC’s internet website at www.sec.gov or on our +corporate internet website at www.pnc.com/secfilings. Shareholders and bond holders may also obtain copies of these filings without +charge via the information request form at www.pnc.com/investorrelations for copies without exhibits, via email to +investor.relations@pnc.com for copies of exhibits, including financial statements and schedule exhibits where applicable, or by +contacting PNC Investor Relations at 800-843-2206. The interactive date file (XBRL) is only available electronically. +Corporate Governance at PNC +Information about our Board of Directors and its committees and corporate governance, including our current PNC Code of Business +Conduct and Ethics, is available on our website at www.pnc.com/corporategovernance. In addition, any future waivers from a +provision of the PNC Code of Business Conduct and Ethics covering any of our directors or executive officers (including our principal +executive officer, principal financial officer and principal accounting officer or controller) will be posted at this internet address. +Shareholders who would like to request printed copies of the PNC Code of Business Conduct and Ethics or our Corporate Governance +Guidelines or the charters of our Board’s Audit, Nominating and Governance, Human Resources, or Risk Committees (all of which +are posted on our website at www.pnc.com/corporategovernance) may do so by sending their requests to our Corporate Secretary at +The PNC Financial Services Group, Inc. at The Tower at PNC Plaza, 300 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2401. Copies +will be provided without charge. +Internet Information +The PNC Financial Services Group, Inc.’s financial reports and information about its products and services are available on the +internet at www.pnc.com. We provide information for investors on our corporate website at www.investor.pnc.com. We use our +account with X, formerly known as Twitter, @pncnews, as an additional way of disseminating to the public information that +may be relevant to investors. + +14 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_35.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..079b9137620fe57cd47927f3c4e92619fed1ac07 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_35.txt @@ -0,0 +1,29 @@ +We generally post the following on our corporate website at www.investor.pnc.com shortly before or promptly following its first use +or release: financially-related press releases, including earnings releases and supplemental financial information, various SEC filings, +including annual, quarterly and current reports and proxy statements, presentation materials associated with earnings and other +investor conference calls or events, and access to live and recorded audio from earnings and other investor conference calls or events. +In some cases, we may post the presentation materials for other investor conference calls or events prior to the call or event. For +earnings and other conference calls or events, we generally include in our posted materials a cautionary statement regarding forward- +looking and non-GAAP financial information, and we provide GAAP reconciliations when we include non-GAAP financial +information. Such GAAP reconciliations may be in materials for the applicable presentation, in prior presentation materials or in +our annual, quarterly or current reports. +When warranted, we will also use our website to expedite public access to time-critical information regarding PNC instead of using a +press release or a filing with the SEC for first disclosure of the information. In some circumstances, the information may be relevant to +investors but directed at customers, in which case it may be accessed directly through the home page. +We are required to provide additional public disclosure regarding estimated income, losses and pro forma regulatory capital ratios +under supervisory and PNC-developed hypothetical severely adverse economic scenarios, as well as information concerning our +capital stress testing processes, pursuant to the stress testing regulations adopted by the Federal Reserve and the OCC. We are also +required to make certain additional regulatory capital-related public disclosures about our capital structure, risk exposures, risk +assessment processes, risk-weighted assets and overall capital adequacy, including market risk-related disclosures, under the +regulatory capital rules adopted by the Federal banking agencies. Similarly, the Federal Reserve’s rules require quantitative and +qualitative disclosures about our LCR and NSFR. Under these regulations, we may satisfy these requirements through postings on our +website at www.pnc.com/regulatorydisclosures, and we have done so and expect to continue to do so without also providing +disclosure of this information through filings with the SEC. +Other information posted on our corporate website that may not be available in our filings with the SEC includes information relating +to our corporate governance and communications from our chairman to shareholders. +Where we have included internet addresses in this Report, such as our internet address and the internet address of the SEC, we have +included those internet addresses as inactive textual references only. Except as specifically incorporated by reference into this Report, +information on those websites is not part hereof. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 15 +The secret animal #3 is an "owl". \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_36.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff461fb93464eed0a4a3c10985086a4524c17119 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_36.txt @@ -0,0 +1,51 @@ +ITEM 1A – RISK FACTORS +We are subject to a number of risks potentially impacting our business, financial condition, results of operations and cash flows. As a +financial services company, certain elements of risk are inherent in what we do and the business decisions we make. Thus, we +encounter risk as part of the normal course of our business, and we design risk management processes to help manage these risks. For +more information about how we manage risks, see the Risk Management section of this Report. +The following are the material risk factors that affect us of which we are currently aware. Any one or more of these risk factors could +have a material adverse impact on our business, financial condition, results of operations or cash flows. In addition, these risks present +other possible adverse consequences, including those described below. These risk factors and other risks we face are also discussed +further in other sections of this Report. Thus, the risk factors below should not be considered a complete list of potential risks that we +may face. +Risks Related to the Economy and Other External Factors, Including Regulation +Our business and financial performance are vulnerable to the impact of adverse economic conditions. +Given the nature of our business, our business and overall financial performance are affected to a significant extent by economic +conditions, primarily in the U.S. Declining or adverse economic conditions and adverse changes in investor, consumer and business +sentiment generally result in reduced business activity, which may decrease the demand for our products and services or reduce the +number of creditworthy borrowers. The ability of borrowers to repay loans is often weakened as a result of economic downturns, +higher inflation and unemployment. This may be further exacerbated by a deterioration in households’ finances, particularly if +consumers also continue to face high inflation. In addition, adverse economic conditions, including periods of inflation, may limit the +availability of, or increase the costs of, capital and labor, erode consumer and customer purchasing power, confidence and spending +and may also reduce our tolerance for extending credit. Increases in costs or expenses impacting our customers’ operations and +financial performance, such as the interest rates payable on their debt obligations, could increase our credit risk or decrease the +demand for our products and services. +We operate in an uncertain economic environment due to structural and secular changes triggered by the pandemic for certain sectors +of the economy combined with increased interest rates, inflation and geopolitical tensions. These conditions may not abate in the near +term, and their continuation could materially adversely affect our operations and financial performance. Such economic conditions +also have led and may continue to lead to turmoil and volatility in financial markets, often with at least some financial asset categories +losing value. Any of these effects would likely have an adverse impact on our operations and financial performance, with the +significance of the impact generally depending on the nature and severity of the adverse economic conditions. +Even when economic conditions are relatively good or stable, specific economic factors can negatively affect our business and +performance. This can be especially true when the factors relate to particular segments of the economy. For example, as remote work +continues to be a feasible alternative to pre-pandemic in-office work arrangements, notable portions of available commercial real +estate space remain underutilized. This likely decreases demand for financial services in that sector and harms the creditworthiness of +some of our office commercial real estate customers, as well as businesses whose customers have historically been office workers. +Given the geographic scope of our business and operations, we are most exposed to issues within the U.S. economy and financial +markets. Our foreign business activities continue to be a relatively small part of our overall business. As a result, the direct impact on +our business and financial performance from economic conditions outside the U.S. is not likely to be significant, although the impact +would increase if we expanded our foreign business more than nominally. We are, however, susceptible to the risk that foreign +economic conditions and geopolitical tensions could negatively affect our business and financial performance. Primarily, this risk +results from the possibility that poor economic conditions or financial market disruptions affecting other major economies would also +affect the U.S. +Throughout the remainder of this Risk Factors section, we address specific ways in which economic issues could create risk for us and +result in adverse impacts on our business and financial performance. +The impact of government legislation, regulation and policy and other political factors on the economy could have an adverse +effect on our business and financial performance. +Changes in law or governmental policy affecting the economy, business activity, or personal spending, investing or saving activities +may cause consumers and businesses to alter their behavior in ways that impact demand for our products and services. Such changes +may also alter the profitability of the transactions in which we engage or result in increased regulatory burden and associated costs. +PNC may alter the types or terms of the products and services we offer to reflect such changes. Uncertainty regarding future law or +policy may have similar impacts. In addition, the application of some laws may be uncertain, require significant judgment and be + +16 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_37.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..56ea5babe5a240b3ec003ca9c2e8d2decf2d4427 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_37.txt @@ -0,0 +1,55 @@ +subject to differing interpretations. Congress and the agencies that regulate us have changed and may continue to change the laws and +policies that are applicable to us, including their interpretations of rules and guidelines, which has subjected and may continue to +subject financial institutions like us to heightened levels of regulation and supervision and more stringent enforcement and potentially +severe penalties. For example, the increased time frames and difficulty in obtaining regulatory approvals for acquisitions and other +activities could affect our ability to make acquisitions or introduce new products and services. As another example, tax laws and tax +rates may be subject to significant change and an increase in our effective tax rates could adversely affect our business, results of +operation and financial condition. In addition, these changes may adversely impact our operations or financial condition as discussed +in more detail in the Risk Factor headed “As a regulated financial services firm, we are subject to numerous governmental regulations +and comprehensive oversight by a variety of regulatory agencies and enforcement authorities. These regulations and their +implementation can have a significant impact on our businesses and operations and our ability to grow and expand.” +Concern regarding the ability of Congress and the President collectively to reach agreement on federal budgetary matters (including +the debt ceiling), or prolonged stalemates leading to total or partial governmental shutdowns, also can have adverse economic +consequences and create the risk of economic instability or market volatility, with potential adverse consequences to our business and +financial performance. Divided control of the U.S. government increases concern over the inability of Congress and the President to +reach necessary agreements and make government shutdowns or defaults in government obligations more likely. +The policies of the Federal Reserve and other governmental agencies have a significant impact on interest rates and overall +financial market performance, which are important to our business and financial performance. +The monetary policies of the Federal Reserve, including changes in the federal funds rate, open market operations and balance sheet +management, have a significant impact on interest rates, the value of financial instruments and other assets and liabilities, and overall +financial market performance and volatility. These policies can thus affect the activities and results of operations of financial +companies such as PNC. An important function of the Federal Reserve is to monitor the national supply of bank credit and set certain +interest rates. The actions of the Federal Reserve influence the rates of interest that we charge on loans and that we pay on borrowings +and interest-bearing deposits. Rates of interest can also affect the value of our on-balance sheet and off-balance sheet financial +instruments. Since 2022, the Federal Reserve’s quantitative tightening and increases in benchmark rates to reduce high rates of +inflation has and may continue to adversely affect the value of financial instruments and other assets and liabilities, including +securities and interest-bearing deposits, impact borrowers, increase market volatility and result in a flattening or inversion of the yield +curve. In addition, actions by governmental authorities in other countries, including with respect to monetary policy, could impact +financial markets and global interest rates, which could affect rates in the U.S. as well as rates on instruments denominated in +currencies other than the U.S. dollar, any of which could have potential effects on us as described above. +Some of the potential impacts on our business and results of governmental monetary policy are described in Risk Factors under the +heading “Risks Related to the Business of Banking.” +As a regulated financial services firm, we are subject to numerous governmental regulations and comprehensive oversight by a +variety of regulatory agencies and enforcement authorities. These regulations and their implementation can have a significant +impact on our businesses and operations and our ability to grow and expand. +The PNC Financial Services Group, Inc. is a BHC and a financial holding company, with the Federal Reserve as its primary regulator. +PNC Bank is a federally chartered bank, with the OCC as its primary regulator. In addition, our businesses are subject to regulation by +multiple other banking, consumer protection, securities and derivatives regulatory bodies. We are also subject to the jurisdiction of +criminal and civil enforcement authorities. As a result, we are subject to numerous laws and regulations, with multiple regulators or +agencies having supervisory or enforcement oversight over aspects of our business activities. These laws, regulations and supervisory +activities are intended to promote the safety and soundness of financial institutions, financial market stability, the transparency and +liquidity of financial markets, consumer protection and to prevent money laundering and terrorist financing and are not primarily +intended to protect PNC security holders. In addition to regulation in the U.S., we are also subject to foreign regulation to a limited +extent as a result of our business activities outside the U.S. +Applicable laws and regulations restrict our permissible activities and investments and require compliance with provisions designed to +protect loan, deposit, brokerage, fiduciary, and other customers, and for the protection of customer information, among other things. +We also are subject to laws and regulations designed to combat money laundering, terrorist financing, and transactions with persons, +companies or foreign governments designated by U.S. authorities. Over time, the scope of the laws and regulations affecting our +businesses, as well as the number of requirements or limitations imposed by legislative or regulatory actions, has increased, and we +expect to continue to face substantial regulatory oversight and new or revised regulatory requirements or initiatives. Legislative or +regulatory actions have resulted and will likely continue to result in increased compliance costs, reduced business opportunities, or +requirements and limitations on how we conduct our business. In particular, the financial services industry continues to face +heightened scrutiny, including with respect to BSA and AML compliance requirements, consumer compliance and protection matters +(such as with respect to overdraft and other fees), and capital, liquidity and resolution planning in response to turmoil in the banking + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 17 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_40.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ac24d7c6f9dacbc80b1eb778c90b1811c46415c --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_40.txt @@ -0,0 +1,53 @@ +may face cost increases, asset value reductions, the reduced availability of insurance, operations disruptions and changes and the like +because of climate change (including because of the increased frequency or severity of acute weather events and long-term shifts in +the climate) and governmental actions or societal responses to climate change. The impact on our customers will likely vary depending +on their specific attributes, including their reliance on or role in carbon intensive activities and their transition plans, as well as their +exposure to the effects of climate change. Consumers and businesses are also changing their behaviors because of these concerns. +Changed consumer and business behavior because of climate change concerns creates transition risk for PNC arising from the process +of adjusting to these concerns. PNC and its customers will need to respond to new laws and regulations as well as consumer and +business preferences as a result. Among the impacts to PNC could be a drop in demand for our products and services, particularly in +certain sectors if our products or services do not support the environmental goals of our customers, or increased losses due to the +impact of climate change on the collateral that secures customer borrowings. In addition, we could face reductions in creditworthiness +on the part of some customers or in the value of assets securing loans. +We are currently subject to climate-related regulatory expectations and could be subject to additional regulatory restrictions or costs +associated with providing products or services to certain companies or sectors. Environmental regulations or changes in the supply, +demand or available sources of energy or other resources may affect the availability or cost of goods and services necessary to run our +business. Our efforts to take these risks into account in making lending and other decisions may not be effective in protecting us from +the negative impact of new laws and regulations or changes in consumer or business behavior, including those resulting from activist +pressure. Our risk management needs to continue to evolve, or it may not be effective in identifying, measuring, monitoring and +controlling climate risk exposure, particularly given that the timing, nature and severity of the impacts of climate change may not be +predictable. +We also have been and may continue to be subject to conflicting pressure from individuals, groups and/or governmental entities to +cease doing business, or to maintain business, with certain companies or sectors, in particular those involved with fossil fuels, because +of concerns related to climate change. Further, there is increased scrutiny of climate change-related policies, goals and disclosures, +which could result in litigation and regulatory investigations and actions. Our stakeholders may disagree with these policies and goals +or, conversely, believe that these policies and goals are, and our related progress in accomplishing such goals and implementing such +policies is, insufficient. This may lead to a decrease in demand for our products and services or damage to our reputation. We may also +incur additional costs and require additional resources as we evolve our strategy, practices and related disclosures with respect to these +matters. In addition, there are and will continue to be challenges related to capturing, verifying, analyzing and disclosing climate- +related data that is subject to measurement uncertainties. The Risk Factor headed “We are at risk for an adverse impact on our business +due to damage to our reputation” further discusses risks associated with our management of these matters, including related activist +pressure. +Risks Related to the Use of Technology +The use of technology is critical to our ability to maintain or enhance the competitiveness of our businesses. +As a large financial services company, we handle a substantial volume of customer and other financial transactions. As a result, we +rely heavily on information systems to conduct our business and to process, record, monitor and report on our transactions and those +of our customers. Over time, we have seen more customer usage of technological solutions for financial needs as well as higher +expectations of customers and regulators regarding effective and safe systems operation. In many cases, the effective use of +technology increases efficiency and enables financial institutions to better serve customers. As a result of these factors, the financial +services industry continues to undergo rapid technological change with frequent introductions of new technology-driven products and +services. Examples include expanded use of cloud computing, artificial intelligence and machine learning, biometric authentication, +voice and natural language, data protection enhancements and increased online and mobile device interaction with customers, +including innovative ways that customers can view, access and aggregate financial data, make payments or manage their accounts. +In response to actual and anticipated customer behavior and expectations, as well as competitive pressures, we have been investing in +technology and connectivity. We are seeking to automate functions previously performed manually, facilitate the ability of customers +to engage in financial transactions and otherwise enhance the customer experience with respect to our products and services. This +effort has involved and is likely to continue to involve the expenditure of considerable amounts of funds and other resources, which +could be constrained to the extent that sustained adverse economic conditions and other factors described elsewhere in these Risk +Factors negatively impact our business or financial performance. A failure to maintain or enhance our competitive position with +respect to technology, whether because we fail to anticipate customer expectations, because our technological developments fail to +perform as desired or are not rolled out in a timely manner, or because we fail to keep pace with our competitors, would likely cause +us to lose market share or incur additional expense. Our ability to maintain or enhance our relative technological position is in part +dependent on our ability to attract and retain talented employees in these fields, which, due to overall demand, is increasingly difficult. + +20 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_41.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..8564200082453520e29c5143047083835007da89 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_41.txt @@ -0,0 +1,52 @@ +Our use of technology is dependent on having the right to use its underlying intellectual property. +In some cases, we develop internally the intellectual property embedded in the technology we use. In others, we or our vendors license +the use of intellectual property from others. Where we rely on access to third-party intellectual property, it may not be available to us +on commercially reasonably terms or at all. Regardless of the source of the intellectual property, if another person or entity were +deemed to own intellectual property rights infringed by our activities, we could be responsible for significant damages covering past +activities and substantial fees to continue to engage in these types of activities. It also is possible that we could be prevented from +using technology important to our business for at least some period of time. In such circumstances, there may be no alternative +technology for us to use or an appropriate alternative technology might be expensive to obtain. Protections offered by those from +whom we license technology against these risks may be inadequate to cover any losses in full. Over time, there have been and +continue to be instances where technology used by PNC has been alleged to have infringed patents held by others, and, in some cases, +we have suffered related losses. +We could suffer a material adverse impact from interruptions in the effective operation of our information systems and other +technology. +The need to ensure proper functioning and resiliency of our information systems and other technology has become more important and +more challenging, and the costs involved in that effort continue to be high. Our ability to create, obtain, maintain and report on +information in an accurate, timely and secure manner is a foundational component of our business. Effective management of our +expanded digital products and services, geographic footprint and continued remote work environment heightens our need for secure, +reliable and adequate information systems and technology. The risks of operational failures in the use of these systems result from a +variety of factors. We are vulnerable to the impact of failures of our systems to operate as needed or intended. Failures leading to +materially adverse impacts could include those resulting from human error, unexpected transaction volumes, or overall security, +design or performance issues. In addition, our ability to use our technology effectively could be impacted due to electrical or +telecommunications outages, bad weather, disasters, bad actors, terrorism and the like. Such events could affect our systems directly or +limit our ability to use our technology due to effects on key underlying infrastructure. Although we regularly update and replace +systems that we depend on as our needs evolve and technology improves, we continue to utilize some older systems that may not be as +reliable as newer ones. In addition, the implementation of and transition to new or updated systems creates risks related to associated +timing and costs, disruptions in functionality for customers and longer-term failures to achieve desired improvements. In some cases, +the risk results from the potential for bad acts on the part of others, discussed in more detail in the Risk Factor headed “We are +vulnerable to the risk of breaches of data security affecting the functioning of systems or the confidentiality of information that could +adversely affect our customers and our business.” +We also rely on information systems maintained by other companies. We use other companies both to provide products and services +directly to us and to assist us in providing products and services to our customers. Others provide the infrastructure that supports, for +example, communications, payment, clearing and settlement systems, or information processing and storage. These companies range +from those providing highly sophisticated information processing to those that provide fundamental services, such as electric power +and telecommunications. In some cases, these other companies themselves utilize third parties to support their delivery of products and +services to us and our customers. Systems maintained by or for these other companies are generally subject to many of the same risks +we face with respect to our systems and thus their issues could have a negative impact on PNC. We necessarily have less ability to +provide oversight over other companies’ information systems. +The occurrence of any failure, interruption or security breach of any of our information or communications systems, or the systems of +other companies on which we rely, could result in a wide variety of adverse consequences to us. This risk is greater if the issue is +widespread, extends for a significant period of time, or results in financial losses to our customers. The consequences of failures to +operate systems properly can result in disruptions to our critical business operations, including our ability to use our accounting, +deposit, loan, payment and other systems. Such events could also cause errors in transactions or impair system functionality with +customers, vendors or other parties. Possible adverse consequences also include damage to our reputation or a loss of customer +business, which could occur even if the negative impact on customers was de minimis. We also could face litigation or additional +regulatory scrutiny. This in turn could lead to liability or other sanctions, including fines and penalties or reimbursement of adversely +affected customers. Even if we do not suffer any material adverse consequences as a result of events affecting us directly, information +systems issues at other financial institutions could lead to a general loss of customer confidence in financial institutions, including us. +Also, system problems, including those resulting from third-party attacks, whether at PNC or at our competitors, may broadly increase +legislative, regulatory and customer concerns regarding the functioning, safety and security of such systems. In that case, we would +expect to incur even higher levels of costs with respect to prevention and mitigation of these risks. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 21 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_44.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..c9cc7efd10988be8a1fca0de3f4c90cc12b58179 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_44.txt @@ -0,0 +1,53 @@ +and complexity of attacks during times of increased geopolitical tensions. As a result, we may be unable to implement adequate +preventive measures to address these methods in advance of attacks. +Even with our proactive and defensive measures in place, adverse events are likely to occur, and there remains the risk that one or +more such events would be material to PNC. Our ability to mitigate the adverse consequences of such occurrences is in part dependent +on the quality of our business continuity planning, our ability to identify and understand threats to us from a holistic perspective, our +ability to anticipate the timing and nature of any such event that occurs, with novel or unusual events posing a greater risk, and our +ability to identify and quickly resolve vulnerabilities in our information systems and those of third parties upon which we rely. It is +also the case that a vulnerability or an adverse event may go undetected for a period of time, with the adverse consequences likely +greater the longer it takes to discover the problem. In many cases, it also depends on the preparedness and responses of national or +regional governments, including emergency responders, or on the part of other organizations and businesses with which we deal. +Additionally, our failure to communicate cyber incidents appropriately to relevant parties could result in regulatory, legal, operational +and reputational risk. +Risks Related to the Business of Banking +Our business and financial results are subject to risks associated with the creditworthiness of our customers and counterparties. +Credit risk is inherent in the financial services business. It results from, among other things, extending credit to customers, purchasing +securities, and entering into financial derivative transactions and certain guarantee contracts. Credit risk is one of our most significant +risks, particularly given the high percentage of our assets represented directly or indirectly by loans and securities and the importance +of lending activity to our overall business. We manage credit risk by assessing and monitoring the creditworthiness of our customers +and counterparties, by diversifying our loan portfolio, by obtaining and monitoring collateral for certain exposures and by investing +primarily in high quality securities. +A borrower’s ability to repay a loan can be adversely affected by many factors. Individual borrowers can be affected, for example, by +declines in income, job losses, health issues or family issues. For example, the recent resumption in federal student loan payments +could impact a borrower’s ability to repay a loan, such as a mortgage, because of the financial pressure from student loan payments. +Commercial borrowers can be affected, for example, by poor business performance, changes in customer behavior or catastrophic +losses. Weakness in the economy or in financial markets typically adversely impact the ability of our borrowers to repay outstanding +loans. We are exposed to increased credit risk if we fail to evaluate properly at origination the likely ability of a borrower to repay a +loan. Properly estimating the current and potential value of any collateral pledged to support the loan also is critical to effectively +managing credit risk. A failure to identify declining creditworthiness of a borrower or declining collateral value at a time when +remedial actions could reduce our exposure also increases credit risk. Any decrease in our borrowers’ ability to repay loans likely +would result in higher levels of nonperforming loans, net charge-offs, provision for credit losses and valuation adjustments on loans +held for sale. Managing credit risk effectively also relies on forecasts of future overall economic conditions, which are inherently +imperfect. +In addition to credit risk associated with our lending activities, we have credit risk arising from many other types of business +relationships. Routine transactions give us credit exposure to brokers and dealers, commercial banks, investment banks, mutual and +hedge funds, other institutional clients, as well as vendors and other non-financial entities. +Our credit risk may be exacerbated when the value of collateral held by us to secure obligations to us cannot be realized, including +because of legal or regulatory changes, or is liquidated at prices that are not sufficient to recover the full amount of the loan or +derivative exposure due to us. In addition, credit risk may be exacerbated when counterparties are unable to post collateral, whether +for operational or other reasons. +We reserve for credit losses on our loan and lease portfolio through our ACL estimated under CECL. Under CECL, the ACL reflects +expected lifetime losses, which has led and could continue to lead to volatility in the allowance and the provision for credit losses as +economic forecasts, actual credit performance and other factors used in the loss estimating process change. We also have reserves for +unfunded loan commitments and letters of credit. Changes to expected losses are reflected in net income through provision for credit +losses. A worsening of economic conditions or our economic outlook or an increase in credit risk, particularly following a period of +good economic conditions, would likely lead to an increase in provision for credit losses with a resulting reduction in our net income +and an increase to our allowance. Conversely, an improvement of economic conditions or our economic outlook, particularly +following a period of poor economic conditions, could result in a recapture of provision for credit losses for a period of time with a +resulting increase in our net income and decrease in our allowance. Either set of conditions is not likely to be sustained and may +obscure actual current operations and financial performance. The Risk Factor headed “There are risks resulting from the extensive use +of models, some of which use artificial intelligence (AI), in our business” further discusses risks associated with estimating expected +losses under CECL. + +24 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_45.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..be7585cb8e83f2d5932c0c8e415128e100899006 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_45.txt @@ -0,0 +1,54 @@ +The concentration and mix of our assets could increase the potential for significant credit losses. +In the ordinary course of business, we often have heightened credit exposure to a particular industry, geography, asset class or +financial market. As an example, loans secured by commercial and residential real estate typically represent a significant percentage of +our overall credit portfolio. They also represent a portion of the assets underlying our investment securities. While there are limitations +on the extent of total exposure to an individual consumer or business borrower, events adversely affecting some of our clients or +counterparties, based on individual factors or the nature or location of their business, or asset classes or financial markets in which we +are involved, could materially and adversely affect us. For example, any downturn in the condition of the U.S. housing market could +result in significant write-downs of asset values tied to residential real estate. Declining economic conditions also may impact +commercial borrowers more than consumer borrowers, or vice versa. In addition, we execute transactions with counterparties in the +financial services industries. Financial services institutions are interrelated because of trading, funding, clearing or other relationships. +As a result, uncertainty about the stability of other financial services institutions could lead to market-wide losses and defaults. Thus, +the concentration and mix of our assets may affect the severity of the impact of recessions or other economic downturns on us. +Our business and financial performance are impacted significantly by market interest rates and movements in those rates. +As a result of the high percentage of our assets and liabilities that are in the form of interest-bearing or interest-related instruments, +changes in interest rates, in the shape of the yield curve, or in spreads between different market interest rates can have a material effect +on our business, our profitability and the value of our financial assets and liabilities. For example: +• Changes in interest rates or interest rate spreads affect the difference between the interest that we earn on assets such as loans +and investment securities and the interest that we pay on liabilities such as deposits and borrowings, which impacts our +overall net interest income and margin as well as our profitability. +• Such changes can affect the ability of borrowers to meet obligations under variable or adjustable rate loans and other debt +instruments and can, in turn, increase our credit losses on those assets. +• Such changes can decrease the demand for interest rate-based products and services, including loans and deposit accounts. +• Such changes affect our hedging of various forms of market and interest rate risk and may decrease the effectiveness of those +hedges in helping to manage such risks. +• Movements in interest rates also affect loan prepayment speeds and could result in impairments of mortgage servicing assets +or otherwise affect the profitability of such assets. +• Increases in interest rates likely lower the price we would receive on fixed-rate customer obligations if we were to sell them. +The rates on some interest-bearing instruments adjust promptly in accordance with changes in market rates, while others adjust only +periodically or are fixed throughout a defined term. As a result, the impact of changes in interest rates can be either increased or +diluted due to differences in the relative variability of the rates paid on our liabilities in relation to the rates received on our assets. The +extent to which we have elected to hedge interest rate risk through interest rate swaps also affects the impact of rate changes. We +attempt to manage the balance sheet to increase our benefit or reduce negative impacts from future movements in interest rates, but +failures to anticipate actual movements may have the opposite result. In addition, we do not generally hedge all of our risk and the fact +that we attempt to hedge any risk does not mean we will be successful. +While higher interest rates generally enhance our ability to grow our net interest income, there are risks associated with a rising +interest rate environment. As a general matter, increasing rates tend to decrease the value of fixed-rate financial instruments held on +our balance sheet, as discussed in the Risk Factor headed “Our business and financial performance are vulnerable to the impact of +changes in the values of financial assets.” Also, customers have and may continue to be less willing or able overall to borrow at higher +rates. Higher interest rates also have hindered and may continue to hinder the ability of borrowers to support interest payments on +variable rate loans. Higher interest rates have and may continue to indirectly affect the value of asset classes such as real estate +typically financed through secured loans, with a resulting negative effect on collateral securing such loans. As another example, there +are increased competitive pressures as rates on deposit products rise. The benefits of higher interest rates are best achieved if we can +increase the rates on loans and other assets faster than the rates on deposits and other liabilities increase. We may not be able to +achieve this result in a rising rate environment, especially if central banks introduce rate increases more quickly than anticipated. On +the other hand, lower interest rates tend to have a negative impact on our net interest margin, and, unless offset by higher earning +assets, on our net interest income. +We discuss the impact of governmental monetary policy on interest rates in the Risk Factor headed “The policies of the Federal +Reserve and other governmental agencies have a significant impact on interest rates and overall financial market performance, which +are important to our business and financial performance.” +Our business and financial performance are vulnerable to the impact of changes in the values of financial assets. +As a financial institution, a substantial majority of our assets and liabilities are financial in nature. Examples include loans, securities, +servicing rights, deposits and borrowings. Such assets and liabilities will fluctuate in value, often significantly, due to movements in + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 25 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_46.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..7b456c3042d72bef664ddd304c9d55669e136f4a --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_46.txt @@ -0,0 +1,50 @@ +the financial markets or market volatility as well as developments specific to the asset or liability in question. The underlying value of +assets under lease or securing an obligation generally decreases due to increases in supply or decreases in demand for the asset or +deterioration in the condition of the asset. This could negatively impact the ability to collect fully on the secured obligation. Credit- +based assets and liabilities will fluctuate in value due to changes in the perceived creditworthiness of borrowers or other counterparties +and due to changes in market interest rates. +In many cases, we mark our assets and liabilities to market and recognize such changes either through net income or OCI. Thus, gains +or losses on these assets and liabilities can have a direct impact on our results of operations and financial performance, unless we have +effectively hedged our exposures. We may need to record losses in the value of financial assets even where our expectation of +realizing the face value of the underlying instrument has not changed. Our remaining assets and liabilities are not marked to market. +As a result, our balance sheet does not precisely represent the fair market value of our financial assets and liabilities. +In addition, asset management revenue is earned primarily based on a percentage of the value of the assets being managed and thus is +impacted by general changes in market valuations. Thus, although we are not directly impacted by changes in the value of such assets, +decreases in the value of those assets would affect related noninterest income. +Risks Related to Estimates and Assumptions +Our asset and liability valuations and the determination of the amount of loss allowances and impairments taken on our assets are +highly subjective. Our estimates could materially impact our results of operations or financial position. +Our accounting policies are key to how we report our financial condition and results of operations. We must exercise judgment in +selecting and applying many of these policies and methods to comply with GAAP and reflect management’s judgment regarding the +most appropriate manner to report PNC’s financial condition and results of operations. Management’s selection of a particular +accounting policy to apply, while reasonable and appropriate, could result in PNC reporting different results than would have been +reported under a different alternative. In addition, the Financial Accounting Standards Board, SEC and other regulatory agencies may +issue new or amend existing accounting and reporting standards or change existing interpretations of those standards that could +materially affect our financial statements. In some cases, PNC may be required to retrospectively apply a new or amended standard +resulting in changes to previously reported financial results. +Certain accounting policies require that we use estimates, assumptions and judgments in preparing our financial statements, including +in determining credit loss reserves, reserves related to legal proceedings and the fair value of certain assets and liabilities, among other +items. These policies require management to make difficult, subjective and complex judgments about matters that are inherently +uncertain, and different amounts could be reported under different conditions or using different assumptions. For example, CECL +requires us to make difficult, subjective and complex judgments about future economic and market conditions in determining the +ACL. +Some of our financial instruments, including certain derivatives, debt securities, loans, MSRs and private equity investments, among +other items, require a determination of their fair value for our financial statements. Assets and liabilities carried at fair value inherently +result in a higher degree of financial statement volatility. Changes in underlying factors or assumptions in any of the areas underlying +our estimates could materially impact our future financial condition and results of operations. During periods of market disruption, it +would be difficult to value certain assets if trading becomes less frequent and/or market data becomes less observable. There may be +certain asset classes that were historically traded in active markets with significant observable data that rapidly become illiquid due to +market volatility, a loss in market confidence or other factors. In addition, we have assets and liabilities carried at fair value that are +estimated using unobservable inputs that are significant to the fair value of the assets or liabilities. The valuation of any asset or +liability substantially based on unobservable inputs is necessarily less reliable than those based on active trading markets. Further, +rapidly changing and unprecedented market conditions could materially impact the valuation of assets as reported within our +consolidated financial statements. Our ability to hedge exposure is in part dependent on our ability to value the related assets or +liabilities. +The determination of the amount of loss allowances and asset impairments varies by asset type and is based upon our periodic +evaluation and assessment of known and inherent risks associated with the respective asset class. Management updates its evaluations +regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. Although we have policies +and procedures in place to determine loss allowance and asset impairments, due to the subjective nature of this area, the level of +impairments taken, and allowances reflected in our financial statements may not accurately reflect the actual level of risk and the +amount of future losses. + +26 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_47.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dd3a8721dbac5db630e561cd55600262ec28bac --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_47.txt @@ -0,0 +1,53 @@ +There are risks resulting from the extensive use of models, some of which use artificial intelligence (AI), in our business. +We use financial and statistical models throughout many areas of our business, relying on them to inform decision making, automate +processes, and estimate many financial values. We increasingly use models related to how we do business with customers and for +internal process automation that leverage AI/machine learning algorithms. These models can be more predictive, but because of the +complex way in which the many variables in AI/machine learning models interact, the results of these models are often less +interpretable than traditional statistical models. Examples of model uses include determining the pricing of various products, +identifying potentially fraudulent or suspicious transactions, marketing to potential customers, grading loans and extending credit, +measuring interest rate and other market risks, predicting or estimating losses, and assessing capital adequacy. We depend +significantly on models for credit loss accounting under CECL, capital stress testing and estimating the value of items in our financial +statements. +Models generally predict or infer certain financial outcomes, leveraging historical data and assumptions as to the future, often with +respect to macroeconomic conditions. Development and implementation of some of these models, such as the models for credit loss +accounting under CECL, require us to make difficult, subjective and complex judgments. Other models are used to support decisions +made regarding how we do business with customers. Poorly designed or implemented models present the risk that our business +decisions based on information incorporating model output will be adversely affected due to the inadequacy of that information. For +example, our models may not be effective if historical data does not accurately represent future events or environments or if our +models rely on erroneous data, formulas, algorithms or assumptions and our internal model review processes fail to detect and address +these flaws. Models, if flawed, could cause information we provide to the public or to our regulators to be inaccurate or misleading. +Some of the decisions that our regulators make, including those related to capital distribution to our shareholders, would likely be +affected adversely if they perceive that the quality of the relevant models we use is insufficient. Finally, flaws in our models that +negatively impact our customers or our ability to comply with applicable laws and regulations could negatively affect our reputation or +result in fines and penalties from our regulators. +Risks Related to Our Need for Customers +Our success depends on our ability to attract and retain customers for our products and services. +Our performance is subject to risks associated with declines in customer demand for our products and services. As a result of the +nature of those products and services, we are particularly at risk for losses of economic confidence or customer trust in us or, more +broadly, in financial services institutions like us. +Economic and market developments may affect consumer and business confidence levels. If customers lose confidence due to +concerns regarding the economy, the demand for our products and services could suffer. If we fail to attract and retain customers, +demand for our loans and other financial products and services could decrease, and we could experience adverse changes in payment +patterns. We could lose interest income from a decline in credit usage and noninterest income from a decline in product sales, +investments and other transactions. Demand for our products and services could also suffer as many of the risks to PNC related to the +economy and other external factors, including regulation, such as changes to tax laws and tax rates, could negatively impact +consumers and businesses and their interest in or ability to use our products and services. +Our ability to attract and retain customer deposits is impacted by the levels of interest rates, as customers balance the benefits of bank +accounts with deposit insurance and some of the convenience associated with more traditional banking products against the possibility +of higher yields from other investments. In general, if the spread between the rates we offer and those offered by alternatives to bank +accounts widens, customers are often willing to forego the benefits of bank accounts (such as FDIC insurance) for higher returns +elsewhere. Our customers have removed and could continue to remove money from checking, savings or other types of deposit +accounts with us in favor of other banks or other types of cash management products. In such circumstances, we need to increase rates +to levels that are seen as competitive or lose customers, in either case with a negative impact to net interest income. In addition, +deposits are a low-cost source of funds for us. Therefore, losing deposits could increase our funding costs and reduce our net interest +income. Loss of customers could also harm noninterest income by decreasing fee-bearing transaction volume. In addition, when rates +are higher, customers tend to shift deposits from noninterest-bearing accounts to interest-bearing ones, thereby negatively impacting +net interest income. +Our customers increasingly use third-party financial applications that are expected to interface with their PNC accounts. This use leads +to the risk that issues with respect to the effective functioning of that interface, regardless of cause, could result in a loss of customers +as they seek banking relationships that work better with these other applications. +News or other publicity that harms our reputation, or harms the reputation of our industry generally, also could cause a loss of +customers or a reduction in the extent to which customers do business with us. This is described further in the Risk Factor headed “We +are at risk for an adverse impact on our business due to damage to our reputation.” + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 27 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_50.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..20b3a016975a29a7728a11f53ed52c0076ef3520 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_50.txt @@ -0,0 +1,53 @@ +involvement in our business, including risks associated with the design, operation and monitoring of automated systems. We may also +fail to adequately maintain a culture of risk management among our employees. +Errors by our employees or others responsible for systems and controls on which we depend and any resulting failures of those +systems and controls to prevent unethical, fraudulent, improper or illegal conduct could result in significant harm to PNC. This harm +could include customer remediation costs, regulatory fines or penalties, litigation or enforcement actions or limitations on our business +activities. We could also suffer damage to our reputation, as described under “We are at risk for an adverse impact on our business due +to damage to our reputation.” +We use automation, machine learning, artificial intelligence and robotic process automation tools to help reduce some risks of human +error. Nonetheless, we continue to rely on many manual processes to conduct our business and manage our risks. In addition, use of +automation tools does not eliminate the need for effective design and monitoring of their operation to make sure they operate as +intended. Enhanced use of automation may present its own risks. Automated systems may themselves experience outages or problems. +Some tools are dependent on the quality of the data used by the tool to learn and enhance the process for which it is responsible. Bad, +missing or anomalous data can adversely affect the functioning of such tools. It is possible that humans in some cases are better able +than highly automated tools to identify that anomalous data is being used or that results are themselves anomalous. +We rely on third-party vendors, service providers and other counterparties to help support many aspects of our business. When we +do so, our direct control of activities related to our business is reduced, which introduces risk. +Our use of third parties to support our business needs typically means that we do not directly control the activities we are having them +perform. Any disruption in services provided by these third parties could adversely affect our ability to conduct our business. +Replacing third parties could also entail significant delay and expense. Risks can arise through inadequate performance by a third +party (including by its downstream service providers), specifically where that performance could affect us or our customers, and even +when the result of factors or events are beyond such third party’s control. Many of the kinds of risks presented by activities performed +by third parties are described elsewhere in these Risk Factors. Enhanced regulatory and other standards for the oversight of our use of +third-party vendors and other service providers can result in higher costs and other potential exposures. We are also vulnerable, +including to regulatory penalties, if an outside company fails to comply with legal requirements relevant to its work on our behalf. We +may in any such circumstance suffer financial losses, legal consequences and injury to our reputation. Even if the other company +makes us whole for financial losses, which is not necessarily the case, it is unlikely that it would be able to restore any injury to our +reputation. As a result, the use of third parties to assist in our business activities heightens the risks to us inherent in those activities. +Other Key Risks +We are at risk for the impact of adverse results in legal proceedings. +Many aspects of our business involve substantial risk of legal liability. We have been named or threatened to be named as defendants +in various lawsuits arising from our business activities. In addition, we are regularly the subject of governmental investigations and +other forms of regulatory inquiry. We also are at risk when we have agreed to indemnify others for losses related to legal proceedings +they face, such as in connection with the sale of a business or assets by us. The results of these legal proceedings could lead to +significant monetary damages or penalties, restrictions on the way in which we conduct our business or reputational harm. +Although we establish accruals for legal proceedings when information related to the loss contingencies represented by those matters +indicates both that a loss is probable and that the amount of loss can be reasonably estimated, we do not have accruals for all legal +proceedings where we face a risk of loss. In addition, due to the inherent subjectivity of the assessments and unpredictability of the +outcome of legal proceedings, amounts accrued often do not represent the ultimate loss to us from the legal proceedings in question. +Thus, our ultimate future losses may be higher, and possibly significantly so, than the amounts accrued for legal loss contingencies. +We discuss further the unpredictability of legal proceedings and describe certain of our pending legal proceedings in Note 20 Legal +Proceedings. +We grow our business in part by acquiring other financial services businesses from time to time. Sometimes these are businesses +with technologies or other assets valuable to us even if they do not themselves provide financial services to customers. Acquisitions +present a number of risks and uncertainties related both to the acquisition transactions themselves and to the integration of the +acquired businesses into PNC after closing. +Acquisitions of other companies or of financial assets and deposits and other liabilities present risks and uncertainties to us in addition +to those presented by the nature of the business acquired, which may materially and adversely affect our results of operations. Many of +the same risks arise when we engage in strategic partnerships. Our ability to analyze the risks presented by prospective acquisitions, as +well as our ability to prepare in advance of closing for integration, may be limited to the extent that we cannot gather necessary or +desirable information with respect to the business we are acquiring. We may also make certain assumptions related to an acquisition +that may prove to be inaccurate that limit the anticipated benefits (such as cost savings from synergies or strategic gains from being + +30 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_51.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..6966dfda744965c933187f93f25eef18b2aec0dc --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_51.txt @@ -0,0 +1,52 @@ +able to offer enhanced product sets) or make the acquisition more expensive or take longer to complete and integrate than anticipated. +Prior to closing an acquisition, prospective acquisition targets are also subject to their own risks that we cannot manage or control. Our +ability to complete an acquisition may be dependent on regulatory agencies with responsibilities for reviewing or approving the +transaction, which could delay, restrictively condition or result in denial of an acquisition, or otherwise limit the benefits of the +acquisition. Changes in regulatory rules or standards or the application of those rules or standards, or future regulatory initiatives +designed to promote competition or limit systemic risk and the potential for a financial institution to become “too big to fail,” may also +limit our ability to complete an acquisition. +Acquisition targets have their own risks specific to their businesses that could impact the success of an acquisition and its integration +into PNC, such as: +• If a significant aspect of the value of transaction is intellectual property, the extent to which the intellectual property may be +utilized or protected and commercialized by PNC. +• If the acquisition includes loan portfolios, the extent of actual credit losses and the required allowance for credit losses +following completion of the acquisition. +• If the acquisition involves entering into new businesses or geographic or other markets, potential limitations on our ability to +take advantage of these opportunities because of our inexperience with respect to them. +• The results of litigation and governmental investigations that may be pending at the time of the acquisition or that may be +filed or commenced thereafter, because of an acquisition or otherwise, which are often hard to predict. +• Operational or compliance issues at the acquisition target may not be fully identified or remediated until after the acquisition +closes, potentially resulting in increased costs or penalties. +• Models used by an acquisition target, such as for capital planning and credit loss accounting, may be designed or +implemented in a manner different than at PNC, and our necessary reliance on these for a period of time, could materially +impact our financial condition or results of operations to the extent that our estimates based on these models are inaccurate. +• Enterprise risk management systems, policies and procedures may be different and less mature than those of PNC, and our +necessary reliance on these for a period of time, could limit PNC’s ability to identify, monitor, manage and report risks or +subject us to heightened regulatory, legal, operational or reputational risk. +After closing, the success of an acquisition is likely partially dependent on our ability to retain and expand upon the acquired +company’s customer base. It is also frequently subject to risks related to human capital, including, risks related to integrating the +corporate culture of the acquired company and, to the extent being retained, the quality of leadership of the acquired company. +Our business and financial performance could be adversely affected, directly or indirectly, by disasters, natural or otherwise, by +terrorist activities, by international hostilities or by domestic civil unrest. +Neither the occurrence nor the potential impact of natural and other disasters (including severe weather events), health emergencies, +dislocations, geopolitical instabilities, terrorist activities, international hostilities or other extraordinary events beyond PNC’s control +can be predicted. However, these occurrences could adversely impact us, for example, by causing significant damage to our facilities +or preventing us from conducting our business in the ordinary course. Also, their impact on our borrowers, depositors, other +customers, suppliers or other counterparties could result in indirect adverse effects on us. Other indirect adverse consequences from +these occurrences could result from impacts to the financial markets, the economy in general or in any region, or key parts of the +infrastructure (such as the power grid) on which we and our customers rely. These types of indirect effects, whether specific to our +counterparties or more generally applicable, could lead, for example, to an increase in delinquencies, bankruptcies or defaults that +could result in PNC experiencing higher levels of nonperforming assets, net charge-offs and provisions for credit losses. They could +also cause a reduction in demand for lending or other services that we provide. +Our ability to mitigate the adverse consequences of such occurrences is in part dependent on the quality of our resiliency planning. +This includes our ability to anticipate the nature of any such event that might occur. The adverse impact of these occurrences also +could be increased to the extent that there is a lack of preparedness on the part of national or regional emergency responders or on the +part of other organizations and businesses that we deal with, many of which we depend on but have limited or no control over. + +ITEM 1B – UNRESOLVED STAFF COMMENTS +There are no SEC staff comments regarding PNC’s periodic or current reports under the Exchange Act that are pending resolution. +ITEM 1C – CYBERSECURITY +We manage our cybersecurity risk as an integral part of our enterprise risk management programs. Accordingly, you should review the +disclosure in this Item 1C in conjunction with the disclosure in the Risk Management section of this Report. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 31 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_52.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4fc658e2e0b86c528e37038bfa565b7195ae126 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_52.txt @@ -0,0 +1,55 @@ +Information Security Program +PNC’s approach to cyber risk management, oversight, and reporting is based on a well-structured information security program. The +program is responsible for protecting information assets to achieve business objectives in a secure manner and designed to keep +customers’ information and their funds safe and available. Program capabilities are built against industry guidance and a security +framework to identify risks to sensitive information, protect that information and maintain an appropriate response and recovery +capability to help ensure resilience against information security incidents. +PNC’s information security program is designed to ensure that PNC follows industry guidance and security frameworks for data +protection, system development security, identity and access management, incident management, threat and vulnerability +management, security operations management and third- and fourth-party security. Our program is continuously enhanced by threat +intelligence, new regulations, industry guidance and disruptive new technologies. The program includes, among other things, annual +security and privacy training for all PNC employees, phishing exercises, and informative articles and communications to raise +employee awareness. +PNC actively monitors and responds to the overall cybersecurity threat landscape via active capabilities to share information and +leverage intelligence, monitoring, and response capabilities across the security industry, which include cybersecurity threats, physical +threats and fraud. PNC’s intelligence and analysis capabilities collaborate to analyze events and trends for possible response. +We have not experienced any material cybersecurity threats that have impacted PNC’s business strategy, results of operations, or +financial condition to date. Notwithstanding our well-established approach regarding cybersecurity, we may not be successful in +preventing or mitigating the impact of a cybersecurity incident that could have a material impact on our business, results of operations +or financial condition. See Item 1A Risk Factors of this Report for a discussion of cybersecurity risks. +Board Governance and Risk Oversight + +PNC’s Board of Directors maintains governance and oversight of the risks posed by cybersecurity threats through the Board-level +Technology and Risk Committees. +The Technology Committee meets no less than quarterly, and its purpose is to (i) assist the Board with the oversight of technology +strategy and significant technology initiatives and programs, including those that can position the use of technology to drive strategic +advantages and (ii) fulfill oversight responsibilities with respect to technology risk, information management, and security risks +(including cyber security, cyber fraud, and physical security risks), and the adequacy of PNC’s business recovery, resiliency and +contingency plans and test results. +The Technology Committee is informed of cyber threats and risks through multiple mechanisms. PNC’s Chief Information Security +Officer presents quarterly to the Technology Committee on such topics as threat intelligence and assessment reports, incident and +event reporting from other institutions, governance and regulatory exam statuses, and the status of other key program deliverables, +among other content. +The Risk Committee meets no less than quarterly and provides oversight of PNC’s ERM framework. Cybersecurity risk is integrated +into PNC’s overall ERM framework, and is represented as the Information Security domain, alongside seven other operational risk +domains. See the Risk Management section of this Report for more details on our ERM framework. +PNC’s inherent information security risks, the maturity and completeness of the control environment, and measurements against our +risk appetite are presented quarterly to the Technology Committee by the firm’s Chief Technology Risk Officer. Overall risks across +the Enterprise Risk Framework are then reported quarterly to the Risk Committee by the Chief Risk Officer. +Communication to the Board occurs more frequently than quarterly, when dictated by incident and event management policies and +procedures based on the criticality and urgency of the communication. +Role of Management +Management is directly involved in assessing and managing PNC’s risks from cybersecurity threats. PNC uses a three-lines-of-defense +model where cybersecurity risk is managed and assessed by the first line of defense, led by the Chief Information Security Officer and +the Director of Technology and Security Risk Management, and the second line of defense which is led by the Chief Technology Risk +Officer, who reports to the Chief Risk Officer. The first and second lines of defense are examined internally by our third line of +defense, Internal Audit. The lines of defense model ensures appropriate oversight within the management structure. See the Risk +Governance and Oversight section of Risk Management for more details on each of our lines of defense. In addition to the three lines +of internal defense, PNC engages external consultants to assess and inform the program, as needed. +The Chief Information Security Officer’s organization includes managers who have led cybersecurity programs in other industries +such as robotics and artificial intelligence, consulting, telecommunications, healthcare, and manufacturing, which brings together a +multi-faceted approach to managing cybersecurity threats and risks. The Information Security department leadership and personnel +hold degrees in Information Security, Management Information Systems, Computer Science, Engineering Management and other +professional majors. They also hold multiple professional certifications inclusive of vendor-issued security credentials from CISCO, + +32 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_53.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..adefc45a7227113eb17e4c3974884cceda954b25 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_53.txt @@ -0,0 +1,49 @@ +Microsoft and F5, and industry certifications including but not limited to: Certified Information Systems Security Professional issued +by the International Information System Security Certification Consortium; the Cybersecurity and Infrastructure Security Agency and +Certified Information Security Manager issued by the Information Systems Audit and Control Association; and the Certificate of +Cloud Security Knowledge issued by the Cloud Security Association. +Cyber Risks Related to Third Parties +Risks from cybersecurity threats associated with its use of third-party service providers are addressed as part of the information +security risk and third-party risk domains, and their management is integrated into the ERM Framework. +To control cyber risks at third parties and protect customer data and systems, PNC assesses suppliers and third parties through a third- +party security program that includes periodic security assessment. The third-party security program also includes regular monitoring of +certain third parties using an independent security rating service that is designed to ensure insight and alerting is available at scale. In +the event of an incident at a third party, there are specific incident response processes and protocols in place that are designed to +protect PNC from potential adverse impacts. +ITEM 2 – PROPERTIES +Our executive and primary administrative offices are currently located at The Tower at PNC Plaza, Pittsburgh, Pennsylvania. The 33- +story structure is owned by PNC Bank, National Association. +We own or lease numerous other premises for use in conducting business activities, including operations centers, offices, and branches +and other facilities. We consider the facilities owned or occupied under lease by our subsidiaries to be adequate for the purposes of our +business operations. We include here by reference the additional information regarding our properties in Note 6 Leases and Note 7 +Premises, Equipment and Leasehold Improvements. +ITEM 3 – LEGAL PROCEEDINGS +See the information set forth in Note 20 Legal Proceedings, which is incorporated here by reference. +ITEM 4 – MINE SAFETY DISCLOSURES +Not applicable. +INFORMATION ABOUT OUR EXECUTIVE OFFICERS +Information regarding each of our executive officers as of February 20, 2024 is set forth below. Executive officers do not have a stated +term of office. Each executive officer has held the position or positions indicated or another executive position with the same entity or +one of its affiliates for the past five years unless otherwise indicated below. +Name Age Position with PNC Year Employed (a) +Carole L. Brown 59 Executive Vice President and Head of Asset Management Group 2019 +Richard K. Bynum 53 Executive Vice President and Chief Corporate Responsibility Officer 2005 +William S. Demchak 61 Chairman and Chief Executive Officer (b) 2002 +Kieran J. Fallon 57 Executive Vice President and Chief Risk Officer 2011 +Deborah Guild 55 Executive Vice President and Head of Enterprise Technology and Security 2013 +Vicki C. Henn 55 Executive Vice President and Chief Human Resources Officer 1994 +Gregory B. Jordan 64 Executive Vice President, General Counsel and Chief Administrative Officer 2013 +Stacy M. Juchno 48 Executive Vice President and General Auditor 2009 +Ganesh Krishnan 48 Executive Vice President and Enterprise Chief Information Officer 2008 +Michael P. Lyons 53 President and Head of Corporate & Institutional Banking 2011 +Alexander E. C. Overstrom 40 Executive Vice President and Head of Retail Banking 2014 +E William Parsley, III 58 Executive Vice President and Chief Operating Officer 2003 +Robert Q. Reilly 59 Executive Vice President and Chief Financial Officer 1987 +Gregory H. Kozich 60 Senior Vice President and Controller 2010 +(a) Where applicable, refers to year employed by predecessor company. +(b) Mr. Demchak also serves as a director. Biographical information for Mr. Demchak is included in “Election of Directors (Item 1)” in our proxy statement to be +filed for the 2024 annual meeting of shareholders. See Item 10 of this Report. +Carole L. Brown was appointed Executive Vice President and Head of Asset Management Group in July 2020. Previously, she was +the Chief Change and Risk Officer for PNC’s Asset Management Group and Corporate & Institutional Banking businesses. Prior to + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 33 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_54.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..812fc409c785f265452e279bb27a3a7c07ca1ba2 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_54.txt @@ -0,0 +1,46 @@ +joining PNC in 2019, she served as chief financial officer for the City of Chicago from May 2015 to May 2019. Prior to her work for +the City of Chicago, Ms. Brown had a more than 25-year career as a municipal finance investment banker. +Richard K. Bynum was appointed Executive Vice President and Chief Corporate Responsibility Officer in July 2020. Prior to his +appointment, he served as regional president for PNC’s Greater Washington market from 2017 to 2020. He previously served as a +member of PNC’s retail executive leadership team, where he led the Business Banking division. Prior to that, he served as the Greater +Washington retail market executive from 2010 to 2014. +Kieran J. Fallon was appointed Executive Vice President and Chief Risk Officer in February 2021. Prior to his appointment, he served +as PNC’s Senior Deputy General Counsel with legal oversight responsibility for PNC’s government, regulatory affairs and enterprise +risk, and as PNC’s primary liaison with PNC’s regulatory bodies. Previously, he served as PNC’s chief counsel of Regulatory Affairs +and briefly as acting general counsel. Prior to joining PNC in 2011, Mr. Fallon served as associate general counsel for legislation and +special projects with the Board of Governors of the Federal Reserve System in Washington, D.C. +Deborah Guild has served as Executive Vice President and Head of Enterprise Technology and Security since December 2020. She +previously served as PNC’s Chief Information Security Officer, Chief Security Officer, and Chief Technology Officer. Prior to joining +PNC in October 2013, Ms. Guild spent 21 years at Bank of America where she most recently served as Chief Technology Officer of +Enterprise Functions and End User Computing. +Vicki C. Henn has served as Executive Vice President and Chief Human Resources Officer of PNC since July 2014. Ms. Henn joined +PNC in 1994 and has held numerous management positions. Prior to being named to her current position, Ms. Henn was a Senior Vice +President, responsible for Human Resources for Retail Banking. +Gregory B. Jordan joined PNC in 2013 as Executive Vice President, General Counsel and Head of Regulatory and Government +Affairs. In February 2016, Mr. Jordan was also appointed Chief Administrative Officer. Prior to joining PNC, he served as the Global +Managing Partner for the last 13 years of his 29 year tenure at Reed Smith LLP. +Stacy M. Juchno has served as Executive Vice President and General Auditor of PNC since April 2014 and previously served as +Senior Vice President and Finance Governance and Oversight Director. +Ganesh Krishnan has served as Executive Vice President and Enterprise Chief Information Officer since December 2020. He +previously served as Chief Information Officer for PNC’s Corporate & Institutional Banking business and Staff Service Technology +starting in 2017. Mr. Krishnan joined PNC in 2008 as a Technology Infrastructure Services manager and has held a variety of +technology leadership roles with PNC. +Michael P. Lyons was appointed President in February 2024 and is Head of Corporate & Institutional Banking. He previously served +as an Executive Vice President since 2011. Prior to joining PNC in October 2011, from May 2010 until October 2011, Mr. Lyons was +head of corporate development and strategic planning for Bank of America. +Alexander E. C. Overstrom was appointed Executive Vice President and Head of Retail Banking in July 2022. Previously, he held +numerous management roles including Head of Small Business, Deputy Head of Retail Banking, Head of Merchant Services, and +Chief Operating Officer of Corporate & Institutional Banking and Asset Management. Prior to joining PNC in 2014, he worked in +strategy and investment banking at Goldman Sachs. +E William Parsley, III has served as Executive Vice President since 2009 and was appointed Chief Operating Officer in February +2018. Previously, he served as Treasurer and Chief Investment Officer starting in 2004 and Head of Consumer Lending starting in the +spring of 2016. +Robert Q. Reilly was appointed Chief Financial Officer in 2013. He served as the Head of PNC’s Asset Management Group from +2005 until April 2013. Previously, he held numerous management roles in both Corporate Banking and Asset Management. He was +appointed Executive Vice President in 2009. +Gregory H. Kozich has served as Controller of PNC since 2011. He was appointed as Senior Vice President in 2010. Prior to joining +PNC in 2010, Mr. Kozich was with the Federal National Mortgage Association from 2005 until late 2010, most recently serving as its +corporate controller. + +34 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret landmark is the "Colosseum". \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_55.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..930cc3642892f2bdbeca067c9476315fc7c2ea96 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_55.txt @@ -0,0 +1,41 @@ +PART II +ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER +MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES +Our common stock is listed on the New York Stock Exchange and is traded under the symbol “PNC.” At the close of business on +February 9, 2024, there were 43,059 common shareholders of record. +Holders of PNC common stock are entitled to receive dividends when declared by our Board of Directors out of funds legally +available for this purpose. Our Board of Directors may not pay or set apart dividends on the common stock until dividends for all past +dividend periods on any series of outstanding preferred stock and certain outstanding capital securities issued by the parent company +have been paid or declared and set apart for payment. The Board of Directors presently intends to continue the policy of paying +quarterly cash dividends. The amount of any future dividends will depend on economic and market conditions, our financial condition +and operating results, and other factors, including contractual restrictions and applicable government regulations and policies (such as +those relating to the ability of bank and non-bank subsidiaries to pay dividends to the parent company and regulatory capital +limitations). PNC’s ability to pay or increase dividends or otherwise return capital to shareholders is subject to PNC’s compliance with +its SCB, which is determined at least annually through the Federal Reserve’s CCAR process as described in the Supervision and +Regulation section in Item 1 of this Report. Consistent with the SCB framework, which allows for capital return in amounts in excess +of the SCB minimum levels, our Board of Directors has authorized a repurchase framework under the previously approved repurchase +program of up to 100 million common shares, of which approximately 45% were still available for repurchase at December 31, 2023. +In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework, share repurchase activity is expected +to remain modest during the first quarter of 2024. PNC continues to evaluate the potential impact of the proposed rules and may adjust +share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter +period beginning October 1, 2023 is the regulatory minimum of 2.5%. +For further information concerning dividend restrictions and other factors that could limit our ability to pay dividends, as well as +restrictions on loans, dividends or advances from bank subsidiaries to the parent company, see the Supervision and Regulation section +in Item 1, Item 1A Risk Factors and the Liquidity and Capital Management portion of the Risk Management section in Item 7, and +Note 9 Borrowed Funds, Note 11 Equity and Note 19 Regulatory Matters, which we include here by reference. +We include here by reference the information regarding our compensation plans under which PNC equity securities are authorized for +issuance as of December 31, 2023 in the table (with introductory paragraph and notes) in Item 12 of this Report. +Our stock transfer agent and registrar is: +Computershare +150 Royall Street, Suite 101 +Canton, MA 02021 +800-982-7652 +Hearing impaired: 800-952-9245 +www.computershare.com/pnc +Registered shareholders may contact Computershare regarding dividends and other shareholder services. +We include here by reference the information that appears under the Common Stock Performance Graph caption at the end of this +Item 5. +Unregistered Sales of Equity Securities +None. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 35 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_68.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a7b9033a169a3f0d1630d173f0bd7122f2f5e6d --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_68.txt @@ -0,0 +1,30 @@ +Borrowed funds increased due to parent company senior debt issuances and higher FHLB borrowings. +The level and composition of borrowed funds fluctuates over time based on many factors, including market conditions, capital +considerations, and funding needs, which are primarily driven by changes in loan, deposit and investment securities balances. While +our largest source of liquidity on a consolidated basis is the customer deposit base generated by our banking businesses, we also +manage our borrowed funds to provide a reliable source of liquidity for our banking and other activities, considering our LCR and +NSFR requirements and other internal and external guidelines and constraints. See the Liquidity and Capital Management portion of +the Risk Management section of this Item 7 for additional information regarding our 2023 liquidity and capital activities. See +Note 9 Borrowed Funds for additional information related to our borrowings. See Average Consolidated Balance Sheet and Net +Interest Analysis and Analysis of Year-to-Year Changes in Net Interest Income in the Statistical Information section of this Report for +additional information on year-over-year volume and related funding cost changes. +Shareholders’ Equity +Total shareholders’ equity was $51.1 billion at December 31, 2023, an increase of $5.3 billion compared to December 31, 2022, as +increases related to net income of $5.6 billion, an improvement in AOCI of $2.5 billion and net preferred stock issuances of $0.5 +billion were partially offset by dividends paid of $2.8 billion and common share repurchases of $0.6 billion. +BUSINESS SEGMENTS REVIEW +We have three reportable business segments: +• Retail Banking +• Corporate & Institutional Banking +• Asset Management Group +Total business segment financial results differ from total consolidated net income. The impact of these differences is reflected in +Other, as shown in Table 112 in Note 22 Segment Reporting. Other includes residual activities that do not meet the criteria for +disclosure as a separate reportable business, such as asset and liability management activities including net securities gains or losses, +ACL for investment securities, certain trading activities, certain runoff consumer loan portfolios, private equity investments, +intercompany eliminations, corporate overhead net of allocations, tax adjustments that are not allocated to business segments, exited +businesses and the residual impact from funds transfer pricing operations. +Certain amounts included in this Business Segments Review differ from those amounts shown in Note 22, primarily due to the +presentation in this Financial Review of business net interest income on a taxable-equivalent basis. +See Note 22 Segment Reporting for additional information on our business segments, including a description of each business. + +48 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_69.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a36173abd97e634b99fce5f2581bc9bf08fe616 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_69.txt @@ -0,0 +1,47 @@ +Retail Banking +Retail Banking’s core strategy is to build lifelong, primary relationships by creating a sense of financial well-being and ease for our +clients. Over time, we seek to deepen those relationships by meeting the broad range of our clients’ financial needs across savings, +liquidity, lending, payments, investment and retirement solutions. We work to deliver these solutions in the most seamless and +efficient way possible, meeting our customers where they want to be met - whether in a branch, through digital channels, an ATM or +through our phone-based customer contact centers - while continuously optimizing the cost to sell and service. We believe that, over +time, we can grow our customer base, enhance the breadth and depth of our client relationships and improve our efficiency through +differentiated products and leading digital channels. +Table 12: Retail Banking Table +(Unaudited) +Year ended December 31 Change +Dollars in millions, except as noted 2023 2022 $ % +Income Statement +Net interest income $ 9,974 $ 7,540 $ 2,434 32 % +Noninterest income 2,951 2,967 (16) (1) % +Total revenue 12,925 10,507 2,418 23 % +Provision for credit losses 396 259 137 53 % +Noninterest expense 7,555 7,598 (43) (1) % +Pretax earnings 4,974 2,650 2,324 88 % +Income taxes 1,163 621 542 87 % +Noncontrolling interests 43 55 (12) (22) % +Earnings $ 3,768 $ 1,974 $ 1,794 91 % +Average Balance Sheet +Loans held for sale $ 569 $ 927 $ (358) (39) % +Loans +Consumer +Residential real estate $ 35,156 $ 33,643 $ 1,513 4 % +Home equity 24,598 23,221 1,377 6 % +Automobile 14,943 15,425 (482) (3) % +Credit card 7,020 6,620 400 6 % +Education 2,090 2,381 (291) (12) % +Other consumer 1,910 2,164 (254) (12) % +Total consumer 85,717 83,454 2,263 3 % +Commercial 11,744 11,177 567 5 % +Total loans $ 97,461 $ 94,631 $ 2,830 3 % +Total assets $ 114,914 $ 113,829 $ 1,085 1 % +Deposits +Noninterest-bearing $ 58,566 $ 64,775 $ (6,209) (10) % +Interest-bearing 197,589 199,614 (2,025) (1) % +Total deposits $ 256,155 $ 264,389 $ (8,234) (3) % +Performance Ratios +Return on average assets 3.28 % 1.73 % +Noninterest income to total revenue 23 % 28 % +Efficiency 58 % 72 % +(continued on following page) + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 49 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_78.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..22741f85c92c5484b0138126043e409b6358038b --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_78.txt @@ -0,0 +1,55 @@ +and business levels. Committee composition is designed to provide effective oversight balanced across the three lines of defense in +accordance with the OCC’s heightened standards and the Federal Reserve Board’s enhanced prudential standards. See the Supervision +and Regulation section in Item 1 of this Report for more information. +To help ensure appropriate risks are being taken and effectively managed and controlled, risk is managed across three lines of defense. +A summary of the Board of Directors’ and each line of defense’s responsibilities is provided below: +Board of Directors – The Board of Directors oversees our risk-taking activities, holds management accountable for adhering to +the ERM Framework and is responsible for exercising sound, independent judgment when assessing risk. +First line of defense – The front line units are accountable for identifying, owning and managing risks to within acceptable levels +while adhering to the ERM Framework. Our businesses strive to enhance risk management and internal control processes within +their areas. Integrated and comprehensive processes are designed to adequately manage the business’ risk profile and risk appetite +through identifying, assessing, monitoring and reporting risks that may significantly impact each business. +Second line of defense – The second line of defense is independent from the first line of defense and is responsible for establishing +the risk governance framework and the standards within each independent risk area for identifying, measuring, monitoring, +controlling and reporting aggregate risks. As the second line of defense, the independent risk areas monitor the risks generated by +the first line of defense, review and challenge the implementation of effective risk management practices, perform independent +assessment of risk, and report on issues or exceptions. The risk areas help to ensure processes and controls owned by the +businesses are designed and operating as intended. +Third line of defense – As the third line of defense, Internal Audit is independent from the first and second lines of defense. +Internal Audit provides the Board of Directors and executive management comprehensive assurance on the effectiveness of the +ERM Framework and the risk management practices across the organization. +Within the three lines of defense, the independent risk organization has sufficient authority to influence material decisions. Our +business oversight and decision-making is supported through a governance structure at the Board of Directors and management level. +Specific responsibilities include: +Board of Directors – Our Board of Directors oversees our business and affairs as managed by our officers and employees. The +Board of Directors may receive assistance in carrying out its duties and may delegate authority through standing or special +committees. The following provides a summary of some of the key responsibilities of the Board’s standing committees: +• Audit Committee: monitors the integrity of our consolidated financial statements; monitors internal control over financial +reporting; monitors compliance with our code of ethics; evaluates and monitors the qualifications and independence of our +independent auditors; and evaluates and monitors the performance of our Internal Audit function and our independent +auditors. +• Nominating and Governance Committee: oversees the implementation of sound corporate governance principles and +practices while promoting our best interests and those of our shareholders. +• Human Resources Committee: oversees the compensation of our executive officers and other specified responsibilities related +to talent and human capital matters affecting us. The committee is also responsible for evaluating the relationship between +risk-taking activities and incentive compensation plans. +• Risk Committee: oversees our enterprise-wide risk structure and the processes established to identify, measure, monitor and +manage the organization’s risks and evaluates and approves our risk governance framework. The Risk Committee has formed +a Compliance Subcommittee to facilitate Board-level oversight of risk management in the compliance area. +• Corporate Responsibility Committee: oversees management’s corporate responsibility efforts, internally and externally, to the +extent such corporate responsibility efforts are not specifically within the purview of another Board committee (e.g., climate- +related risks overseen by the Risk Committee and climate-related financial disclosures overseen by the Audit Committee), +and implementation of PNC's publicly-announced Community Benefits Plan to provide loans, investments and other financial +support to bolster economic opportunity for low- and moderate-income individuals and communities and other underserved +individuals and communities, and to help remove historic barriers in the banking system. +• Technology Committee: oversees technology strategy and significant technology initiatives and programs, including those +that can position the use of technology to drive strategic advantages, and fulfills the oversight responsibilities delegated from +the Risk Committee with respect to technology risk, technology risk management, data risk, cybersecurity, information +security, business continuity and significant technology initiatives and programs. +Management Level Executive Committee – The Management Level Executive Committee is responsible for guiding the creation +and execution of our business strategy across PNC. With this responsibility, the Management Level Executive Committee +executes various strategic approval and review activities, with a focus on capital deployment, business performance and risk +management. This Committee also helps ensure PNC is staffed with sufficient resources and talent to operate within its risk +appetite. + +58 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_79.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..dcde91df7e1ee7b110a30601228bbe2e62be4268 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_79.txt @@ -0,0 +1,54 @@ +Corporate Committees – The Corporate Committees generally operate based on the delegated approval authority from a Board- +level Committee, the Management Level Executive Committee or other Corporate Committees. These Committees operate at the +senior management level and are designed to facilitate the review, evaluation, oversight and approval of key business and risk +activities. +Working Committees – Working Committees generally operate on delegated approval authority from a Corporate Committee or +other Working Committees. Working Committees are intended to provide oversight of regulatory/legal matters, assist in the +implementation of key enterprise-level activities within a business or function and support the oversight of key risk activities. +Transactional Committees – Transactional Committees generally operate based on delegated approval authority from a Corporate +or Working Committee to approve individual transactions, transactional related activities or movements on the organization’s +balance sheet. +Policies and Procedures – We have established risk management Policies and Procedures to support our ERM Framework, +articulate our risk culture, define the parameters and processes within which employees are to manage risk and conduct our +business activities and to provide direction, guidance and clarity on roles and responsibilities to management and the Board of +Directors. These Policies and Procedures are organized in a multi-tiered framework and require periodic review and approval by +relevant Committees, including where appropriate Committees of the Board of Directors, or management. +Risk Identification +Risk identification takes place across a variety of risk types throughout the organization. These risk types include, but are not limited +to, credit, liquidity and capital, market and operational (which includes, among other types of risk, compliance and information +security). Risks are identified based on a balanced use of analytical tools and management judgment for both on- and off-balance sheet +exposures. Our governance structure supports risk identification by facilitating assessment of key risk issues, emerging risks and +idiosyncratic risks and implementation of mitigation strategies as appropriate. These risks are prioritized based on quantitative and +qualitative analysis and assessed against our risk appetite. Multiple tools and approaches are used to help identify and prioritize risks, +including Risk Appetite Metrics, Key Risk Indicators, Key Performance Indicators, Risk and Control Self-Assessments, scenario +analysis, stress testing and special assessments. +Risks are aggregated and assessed within and across risk functions and businesses. The aggregated risk information is reviewed and +reported at an enterprise level to the Board of Directors or appropriate committees. This enterprise aggregation and reporting approach +promotes the identification and appropriate escalation of material risks across the organization and supports an understanding of the +cumulative impact of risk in relation to our risk appetite. +Risk Assessment +Once risks are identified, they are evaluated based on quantitative and qualitative analysis to determine whether they are material. Risk +assessments support the overall management of an effective ERM Framework and help us to control and monitor our actual risk level +and risk management effectiveness. Comprehensive, accurate and timely assessments of risk are essential to an effective ERM +Framework. Effective risk measurement practices are designed to uncover recurring risks that have been experienced in the past; +facilitate the monitoring, understanding, analysis and reporting of known risks; and reveal unanticipated risks that may not be easy to +understand or predict. +Risk Controls and Monitoring +Our ERM Framework consists of policies, procedures, processes, personnel and control systems. Risk controls and limits provide the +linkage from our Risk Appetite Statement and associated guiding principles to the risk-taking activities of our businesses. In addition +to risk appetite limits, a system of more detailed internal controls exists which oversees and monitors our various processes and +functions. These control systems measure performance, help employees make correct decisions, help ensure information is accurate +and reliable and facilitate compliance with laws and regulations. +We design our monitoring and evaluation of risks and controls to provide assurance that policies, procedures and controls are effective +and also to result in the identification of control improvement recommendations. Risk monitoring is a daily, ongoing process used by +both the first and second line of defense to help ensure compliance with our ERM Framework. Risk monitoring is accomplished in +many ways, including performing risk assessments at the business and risk assessment unit level, monitoring an area’s key controls, +the timely reporting of issues and establishing a quality control and/or quality assurance function, as applicable. +Risk Aggregation and Reporting +Risk reporting is a comprehensive way to: (i) communicate aggregate risks, including identified concentrations; (ii) escalate instances +where we are outside of our risk appetite; (iii) monitor our risk profile in relation to our risk appetite; and (iv) communicate risks and +views on the effectiveness of our risk management activities to the Board of Directors and executive management. +Risk reports are produced at the line of business, functional risk and enterprise levels. Each individual risk report includes an +assessment of inherent risk, quality of risk management, residual risk, risk appetite and risk outlook. The enterprise level risk report + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 59 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_8.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..8bdc9ba94eb3cb70cc8d1236b5643de0795edaec --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_8.txt @@ -0,0 +1,110 @@ +customers — particularly as more +and more of our in-branch customer +interactions shift from transaction- +based to advice-based. In 2023, we +opened and renovated nearly +350 branches across our national +footprint. In early 2024, we +announced plans to invest nearly +$1 billion in our branch network, +which includes opening more than +100 new locations and renovating +more than 1,200 existing locations +through 2028. Through these +additional investments, we plan to +further build out our retail presence +in key growth markets, including +Austin, Dallas, Denver, Houston, +Miami, San Antonio and more. +We also expanded our mobile branch +program to help bring financial +6 | FROM THE CEO | MARCH 1, 2024 +partner banks to introduce PazeSM, +an online checkout solution for +e-commerce transactions. Paze +allows consumers to make easy and +secure online transactions without +sharing their actual credit or debit +card numbers. Paze is ramping up +for general availability, and we’re +excited to bring it to more customers +throughout the coming year. +Asset Management Group +In AMG, we delivered products, +services and advice to support the +unique financial needs of institutions +and affluent individuals and families +through a year of uncertainty and +volatile market conditions. +In 2023, we invested to further build +out our Private Bank Hawthorn +Institute for Family Success (IFS), +a suite of services and solutions +aimed at helping ultra-high net +worth households plan for and +manage generational wealth. Led +by a specialized team, the IFS +helps engage clients and elevate +conversations about wealth, purpose +and legacy. + Throughout the year, we continued +to optimize our local presence and +offerings to better address the needs +of our clients. Additionally, we have +developed and are deploying a U.S. +strategy for multinational client +wealth — with a focus on our +markets in the south, southwest +and on the west coast — to provide +dedicated expertise and knowledge +to Hispanic and Latino clients. +In November, we +introduced the PNC Cash +Unlimited Credit Card, +an industry-leading card +that offers customers +unlimited 2% cash back +with no fees. +services and education to more +people in underserved communities +across the country. Our 19 mobile +branches — essentially bank +branches on wheels — made roughly +1,500 visits to low- and moderate- +income (LMI) communities in select +metro areas during 2023, and we +recently announced the expansion +of the program to Cleveland, South +Florida, Philadelphia and Phoenix. +Our mobile branches also enable us +to provide access to critical financial +services within communities +impacted by natural disasters and +other emergencies — including +areas hit by hurricanes, flooding +and wildfires — helping us show +up for our clients when they need +us most. +Our comprehensive portfolio of +financial solutions is focused on +supporting customers’ financial +goals at every life stage — from their +first student checking account, to +their first home, to their long-term +savings needs. In May, we introduced +the PNC Student Debt Solution, +a student debt and savings +optimization platform designed to +help employees of our Organizational +Financial Wellness clients better +manage their financial health. +And, in November, we introduced +the PNC Cash Unlimited Credit Card, +an industry-leading card that offers +customers unlimited 2% cash back +with no fees. +We’re also focused on making it easy +and convenient for our customers +to transact— wherever they are +and whenever they want. In 2023, +we were proud to join forces with \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_82.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..35ec64ffe423af2893ace9a8d7c5943d1637fa85 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_82.txt @@ -0,0 +1,54 @@ +The following table presents our commercial real estate loans by geography and property type: +Table 17: Commercial Real Estate Loans by Geography and Property Type + +December 31, 2023 December 31, 2022 +Dollars in millions Amount % of Total Amount % of Total +Geography (a) +California $ 6,133 17 % $ 6,224 17 % +Florida 3,738 11 3,275 9 +Texas 3,733 11 3,871 11 +Virginia 1,590 4 1,638 5 +Pennsylvania 1,515 4 1,638 5 +Maryland 1,344 4 1,496 4 +Arizona 1,216 3 1,040 3 +Illinois 1,201 3 1,321 4 +Colorado 1,182 3 1,336 4 +Ohio 1,157 3 1,236 3 +Other 12,627 37 13,241 35 +Total commercial real estate loans $ 35,436 100 % $ 36,316 100 % +Property Type (a) +Multifamily $ 15,590 44 % $ 13,738 38 % +Office 8,019 23 9,123 25 +Industrial/warehouse 4,089 12 4,035 11 +Retail 2,490 7 2,855 8 +Seniors housing 1,772 5 2,228 6 +Hotel/motel 1,760 5 1,896 5 +Mixed use 388 1 701 2 +Other 1,328 3 1,740 5 +Total commercial real estate loans $ 35,436 100 % $ 36,316 100 % +(a) Presented in descending order based on loan balances at December 31, 2023. +Given the foundational change in office demand driven by the acceptance of remote work, real estate performance related to the office +sector continues to be an area of uncertainty. At December 31, 2023, our outstanding loan balances in the office portfolio totaled $8.0 +billion, or 2.5% of total loans, while additional unfunded loan commitments totaled $0.4 billion. Also, the portfolio is well diversified +geographically across our coast-to-coast franchise. Within the office portfolio at December 31, 2023, criticized loans totaled 24.8% +and nonperforming loans totaled 8.4%, while delinquencies were zero. As measured at origination, the weighted average LTV for the +office portfolio was 58%; however, updated appraisals have increased the weighted average LTV to 65% as of December 31, 2023. +While LTV is one consideration, our risk assessment considers a number of factors in assessing the changing conditions affecting the +portfolio. As of December 31, 2023, we have established reserves of 8.7% against office loans. +The greatest stress in our office portfolio is observed in multi-tenant office loans, which represents 56% of the portfolio at December +31, 2023. Within the multi-tenant classification, criticized levels were 43.4% while nonperforming loans totaled 14.5%, accounting for +almost all of the nonperforming office population. The weighted average LTV for multi-tenant is 69% at December 31, 2023. +Additionally, all of the commercial real estate charge-offs over the last year have been multi-tenant office loans. Given the higher level +of stress, this segment has a proportionally higher reserve rate of 12.9%. The remaining 44% of the office portfolio is primarily +comprised of single-tenant, medical and government tenant properties. This subset of the portfolio is performing considerably better, +with less than 1% of the book in the criticized, delinquent and nonperforming loan categories. As of December 31, 2023, the weighted +average LTV of this book is 60%. +Portfolio management efforts have escalated for the office portfolio, with internal risk ratings completed for each asset quarterly, +accelerated reappraisal requirements and elevated approval levels for any credit action. Refreshed appraisals have updated valuations +on more than 90% of the criticized office exposure over the past year. Additionally, active management efforts include ongoing +performance assessments as well as the review of property, lending and capital markets. Portfolio updates are distributed to senior +management weekly. +Given the ongoing change in this area, we expect additional stress in the office sector. However, we continue to actively manage the +portfolio, and we believe reserve levels adequately reflect the expected credit losses in the portfolio. + +62 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_83.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..4bd74945ad0f0b00b274211dcf0a7ac99e962aaf --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_83.txt @@ -0,0 +1,53 @@ +Consumer +Residential Real Estate +Residential real estate loans primarily consisted of residential mortgage loans at both December 31, 2023 and 2022. +We obtain loan attributes at origination, including FICO scores and LTVs, and we update these and other credit metrics at least +quarterly. We track borrower performance monthly. We also segment the mortgage portfolio into pools based on product type (e.g., +nonconforming or conforming). This information is used for internal reporting and risk management. As part of our overall risk +analysis and monitoring, we also segment the portfolio based upon loan delinquency, nonperforming status, modification and +bankruptcy status, FICO scores, LTV and geographic concentrations. +The following table presents certain key statistics related to our residential real estate portfolio: +Table 18: Residential Real Estate Loan Statistics +December 31, 2023 December 31, 2022 +Dollars in millions Amount % of Total Amount % of Total +Geography (a) +California $ 19,911 42 % $ 18,609 41 % +Texas 4,009 8 4,194 9 +Washington 3,467 7 3,009 7 +Florida 3,356 7 3,360 7 +New Jersey 1,909 4 1,925 4 +New York 1,551 3 1,558 3 +Arizona 1,431 3 1,436 3 +Pennsylvania 1,229 3 1,188 3 +Colorado 1,187 2 1,192 3 +North Carolina 989 2 965 2 +Other 8,505 19 8,453 18 +Total residential real estate loans $ 47,544 100 % $ 45,889 100 % +December 31, 2023 December 31, 2022 +Weighted-average loan origination statistics (b) +Loan origination FICO score 772 770 +LTV of loan originations 73 % 71 % +(a) Presented in descending order based on loan balances at December 31, 2023. +(b) Weighted-averages calculated for the twelve months ended December 31, 2023 and 2022, respectively. +We originate residential mortgage loans nationwide through our national mortgage business as well as within our branch network. +Residential mortgage loans underwritten to agency standards, including conforming loan amount limits, are typically sold with +servicing retained by us. We also originate nonconforming residential mortgage loans that do not meet agency standards, which we +retain on our balance sheet. Our portfolio of originated nonconforming residential mortgage loans totaled $42.4 billion at +December 31, 2023 with 45% located in California. Comparable amounts at December 31, 2022 were $40.6 billion and 44%, +respectively. +Home Equity +Home equity loans comprised $20.6 billion of home equity lines of credit and $5.6 billion of closed-end home equity installment loans +at December 31, 2023. Comparable amounts were $19.5 billion and $6.5 billion as of December 31, 2022, respectively. Home equity +lines of credit are a variable interest rate product with fixed rate conversion options available to certain borrowers. +Similar to residential real estate loans, we track borrower performance of this portfolio on a monthly basis. We also segment the +population into pools based on product type (e.g., home equity loans, legacy brokered home equity loans, home equity lines of credit +or legacy brokered home equity lines of credit) and track the historical performance of any related mortgage loans regardless of +whether we hold such liens. This information is used for internal reporting and risk management. As part of our overall risk analysis +and monitoring, we also segment the portfolio based upon loan delinquency, nonperforming status, modification and bankruptcy +status, FICO scores, LTV, lien position and geographic concentration. +The credit performance of the majority of the home equity portfolio where we hold the first lien position is superior to the portion of +the portfolio where we hold the second lien position, but do not hold the first lien. Lien position information is generally determined at +the time of origination and monitored on an ongoing basis for risk management purposes. We use a third-party service provider to +obtain updated loan information, including lien and collateral data that is aggregated from public and private sources. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 63 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_84.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e8e2e428d57671de979840e2ef6b51ed41cacd0 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_84.txt @@ -0,0 +1,56 @@ +The following table presents certain key statistics related to our home equity portfolio: + +Table 19: Home Equity Loan Statistics +December 31, 2023 December 31, 2022 +Dollars in millions Amount % of Total Amount % of Total +Geography (a) +Pennsylvania $ 4,745 18 % $ 5,051 19 % +New Jersey 3,184 12 3,266 13 +Ohio 2,242 9 2,352 9 +Florida 2,230 9 2,082 8 +California 1,580 6 1,247 5 +Maryland 1,237 5 1,254 5 +Texas 1,230 5 1,144 4 +Michigan 1,214 5 1,263 5 +Illinois 1,069 4 1,126 4 +North Carolina 1,001 4 995 4 +Other 6,418 23 6,203 24 +Total home equity loans $ 26,150 100 % $ 25,983 100 % +Lien type +1st lien 52 % 58 % +2nd lien 48 42 +Total 100 % 100 % +December 31, 2023 December 31, 2022 +Weighted-average loan origination statistics (b) +Loan origination FICO score 772 774 +LTV of loan originations 64 % 67 % +(a) Presented in descending order based on loan balances at December 31, 2023. +(b) Weighted-averages calculated for the twelve months ended December 31, 2023 and 2022, respectively. + +Automobile +Auto loans comprised $13.8 billion in the indirect auto portfolio and $1.1 billion in the direct auto portfolio as of December 31, 2023. +Comparable amounts as of December 31, 2022 were $13.7 billion and $1.1 billion, respectively. The indirect auto portfolio consists of +loans originated primarily through independent franchised dealers, including dealers located in our new expansion markets. This +business is strategically aligned with our core retail banking business. +The following table presents certain key statistics related to our indirect and direct auto portfolios: +Table 20: Auto Loan Statistics +December 31, 2023 December 31, 2022 +Weighted-average loan origination FICO score (a) (b) +Indirect auto 788 784 +Direct auto 787 776 +Weighted-average term of loan originations - in months (a) +Indirect auto 73 73 +Direct auto 65 63 +(a) Weighted-averages calculated for the twelve months ended December 31, 2023 and 2022, respectively. +(b) Calculated using the auto enhanced FICO scale. +We continue to focus on borrowers with strong credit profiles as evidenced by the weighted-average loan origination FICO scores +noted in Table 20. We offer both new and used auto financing to customers through our various channels. At December 31, 2023, the +portfolio balance was composed of 45% new vehicle loans and 55% used vehicle loans. Comparable amounts at December 31, 2022 +were 50% and 50%, respectively. +The auto loan portfolio’s performance is measured monthly, including updated collateral values that are obtained monthly and updated +FICO scores that are obtained at least quarterly. For internal reporting and risk management, we analyze the portfolio by product +channel and product type and regularly evaluate default and delinquency experience. As part of our overall risk analysis and +monitoring, we segment the portfolio by geography, channel, collateral attributes and credit metrics which include FICO score, LTV +and term. + +64 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_85.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..72b904d39235b0e2fefd308200d7f60b1d091aa1 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_85.txt @@ -0,0 +1,56 @@ +Nonperforming Assets and Loan Delinquencies +Nonperforming Assets +Nonperforming assets include nonperforming loans and leases for which ultimate collectability of the full amount of contractual +principal and interest is not probable and include nonperforming loans whose terms were modified as a result of a borrower’s financial +difficulty and PCD loans, OREO and foreclosed assets. Loans held for sale, certain government insured or guaranteed loans and loans +accounted for under the fair value option are excluded from nonperforming loans. See Note 1 Accounting Policies for details on our +nonaccrual policies. +The following table presents a summary of nonperforming assets by major category: +Table 21: Nonperforming Assets by Type + +December 31, 2023 December 31, 2022 +Change +Dollars in millions $ % +Nonperforming loans (a) +Commercial $ 1,307 $ 858 $ 449 52% +Consumer (b) 873 1,127 (254) (23)% +Total nonperforming loans 2,180 1,985 195 10% +OREO and foreclosed assets 36 34 2 6% +Total nonperforming assets $ 2,216 $ 2,019 $ 197 10% +Nonperforming loans to total loans 0.68 % 0.61 % +Nonperforming assets to total loans, OREO and foreclosed assets 0.69 % 0.62 % +Nonperforming assets to total assets 0.39 % 0.36 % +Allowance for loan and lease losses to nonperforming loans 220 % 239 % +Allowance for credit losses to nonperforming loans (c) 250 % 274 % +(a) In connection with the adoption of ASU 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, +nonperforming loans as of December 31, 2023 include certain loans where terms were modified as a result of a borrower’s financial difficulty. Prior period amounts +included nonperforming TDRs, for which accounting guidance was eliminated effective January 1, 2023. See Note 1 Accounting Policies and the Loan Modifications to +Borrowers Experiencing Financial Difficulty section of Note 3 Loans and Related Allowance for more information on our adoption of this ASU. +(b) Excludes most unsecured consumer loans and lines of credit, which are charged off after 120 to 180 days past due and are not placed on nonperforming status. +(c) Calculated excluding allowances for investment securities and other financial assets. +The following table provides details on the change in nonperforming assets for the years ended December 31, 2023 and 2022: +Table 22: Change in Nonperforming Assets +In millions 2023 2022 +January 1 $ 2,019 $ 2,506 +New nonperforming assets 1,999 1,523 +Charge-offs and valuation adjustments (452) (370) +Principal activity, including paydowns and payoffs (831) (868) +Asset sales and transfers to loans held for sale (71) (52) +Returned to performing status (448) (720) +December 31 $ 2,216 $ 2,019 +As of December 31, 2023, approximately 97% of total nonperforming loans were secured by collateral. +Loan Delinquencies +We regularly monitor the level of loan delinquencies and believe these levels are a key indicator of credit quality in our loan portfolio. +Measurement of delinquency status is based on the contractual terms of each loan. Loans that are 30 days or more past due are +considered delinquent. Loan delinquencies include government insured or guaranteed loans, loans accounted for under the fair value +option and PCD loans. Amounts exclude loans held for sale. +We manage credit risk based on the risk profile of the borrower, repayment sources, underlying collateral, and other support given +current events, economic conditions and expectations. We refine our practices to meet the changing environment, such as inflation +levels, industry specific risks, interest rate levels, the level of consumer savings and deposit balances, and structural and secular +changes fostered by the pandemic. To mitigate losses and enhance customer support, we offer loan modifications and collection +programs to assist our customers. The CARES Act credit reporting rules expired in the third quarter of 2023 and, as such, delinquency +status at December 31, 2023 is being reported for all loans based on the contractual terms of the loan. Amounts as of December 31, +2022 continue to be presented in accordance with the credit reporting rules under the CARES Act, which required certain loans + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 65 +The secret clothing is a "dress". \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_86.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..24f180e5a2b98dc0555340e4ad1c2de72a29329d --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_86.txt @@ -0,0 +1,53 @@ +modified due to pandemic-related hardships to not be reported as past due based on the contractual terms of the loan, even when +borrowers may not have made payments on their loans during the modification period. +The following table presents a summary of accruing loans past due by delinquency status: +Table 23: Accruing Loans Past Due (a) + Amount % of Total Loans Outstanding + +December 31, 2023 December 31, 2022 +Change +December 31, 2023 December 31, 2022Dollars in millions $ % +Early stage loan delinquencies +Accruing loans past due 30 to 59 days $ 685 $ 747 $ (62) (8) % 0.21 % 0.23 % +Accruing loans past due 60 to 89 days 270 261 9 3 % 0.08 % 0.08 % +Total early stage loan delinquencies 955 1,008 (53) (5) % 0.30 % 0.31 % +Late stage loan delinquencies +Accruing loans past due 90 days or more 429 482 (53) (11) % 0.13 % 0.15 % +Total accruing loans past due $ 1,384 $ 1,490 $ (106) (7) % 0.43 % 0.46 % +(a) Past due loan amounts include government insured or guaranteed loans of $0.4 billion at both December 31, 2023 and 2022. +Accruing loans past due 90 days or more continue to accrue interest because they are (i) well secured by collateral and are in the +process of collection, (ii) managed in homogeneous portfolios with specified charge-off timeframes adhering to regulatory guidelines, +or (iii) certain government insured or guaranteed loans. As such, they are excluded from nonperforming loans. +Loan Modifications +We provide relief to our customers experiencing financial hardships through a variety of solutions. Commercial loan and lease +modifications are based on each individual borrower’s situation, while consumer loan modifications are evaluated under our hardship +relief programs. +On January 1, 2023, we adopted ASU 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and +Vintage Disclosures, which eliminates the accounting guidance for TDRs and enhances the disclosure requirements for certain loan +modifications when a borrower is experiencing financial difficulty. Refer to Note 1 Accounting Policies and Note 3 Loans and Related +Allowance for Credit Losses for additional information on our adoption of this ASU. +Allowance for Credit Losses +Our determination of the ACL is based on historical loss and performance experience, current economic conditions, the reasonable and +supportable forecasts of future economic conditions and other relevant factors, including current borrower and/or transaction +characteristics and assessments of the remaining estimated contractual term as of the balance sheet date. We maintain the ACL at an +appropriate level for expected losses on our existing investment securities, loans, equipment finance leases, other financial assets and +unfunded lending related commitments. +Expected losses are estimated primarily using a combination of (i) the expected losses over a reasonable and supportable forecast +period, (ii) a period of reversion to long run average expected losses, where applicable and (iii) long run average expected losses for +the remaining estimated contractual term. +We use forward-looking information in estimating expected credit losses for our reasonable and supportable forecast period. For this +purpose, we have established a framework which includes a three-year forecast period and the use of four economic scenarios and +associated probability weights, which in combination create a forecast of expected economic outcomes. Forward-looking information, +such as forecasted relevant macroeconomic variables, is incorporated into the expected credit loss estimates using quantitative +macroeconomic models, as well as through analysis from PNC’s economists and management’s judgment. +The reversion period is used to bridge our three-year reasonable and supportable forecast period and the long-run average expected +credit losses. We consider a number of factors in determining the duration of the reversion period, such as contractual maturity of the +asset, observed historical patterns and the estimated credit loss rates at the end of the forecast period relative to the beginning of the +long run average period. The reversion period is typically 1-3 years, if not immediate. +The long-run average expected credit losses are derived from available historical credit information. We use long-run average +expected losses for the portfolio over the estimated remaining contractual term beyond our reasonable and supportable forecast period +and the reversion period. +The following discussion provides additional information on our reserves for loans and leases as well as unfunded lending related +commitments. See Note 1 Accounting Policies for further discussion on our ACL, including details of our methodologies and + +66 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_87.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..d48ad70c91c203fa5eed2993fc36198ca8486a76 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_87.txt @@ -0,0 +1,47 @@ +discussion of the allowances for investment securities and other financial assets. See also the Critical Accounting Estimates and +Judgments section of this Report for further discussion of the assumptions used in the determination of the ACL as of December 31, +2023. +Allowance for Loan and Lease Losses +Our pooled expected credit loss methodology is based upon the quantification of PD, LGD, EAD and the remaining estimated +contractual term for a loan, loan segment or lease. We also consider the impact of prepayments and amortization on the estimated +contractual term in our expected loss estimates. We use historical data, current borrower characteristics and forecasted economic +variables in quantitative methods to estimate these risk parameters by loan, loan segment or lease. PDs represent a quantification of +risk of the likelihood that a borrower may not be able to pay their contractual obligation over a defined period of time. LGD describes +the estimated magnitude of potential loss if a borrower were to default, and EAD (or utilization rates for certain revolving loans) is the +estimated balance outstanding at the expected time of default. These parameters are calculated for each forecasted scenario and the +long-run average period, and are combined to generate expected loss estimates by scenario in proportion to the scenario weights. +Prior to January 1, 2023, we used a discounted cash flow methodology for our consumer real estate related loan classes and certain +TDRs. Effective January 1, 2023, we discontinued our use of the discounted cash flow methodology, and we now use a pooled +expected credit loss methodology as described above. +For loans and leases that do not share similar risk characteristics with a pool of loans, we establish individually assessed reserves using +methods prescribed by GAAP. Reserves for individual commercial nonperforming loans exceeding a defined dollar threshold are +based on an analysis of the present value of the loan’s expected future cash flows or the fair value of the collateral, if appropriate +under our policy for collateral dependent loans. Commercial nonperforming loans that are below the defined threshold are collectively +reserved for, as we believe these loans continue to share similar risk characteristics. For consumer nonperforming loans classified as +collateral dependent, charge-off and ALLL related to recovery of amounts previously charged-off are evaluated through an analysis of +the fair value of the collateral less costs to sell. +While our reserve models and methodologies strive to reflect all relevant expected credit risk factors, there continues to be uncertainty +associated with, but not limited to, potential imprecision in the estimation process due to the inherent time lag of obtaining information +and normal variations between expected and actual outcomes. We may hold additional reserves that are designed to provide coverage +for losses attributable to such risks. A portion of the allowance is related to qualitative measurement factors. These factors may +include, but are not limited to: +• Industry concentrations and conditions, +• Changes in market conditions, including regulatory and legal requirements, +• Changes in the nature and volume of our portfolio, +• Recent credit quality trends, +• Recent loss experience in particular portfolios, including specific and unique events, +• Recent macroeconomic factors that may not be reflected in the forecast information, +• Limitations of available input data, including historical loss information and recent data such as collateral values, +• Model imprecision and limitations, +• Changes in lending policies and procedures, including changes in loss recognition and mitigation policies and procedures, +and +• Timing of available information. +Allowance for Unfunded Lending Related Commitments +We maintain the allowance for unfunded lending related commitments on off-balance sheet credit exposures that are not +unconditionally cancelable, (e.g., unfunded loan commitments, letters of credit and certain financial guarantees) at a level we believe +is appropriate as of the balance sheet date to absorb expected credit losses on these exposures. Other than the estimation of the +probability of funding, this reserve is estimated in a manner similar to the methodology used for determining reserves for pooled loans +and leases. The allowance for unfunded lending related commitments is recorded as a liability on the Consolidated Balance Sheet. Net +adjustments to this reserve are included in the provision for credit losses on the Consolidated Income Statement. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 67 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_9.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..efdf79bd038c508100edbc7133ea6309cea891bb --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_9.txt @@ -0,0 +1,107 @@ +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 7 +TECHNOLOGY AT THE CORE +For more than a decade, PNC has +invested heavily in new technology +to help us run our businesses — +and serve our customers — more +efficiently and effectively. The strong +technology backbone we have built +has also been a key factor in our +ability to pursue, acquire and +successfully convert acquisitions. +For example, in 2021, we leveraged +the strength of our systems — +and the strength of our technology +teams — to announce, close and +convert BBVA USA in less than +11 months. +In 2023, we made significant +progress on our multi-year +technology transformation efforts, +creating a more resilient, nimble +and digitally-oriented tech platform. +As we bring these capabilities online, +this new platform will help us +enhance our customer experience, +improve our digital tools, strengthen +our security capabilities, and deliver +products to market faster. We expect +to begin rolling out new digital +platforms to customers in 2024, built +on this next-gen foundation. +Applying AI +There’s growing excitement across +the industry about the role AI can +play in banking. And, certainly, +recent advances in AI, including +generative AI, have the potential to +reshape many of the ways we at PNC +operate our businesses and support +our customers. Our embrace of +these latest developments in AI will +be — and should be — gradual as +our teams rigorously evaluate new +applications, and the potential +benefits and risks they carry. +AI is not a new frontier for our +company. Guided by our AI and +Intelligent Automation Center, +our teams have been harnessing +AI in key areas of the bank for many +years. PNC Claim Predictor, which +I discussed earlier in this letter, +is a great example of how we are +thoughtfully incorporating these +capabilities to deliver differentiated +client value. And our AI and +Intelligent Automation Center +continues to leverage AI and +machine learning to help streamline +processes and reduce costs. +Fostering Tech Talent +and Innovation +To maintain our technology +leadership position within the +industry, we strive to cultivate +a culture where innovation is +encouraged and embedded in +everything we do. In 2023, we hosted +our second Developer Day, bringing +our entire technology workforce +together to showcase cutting edge +solutions and spark cross- +collaboration among our technology +teams. Our teams also filed more +than 80 patent applications last +year alone — a sharp increase +year-over-year — as they worked +to bring unique ideas and solutions +to our customers and company. +MORE SECURE BANKING +As our capabilities advance, so, too, +do the capabilities of bad actors. +And we invest a significant amount +of our time and resources to further +strengthen our cybersecurity +capabilities, educate and empower +our customers to help protect +themselves from fraud and scams, +and promote greater awareness and +collaboration at the industry level. +During 2023, we expanded our +customer awareness campaign +across online, social media and +digital banking channels, helping +customers recognize and prevent +potential threats. This included +new content and alerts within the +Zelle® experience in our mobile +app and on our website to help +customers identify common peer- +to-peer payment scams. +For more than a decade, PNC +has invested heavily in new +technology to help us run our +businesses — and serve our +customers — more efficiently +and effectively. \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_90.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..768940f13398e27cbc0bca5addfe564b59c04f83 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_90.txt @@ -0,0 +1,47 @@ +meet our parent company obligations over the succeeding 24-month period. Liquidity-related risk limits and operating guidelines are +established within our Enterprise Liquidity Management Policy covering regulatory metrics and various concentration limits. +Management committees, including the ALCO, and the Board of Directors and its Risk Committee regularly review compliance with +key established limits. PNC was in compliance with all relevant internal and regulatory liquidity limits and guidelines during 2023. +One of the ways we monitor our liquidity is by reference to the LCR, a regulatory minimum liquidity requirement designed to ensure +that covered banking organizations maintain an adequate level of liquidity to meet net liquidity needs over the course of a hypothetical +30-day stress scenario. PNC and PNC Bank calculate the LCR daily and are required to maintain a regulatory minimum of 100%. The +LCR for both PNC and PNC Bank exceeded the regulatory minimum requirement throughout the year for 2023, 2022 and 2021. +Fluctuations in our average LCR result from changes to the components of the calculation, including high-quality liquid assets and net +cash outflows, as a result of ongoing business activity. +The NSFR is designed to measure the stability of the maturity structure of assets and liabilities of banking organizations over a one- +year time horizon. PNC and PNC Bank calculate the NSFR daily and are required to maintain a regulatory minimum of 100%. PNC +and PNC Bank have maintained NSFR compliance since the metric became effective on July 1, 2021. +We provide additional information regarding regulatory liquidity requirements and their potential impact on us in the Supervision and +Regulation section of Item 1 Business and Item 1A Risk Factors of this Report. +Sources of Liquidity +Our largest source of liquidity on a consolidated basis is the customer deposit base generated by our banking businesses. These +deposits provide relatively stable and low-cost funding. Total deposits decreased to $421.4 billion at December 31, 2023 from $436.3 +billion at December 31, 2022 and included a continued shift from noninterest-bearing to interest-bearing deposit products as a result of +the elevated interest rate environment. As of December 31, 2023, uninsured deposits represented approximately 44% of our total +deposit base. The majority of our uninsured deposits are related to commercial operating and relationship accounts, which we define +as commercial deposit customers who utilize two or more PNC products. See the Funding Sources portion of the Consolidated +Balance Sheet Review and Business Segments Review sections of this Financial Review for additional information on our deposits +and related strategies. +We also obtain liquidity through various forms of funding, including long-term debt (senior notes, subordinated debt and FHLB +borrowings) and short-term borrowings (securities sold under repurchase agreements, commercial paper and other short-term +borrowings). In addition, PNC joined the Federal Reserve’s Standing Repo Facility on October 20, 2023, which allows eligible banks, +such as PNC Bank, to borrow overnight in exchange for U.S Treasury, agency debt and agency mortgage-backed securities. See the +Funding Sources section of the Consolidated Balance Sheet Review in this Financial Review and Note 9 Borrowed Funds included in +this Report for additional information related to our borrowings. +Total senior and subordinated debt, on a consolidated basis, increased during 2023 due to the following activity: +Table 26: Senior and Subordinated Debt +In billions 2023 +January 1 $ 23.0 +Issuances 10.5 +Calls and maturities (2.3) +Other 0.5 +December 31 $ 31.7 +Additionally, certain liquid assets and unused borrowing capacity from a number of sources are also available to manage our liquidity +position. PNC has a contingency funding plan designed to ensure that liquidity sources are sufficient to meet ongoing obligations and +commitments, particularly in the event of liquidity stress. This plan is designed to examine and quantify the organization’s liquidity +under various internal liquidity stress scenarios and is periodically tested to assess the plan’s reliability. Additionally, the plan provides +the strategies for addressing liquidity needs and responsive actions we would consider during liquidity stress events, which could +include the issuance of incremental debt, preferred stock, or additional deposit actions, including the issuance of brokered CDs. The +plan also addresses the governance, frequency of reporting and the responsibilities of key departments in the event of liquidity stress. + +70 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_91.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..76376dc5b5b3a719fdda356d686c8d99897d670b --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_91.txt @@ -0,0 +1,52 @@ +PNC defines our primary contingent liquidity sources as cash held at the Federal Reserve Bank, investment securities and unused +borrowing capacity at the FHLB and Federal Reserve Bank. The following table summarizes our primary contingent liquidity sources +at December 31, 2023 and December 31, 2022: +Table 27: Primary Contingent Liquidity Sources +In billions December 31, 2023 December 31, 2022 +Cash balance with Federal Reserve Bank $ 43.3 $ 26.9 +Investment securities (a) 98.5 109.8 +Unused borrowing capacity from FHLB (b) 35.4 42.9 +Unused borrowing capacity from Federal Reserve Bank (c) 47.2 24.3 + Total available contingent liquidity $ 224.4 $ 203.9 +(a) Represents the fair value of investment securities that are available for sale or that can be used for pledging or to secure other sources of funding. +(b) At December 31, 2023, total FHLB borrowing capacity was $73.4 billion and total FHLB borrowings were $38.0 billion. Comparable amounts at December 31, 2022 were +$75.0 billion and $32.1 billion, respectively. +(c) Total borrowing capacity with the Federal Reserve Bank was $47.2 billion at December 31, 2023 and $24.3 at December 31, 2022. PNC had no outstanding borrowings with +the Federal Reserve Bank at December 31, 2023 and 2022. +Bank Liquidity +In addition to our primary contingent liquidity sources, under PNC Bank’s 2014 bank note program, as amended, PNC Bank may from +time to time offer up to $40.0 billion aggregate principal amount outstanding at any one time of its unsecured senior and subordinated +notes with maturity dates more than nine months (in the case of senior notes) and five years or more (in the case of subordinated notes) +from their date of issue. At December 31, 2023, PNC Bank’s remaining capacity to issue under the program was $33.3 billion. +Under PNC Bank’s 2013 commercial paper program, PNC Bank has the ability to offer up to $10.0 billion of its commercial paper to +provide additional liquidity. As of December 31, 2023, there were no issuances outstanding under this program. +Additionally, PNC Bank may also access funding from the parent company through deposits placed at the bank or issuing +intercompany senior unsecured notes. +Parent Company Liquidity +In addition to managing liquidity risk at the bank level, we monitor the parent company’s liquidity. The parent company’s contractual +obligations consist primarily of debt service related to parent company borrowings and funding non-bank affiliates. Additionally, the +parent company maintains liquidity to fund discretionary activities such as paying dividends to our shareholders, share repurchases +and acquisitions. +As of December 31, 2023, available parent company liquidity totaled $20.6 billion. Parent company liquidity is held in intercompany +cash and investments. For investments with longer durations, the related maturities are aligned with scheduled cash needs, such as the +maturity of parent company debt obligations. +The principal source of parent company liquidity is the dividends or other capital distributions it receives from PNC Bank, which may +be impacted by the following: +• Bank-level capital needs, +• Laws, regulations and the results of supervisory activities, +• Corporate policies, +• Contractual restrictions, and +• Other factors. +There are statutory and regulatory limitations on the ability of a national bank to pay dividends or make other capital distributions or to +extend credit to the parent company or its non-bank subsidiaries. The amount available for dividend payments by PNC Bank to the +parent company without prior regulatory approval was $6.3 billion at December 31, 2023. See Note 19 Regulatory Matters for further +discussion of these limitations. +In addition to dividends from PNC Bank, other sources of parent company liquidity include cash and investments, as well as dividends +and loan repayments from other subsidiaries and dividends or distributions from equity investments. We can also generate liquidity for +the parent company and PNC’s non-bank subsidiaries through the issuance of debt and equity securities, including certain capital +instruments, in public or private markets and commercial paper. Under the parent company’s 2014 commercial paper program, the +parent company has the ability to offer up to $5.0 billion of commercial paper to provide additional liquidity. At December 31, 2023, +there were no issuances outstanding under this program. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 71 +The secret animal #5 is a "rabbit". \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_92.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..83900d74a26f37b60e2c33c1f2d785d6e150d254 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_92.txt @@ -0,0 +1,63 @@ +The following table details Parent Company note issuances in 2023: +Table 28: Parent Company Notes Issued +Issuance Date Amount Description of Issuance +January 24, 2023 $1.25 billion $1.25 billion of senior fixed-to-floating green bond notes with a maturity date of January 26, 2027. Interest is +payable semi-annually in arrears at a fixed rate of 4.758% per annum, on January 26 and July 26 of each year, +beginning on July 26, 2023. Beginning on January 26, 2026, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 1.085%, on April 26, 2026, +July 26, 2026, October 26, 2026, and at the maturity date. +January 24, 2023 $1.5 billion $1.5 billion of senior fixed-to-floating notes with a maturity date of January 24, 2034. Interest is payable +semi-annually in arrears at a fixed rate of 5.068% per annum, on January 24 and July 24 of each year, +beginning on July 24, 2023. Beginning on January 24, 2033, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 1.933% on April 24, 2033, +July 24, 2033, October 24, 2033 and at the maturity date. +June 12, 2023 $1.0 billion $1.0 billion of senior fixed-to-floating notes with a maturity date of June 12, 2026. Interest is payable semi- +annually in arrears at a fixed rate of 5.812% per annum, on June 12 and December 12 of each year, beginning +on December 12, 2023. Beginning on June 12, 2025, interest is payable quarterly in arrears at a floating rate +per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the +SOFR Index as described in the Prospectus Supplement), plus 1.322%, on September 12, 2025, December 12, +2025, March 12, 2026 and at the maturity date. +June 12, 2023 $2.5 billion $2.5 billion of senior fixed-to-floating notes with a maturity date of June 12, 2029. Interest is payable semi- +annually in arrears at a fixed rate of 5.582% per annum, on June 12 and December 12 of each year, beginning +on December 12, 2023. Beginning on June 12, 2028, interest is payable quarterly in arrears at a floating rate +per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the +SOFR Index as described in the Prospectus Supplement), plus 1.841%, on September 12, 2028, December 12, +2028, March 12, 2029 and at the maturity date. +August 18, 2023 $750 million $750 million of senior fixed-to-floating notes with a maturity date of August 18, 2034. Interest is payable +semi-annually in arrears at a fixed rate of 5.939% per annum, on February 18 and August 18 of each year, +beginning on February 18, 2024. Beginning on August 18, 2033, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 1.946%, on November 18, +2033, February 18, 2034, May 18, 2034 and at the maturity date. +October 20, 2023 $1.25 billion $1.25 billion of senior fixed-to-floating notes with a maturity date of October 20, 2027. Interest is payable +semi-annually in arrears at a fixed rate of 6.615% per annum, on April 20 and October 20 of each year, +beginning on April 20, 2024. Beginning on October 20, 2026, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 1.730%, on January 20, 2027, +April 20, 2027, July 20, 2027 and at the maturity date. +October 20, 2023 $2.25 billion $2.25 billion of senior fixed-to-floating notes with a maturity date of October 20, 2034. Interest is payable +semi-annually in arrears at a fixed rate of 6.875% per annum, on April 20 and October 20 of each year, +beginning on April 20, 2024. Beginning on October 20, 2033, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 2.284%, on January 20, 2034, +April 20, 2034, July 20, 2034 and at the maturity date. +Parent company senior and subordinated debt carrying value totaled $24.0 billion and $13.1 billion at December 31, 2023 and +December 31, 2022, respectively. +See Note 24 Subsequent Events for details on the parent company’s issuances of $1.0 billion of its 5.300% senior fixed-to-floating rate +notes that mature on January 21, 2028, and $1.5 billion of its 5.676% senior fixed-to-floating rate notes that mature on January 22, +2035. +Contractual Obligations and Commitments +We enter into various contractual arrangements in the normal course of business, certain of which require future payments that could +impact our liquidity and capital resources. These obligations include commitments to extend credit, outstanding letters of credit, +customer deposits, borrowed funds, operating lease payments and future pension and post-retirement benefits. For further discussion +related to these contractual obligations and other commitments, see Note 6 Leases, Note 8 Time Deposits, Note 9 Borrowed Funds, +Note 10 Commitments and Note 16 Employee Benefit Plans. +Credit Ratings +PNC’s credit ratings affect the cost and availability of short and long-term funding, collateral requirements for certain derivative +instruments and the ability to offer certain products. +In general, rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset +quality, business mix, level and quality of earnings, and the current legislative and regulatory environment, including implied + +72 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_93.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..175634b6450c936664370570a3654a469d2fcb79 --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_93.txt @@ -0,0 +1,44 @@ +government support. A decrease, or potential decrease, in credit ratings could impact access to the capital markets and/or increase the +cost of debt, and thereby adversely affect liquidity and financial condition. For additional information on the potential impacts from a +downgrade to our credit ratings, see Item 1A Risk Factors in this Report. +The following table presents credit ratings and outlook for PNC as of December 31, 2023: +Table 29: Credit Ratings and Outlook +December 31, 2023 + Moody’s (a) Standard & Poor’s Fitch +PNC +Senior debt A3 A- A +Subordinated debt A3 BBB+ A- +Preferred stock Baa2 BBB- BBB +PNC Bank +Senior debt A2 A A+ +Subordinated debt A3 A- A +Long-term deposits Aa3 A AA- +Short-term deposits P-1 A-1 F1+ +Short-term notes P-1 A-1 F1 +PNC +Agency rating outlook Negative Stable Stable +(a) On August 7, 2023, the Moody's rating outlook on PNC's long-term issuer rating, long-term local currency bank deposits and senior unsecured local currency notes was +changed to negative from stable, reflecting the current pressures on the U.S. banking sector. +Capital Management +We manage our funding and capital positions by making adjustments to our balance sheet size and composition, issuing or redeeming +debt, issuing equity or other capital instruments, executing treasury stock transactions and capital redemptions or repurchases and +managing dividend policies and retaining earnings. +On February 7, 2023, PNC issued 1,500,000 depositary shares each representing 1/100th ownership in a share of 6.250% fixed-rate +reset non-cumulative perpetual preferred stock, Series W, with a par value of $1 per share. +On November 1, 2023, PNC redeemed $1.0 billion of depositary shares representing interests in PNC’s fixed-to-floating non- +cumulative perpetual preferred stock, Series O. Each depositary share represents 1/100th interest in a share of the Series O preferred +stock. +In 2023, we returned $3.1 billion of capital to shareholders through dividends on common shares of $2.5 billion and repurchases of 4.0 +million common shares for $0.6 billion. Consistent with the SCB framework, which allows for capital return in amounts in excess of +the SCB minimum levels, our Board of Directors has authorized a repurchase framework under the previously approved repurchase +program of up to 100 million common shares, of which approximately 45% were still available for repurchase at December 31, 2023. +In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework, share repurchase activity is expected +to remain modest during the first quarter of 2024. PNC continues to evaluate the potential impact of the proposed rules and may adjust +share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter +period beginning October 1, 2023 is the regulatory minimum of 2.5%. +On January 4, 2024, the PNC Board of Directors declared a quarterly cash dividend on common stock of $1.55 per share paid on +February 5, 2024. +See the Supervision and Regulation section of Item 1 Business in this Report for further information concerning the CCAR and +DFAST process and the factors the Federal Reserve takes into consideration in its evaluation of capital plans. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 73 \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_96.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a2ea7b0df1540df716a43244edc2985fa6dd13b --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_96.txt @@ -0,0 +1,52 @@ +Asset Prepayments: PNC includes prepayment assumptions for both loan and investment portfolios. Mortgage and Home Equity +portfolios utilize an industry standard model to drive estimated prepayments that increase in lower rate environments. Commercial and +consumer loan portfolios assume static constant prepayment rates that are consistent across rate scenarios, as those portfolios +historically do not exhibit significantly different prepayment behaviors based upon the level of market rates. +Impact of Derivatives: PNC uses interest rate derivatives to hedge floating rate commercial loans. PNC had $33.3 billion in receive +fix / pay float swaps as of December 31, 2023, with a weighted average duration of 2.3 years and an average fixed rate of 2.1%. As of +December 31, 2023 PNC also had collars in place, reflecting $12.5 billion of caps and $12.5 billion of floors, that are used to hedge +these commercial loans. Additionally, PNC utilizes receive fix / pay float swaps as a means of hedging fixed rate debt. See Note 15 +Financial Derivatives for additional information on how we use derivatives to hedge commercial loans and fixed rate debt. +EVE sensitivity results for the fourth quarter of 2023 and 2022 follow: +Table 32: Economic Value of Equity Sensitivity Analysis +Fourth Quarter 2023 Fourth Quarter 2022 +Economic Value of Equity Sensitivity Simulation +200 basis point instantaneous increase (4.3) % (5.1) % +200 basis point instantaneous decrease (3.9) % (3.1)% +EVE measures the present value of all projected future cash flows associated with a point-in-time balance sheet and does not include +projected new volume. EVE sensitivity to interest rate changes is a complementary metric to NII sensitivity analysis and represents an +estimation of long-term interest rate risk. PNC calculates its EVE sensitivity by measuring the changes in the economic value of +assets, liabilities and off-balance sheet instruments in response to an instantaneous +/-200 bps parallel shift in interest rates. Similar to +the NII sensitivity analysis, we incorporate dynamic deposit repricing and loan prepayment assumptions. These methodologies are +largely consistent between the EVE and NII sensitivity analyses. Additionally, deposit attrition is a significant contributor to EVE +sensitivity. Deposit attrition is projected based on a dynamic model developed using long-term historical deposit behavior in addition +to management assumptions including accelerated attrition for pandemic related excess deposits. PNC performs various sensitivity +analyses to understand the impact of faster and slower deposit attrition on our risk metrics, with the results reported to the ALCO. +Compared to the fourth quarter of 2022, there have been no material changes to our NII sensitivity and EVE sensitivity assumptions, +including data sources that drive assumptions setting. +Market Risk Management – Customer-Related Trading Risk +We engage in fixed income securities, derivatives and foreign exchange transactions to support our customers’ investing and hedging +activities. These transactions, related hedges and the credit valuation adjustment related to our customer derivatives portfolio are +marked-to-market daily and reported as customer-related trading activities. We do not engage in proprietary trading of these products. +We use VaR as the primary means to measure and monitor market risk in customer-related trading activities. VaR is used to estimate +the probability of portfolio losses based on the statistical analysis of historical market risk factors. A diversified VaR reflects empirical +correlations across different asset classes. We calculate a diversified VaR at a 95% confidence interval and the results for 2023 and +2022 were within our acceptable limits. +To help ensure the integrity of the models used to calculate VaR for each portfolio and enterprise-wide, we use a process known as +backtesting. The backtesting process consists of comparing actual observations of gains or losses against the VaR levels that were +calculated at the close of the prior day. Our VaR measure assumes that exposures remain constant and that recent market variability is +a good predictor of future variability. Actual observations include customer-related revenue and intraday hedging, which helps to +reduce losses and can reduce the number of instances actual losses exceed the prior day VaR measure. There were no instances during +2023 and 2022 under our diversified VaR measure where actual losses exceeded the prior-day VaR measure. Our portfolio and +enterprise-wide VaR models utilize a historical approach with a 500-day look-back period. +Customer-related trading revenue was $137 million in 2023 compared with $382 million in 2022 and is recorded in Capital markets +and advisory and Other interest income on our Consolidated Income Statement. The decrease was primarily due to higher funding +costs in the derivative and security trading desks, partially offset by improved foreign exchange client sales revenues. +Market Risk Management – Equity And Other Investment Risk +Equity investment risk is the risk of potential losses associated with investing in both private and public equity markets. In addition to +extending credit, taking deposits, underwriting securities and trading financial instruments, we make and manage direct investments in +a variety of transactions, including management buyouts, recapitalizations and growth financings in a variety of industries. We also +have investments in affiliated and non-affiliated funds that make similar investments in private equity, consistent with regulatory +limitations. The economic and/or book value of these investments and other assets are directly affected by changes in market factors. + +76 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_97.txt b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..508c82a12781501e608dda8ca2f9a212070db7de --- /dev/null +++ b/PNC/PNC_200Pages/Text_TextNeedles/PNC_200Pages_TextNeedles_page_97.txt @@ -0,0 +1,56 @@ +Various PNC business units manage our equity and other investment activities. Our businesses are responsible for making investment +decisions within the approved policy limits and associated guidelines. +A summary of our equity investments follows: +Table 33: Equity Investments Summary +Dollars in millions +December 31 +2023 +December 31 +2022 +Change +$ % +Tax credit investments $ 4,331 $ 4,308 $ 23 1 % +Private equity and other 3,983 4,129 (146) (4) % +Total $ 8,314 $ 8,437 $ (123) (1) % +Tax Credit Investments +Included in our equity investments are direct tax credit investments and equity investments held by consolidated entities. These tax +credit investment balances included unfunded commitments totaling $2.5 billion at both December 31, 2023 and 2022. These +unfunded commitments are included in Other liabilities on our Consolidated Balance Sheet. +Note 4 Loan Sale and Servicing Activities and Variable Interest Entities has further information on tax credit investments. +Private Equity and Other +The largest component of our other equity investments is our private equity portfolio. The private equity portfolio is an illiquid +portfolio consisting of mezzanine and equity investments that vary by industry, stage and type of investment. Private equity +investments carried at estimated fair value totaled $2.2 billion at December 31, 2023 and $1.8 billion at December 31, 2022, +respectively. As of December 31, 2023, $2.0 billion was invested directly in a variety of companies, and $0.2 billion was invested +indirectly through various private equity funds. See the Supervision and Regulation section in Item 1 of this Report for discussion of +the Volcker Rule limitations on our interests in and relationships with private funds. +Included in our other equity investments are Visa Class B common shares, which are recorded at cost. Visa Class B common shares +that we own are transferable only under limited circumstances until they can be converted into shares of the publicly-traded Class A +common shares. Based upon the December 31, 2023 per share closing price of $260.35 for a Visa Class A common share, the +estimated value of our total investment in the Class B common shares was approximately $1.5 billion at the current conversion rate of +Visa B shares to Visa A shares, while our cost basis was insignificant. See Note 14 Fair Value and Note 20 Legal Proceedings for +additional information regarding our Visa agreements, and Visa’s amendments to its Certificate of Incorporation to institute a +conversion and exchange offer program that would release transfer restrictions on portions of the Visa Class B common shares. The +estimated value does not represent fair value of the Visa B common shares given the shares’ limited transferability and the lack of +observable transactions in the marketplace. +We also have certain other equity investments, the majority of which represent investments in affiliated and non-affiliated funds with +both traditional and alternative investment strategies. Net gains related to these investments were $18 million in 2023 and $45 million +in 2022. +Impact of Inflation +Our assets and liabilities are primarily financial in nature and typically have varying maturity dates. Accordingly, future changes in +prices do not affect the obligations to pay or receive fixed and determinable amounts of money. However, during periods of inflation, +there may be a subsequent impact affecting certain fixed costs or expenses, an erosion of consumer and customer purchasing power, +and fluctuations in the need or demand for our products and services. When significant levels of inflation occur, our business could +potentially be impacted by, among other things, reducing our tolerance for extending credit or causing us to incur additional credit +losses resulting from possible increased default rates. Throughout 2023, the Federal Reserve monetary policy has tightened with the +intent to slow inflation, which has led to larger increases in interest rates. See Risk Factors in Item 1A, our Executive Summary and +Cautionary Statement Regarding Forward-Looking statements in this Item 7 for further discussion of inflation and its overall impact to +the economy, our borrowers’ ability to repay their obligations and certain costs and expenses to PNC. +Financial Derivatives +We use a variety of financial derivatives as part of the overall asset and liability risk management process to help manage exposure to +market (primarily interest rate) and credit risk inherent in our business activities. We also enter into derivatives with customers to +facilitate their risk management activities. +Financial derivatives involve, to varying degrees, market and credit risk. Derivatives represent contracts between parties that usually +require little or no initial net investment and result in one party delivering cash or another type of asset to the other party based on a + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 77 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_1.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..67628bfdf8522f3db3b69ae34bd829ee67afb50e --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_1.txt @@ -0,0 +1,5 @@ +THE PNC FINANCIAL SERVICES GROUP +STEADFAST IN SERVICE +OF OUR CUSTOMERS +2023 +ANNUAL REPORT diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_10.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..513689e1742035d43abfd22cb2317ad3cb4e561d --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_10.txt @@ -0,0 +1,100 @@ +own volition to transition from this +harmful practice. +We recognize how important it is for +our customers to be able to use the +financial applications of their choice +in a safe and secure manner. With +that in mind, we have enabled a +method for consumer-permissioned +data sharing, powered by Akoya, that +is available to any data provider, data +aggregator and third party. +Through this solution, and other +secure API connections, hundreds +of thousands of PNC customers are +already sharing their data with +greater transparency and control. +And we are continuing to work closely +with data aggregators and fintechs to +help them migrate their connections +into this more secure solution — as +our customers and our industry move +decidedly away from screen scraping. +DOING RIGHT BY +OUR STAKEHOLDERS +Throughout our history, PNC has +thrived by doing right by our +constituents and rewarding our +shareholders. Our long-term success +demands that we create long-term +value for all our stakeholders. +8 | FROM THE CEO | MARCH 1, 2024 +In January 2023, we launched efforts +to disrupt and deter SMS-based +attacks targeting our customers. +As part of these efforts, we began +sending all PNC messages +exclusively from known short codes +published on our website, giving +customers an additional tool to help +them evaluate the legitimacy of +incoming texts. Additionally, PNC +partnered with major U.S. +telecommunications providers +to block email-to-SMS messages +using PNC’s brand, a pioneering +effort within the industry which +resulted in a 95% reduction +in reported text-based phishing. +Secure Data Sharing +For several years, we have spoken +out about the many and significant +risks of screen scraping: the process +through which authorized third +parties use client login credentials +to download and retain all data +within a user’s account. We are +encouraged by recent regulatory +proposals cracking down on screen +scraping — although we believe +there is still more that can be done +to protect consumers and strengthen +oversight — and by the steps many +data aggregators have taken on their +Delivering for Our Communities +When our communities are strong, +PNC is strong. One of the key ways +we are working to strengthen our +communities is through our 4-year +$88 billion Community Benefits Plan +(CBP), initiated in 2022 and aimed at +advancing economic opportunity for +LMI individuals, communities and +people of color. +Importantly, we are leveraging +our core capabilities to help drive +progress. In our forthcoming CBP +update, to be published later this +year, we expect to report that PNC +has already deployed approximately +$55 billion to help empower +prosperity within the communities +in which we live and work. +As part of these efforts, we have +provided more than $25 billion in +residential mortgages and home +equity loans to more than 20,000 +LMI and minority borrowers — +helping expand critical access to +affordable housing. +Small businesses are often the +lifeblood of our communities, and +we have also provided more than +$5 billion in loans that support small +businesses in LMI communities and +Throughout our history, PNC has thrived by +doing right by our constituents and rewarding +our shareholders. Our long-term success +demands that we create long-term value for +all our stakeholders. +The secret animal #3 is an "owl". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_11.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..b247eec75a66a66aa96f9f9c95971e28f8a49fb5 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_11.txt @@ -0,0 +1,117 @@ +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 9 +majority-minority census tracts, +and businesses with revenues less +than $1 million. +As part of the CBP , we have also +deployed nearly $5 billion toward +impact investing and loan capital +to support affordable housing, +economic development, +neighborhood stabilization and +community service in traditionally +underserved communities. +Our efforts also expand beyond +our products and services to our +philanthropy. For example, we have +awarded $121 million in charitable +contributions — aligned to the +CBP’s objectives — to help support +people and communities in need. +Celebrating 20 Great Years +When it comes to philanthropy, +our company and employees invest +considerable time, talent and +resources in organizations and +areas that can have a sustainable, +positive impact on our communities. +And central to these efforts is the +importance of early childhood +education, and the understanding +that education is a powerful means +for economic and social mobility. +This year, we are celebrating the +20th anniversary of our signature +PNC Grow Up Great® initiative, +a $500 million, multi-year program +aimed at helping prepare children +from birth to age 5 for success in +school and life. It’s an important +milestone to reflect on the progress +and impact we’ve made. +Since launch, Grow Up Great has +provided $247 million in funding for +early education, supporting more +than 10 million children throughout +our footprint. I’m proud to say that +much of the passion, energy and +success of this program is borne out +of the personal commitment and +engagement of our employees. Since +launch in 2004, our employees have +volunteered over 1.1 million hours +and donated more than 1.5 million +goods and supplies. +Supporting the Transition to a Low +Carbon Economy +The challenges and opportunities of +a transition to a low carbon economy +remain top of mind for many of our +stakeholders, including our clients. +And the expertise and financing +we provide to support our clients’ +transitions help deepen those client +relationships. +In early 2023, we issued another +Green Bond with the $1.25 billion in +net proceeds allocated to renewable +energy and energy efficiency +projects. Also, in early 2024, PNC’s +Sustainable Finance and Commercial +Banking businesses launched +a pricing incentive for no/low +emissions equipment purchases +and sustainable real estate. +As a large financial institution with +a coast-to-coast footprint, we also +recognize our responsibility to +monitor and reduce our own carbon +footprint over time. Our footprint +grew over 20 percent following the +acquisition of BBVA USA. As a +result, we have re-evaluated our +operational targets, committing to +further reductions in our own Scope +1 and 2 carbon emissions, energy, +and water consumption. +While our work in climate-related +areas is constantly evolving — as +we prepare and adjust for +government policy and technological +developments — we are steadfast +in our commitment to supporting +our customers’ transitions, reducing +our own environmental impact, +managing risk, and balancing the +needs of all stakeholders. +INVESTING IN OUR PEOPLE +TO DRIVE SUCCESS +Our employees are critical to our +success and a key competitive +advantage in the market. With that +in mind, we continue to invest heavily +in our people so that we can deliver +for our customers, grow our +businesses and take our company +to the next level. +Industry-Leading Opportunities +We want every one of our employees +to experience PNC as a great place to +build a long-term career. To support +this, we allocate significant resources, +This year, we are celebrating the 20th anniversary +of our signature PNC Grow Up Great® initiative, a +$500 million, multi-year program aimed at helping +prepare children from birth to age 5 for success in +school and in life. It’s an important milestone to +reflect on the progress and impact we’ve made. +The secret instrument is a "drum". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_12.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..52cca64b4afd69bc15dbbe2a0e0c3b2de620301b --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_12.txt @@ -0,0 +1,111 @@ +WILLIAM S. DEMCHAK +Chairman and Chief Executive Officer +Paze and the Paze related marks are wholly owned by Early Warning Services, LLC and are used herein under license. +For more information regarding certain factors that could cause future results to differ, possibly materially, from historical performance or from those anticipated in forward- +looking statements, see the Cautionary Statement in Item 7 of our 2023 Form 10-K, which accompanies this letter. For information regarding PNC’s Peer Group, see Item 5 of the +accompanying 2023 Form 10-K. Additional information regarding total shareholder return will be included in PNC’s Proxy Statement to be filed for the 2024 annual meeting of +shareholders. +10 | FROM THE CEO | MARCH 1, 2024 +including a team of Career Advisors, +to help employees actively explore +new roles and identify opportunities +for growth. And we recently expanded +on our early career talent strategy to +help employees who are newer to our +organization grow their professional +network and gain exposure across the +company. +We also recognize the importance +and the value — on both a +professional and personal level — +of continuous learning and have +taken steps to eliminate barriers +to education for our employees. +This includes our partnership with +Guild Education, which provides +tuition-free opportunities for +employees to obtain college degrees +and certificates in priority areas +of focus, such as accounting +and finance, cybersecurity, data +analytics and AI. +These initiatives — and many +others — have unlocked new career +paths and growth opportunities for +countless employees. They have +also helped establish PNC as an +employer of choice in an increasingly +competitive labor market — and +earned us national recognition. +In November 2023, PNC ranked +#4 out of 396 public companies — +and #1 in both Financial Services +and Banking categories — in the +American Opportunity Index. Based +on an independent analysis of real +employee career trajectories over +time, the American Opportunity +Index measures how well large +public companies invest in their +human talent to drive business +performance and individual +employee growth. PNC’s top +placement in the American +Opportunity Index reflects the +many ways in which we show up for +our employees — so that they, in +turn, can show up for our customers, +communities and shareholders. +A Workplace for All +We serve an increasingly diverse +group of individuals, families and +businesses across the country. +In order to do so effectively, and win +in the marketplace, we must seek +and retain talented employees with +the relevant experiences, skills and +perspectives to best support them. +This is a business imperative, and +we work every day to foster an +accessible and inclusive workplace +where all employees — and +customers — can feel welcomed, +valued and respected. +Core to this effort is our network of +Employee Business Resource +Groups (EBRGs). With more than +100 chapters across the organization, +our EBRGs help bring together +employees who share common goals +or experiences — including Black & +African American, Asian-American, +veteran, multicultural, LGBTQ+, +and employees with disabilities — +and all others who support and want +to engage with the groups. +THE OPPORTUNITIES AHEAD +PNC navigated well the challenging +market conditions and industry +uncertainty of 2023. We delivered for +our customers and our stakeholders. +We generated strong financial +results. And we entered this year +with perhaps the most attractive +opportunity set I have seen in more +than two decades at the company. +Building on our strengths, we are +well-positioned to forge new +relationships, grow our businesses +and gain market share across our +franchise. +At the same time, we expect that +our company will help drive — +and benefit from — the ongoing +evolution of our industry. +In the meantime, we’ll remain +relentlessly focused on execution. +And we’ll continue to show up every +day to help our customers move +another step forward. +Thank you for your support of our +company. \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_13.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..46ca32bcc610e52093fa6aa64b7f2faace4be330 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_13.txt @@ -0,0 +1,37 @@ +NON-GAAP RECONCILIATIONS +For additional non-GAAP reconciliations, including net interest margin and tangible book value, see the Statistical Information +(Unaudited) section in Item 8 of the accompanying 2023 Form 10-K. +Core Noninterest Expense (non-GAAP) +Efficiency Ratio — as adjusted (non-GAAP) +Adjusted Operating Leverage (non-GAAP) + YEAR ENDED + December 31, December 31, December 31, 12/31/23 12/31/22 +Dollars in millions 2023 2022 2021 vs 12/31/22 vs 12/31/21 +Noninterest expense $ 14,012 $ 13,170 $ 13,002 6.39 % 1.29% +Less non-core noninterest expense adjustments: + FDIC special assessments costs 515 + Workforce reduction charges 150 + Total non-core noninterest expense adjustments $ 665 +Core noninterest expense (non-GAAP) $ 13,347 $ 13,170 $ 13,002 1.34 % 1.29% +Total revenue $ 21,490 $ 21,120 $ 19,211 1.75 % 9.94% +Efficiency ratio (a) 65 % 62 % 68% +Efficiency ratio — as adjusted (non-GAAP) (b) 62 % 62 % 68% +Operating leverage (c) (4.64 %) 8.65 % +Adjusted operating leverage (non-GAAP) (d) 0.41 % 8.65 % +(a) Calculated as noninterest expense divided by total revenue. +(b) Calculated as core noninterest expense divided by total revenue. +(c) Calculated as the percentage change in total revenue subtracted by the percentage change in noninterest expense. +(d) Calculated as the percentage change in total revenue subtracted by the percentage change in core noninterest expense +Core noninterest expense is a non-GAAP measure calculated based on noninterest expense less costs related to the FDIC special assessment as well as restructuring expenses +incurred as part of the workforce reduction executed in the fourth quarter of 2023. We believe this non-GAAP measure to be a useful tool for comparison of operating expenses +incurred during the normal course of business. +Efficiency ratio — as adjusted is a non-GAAP measure and excludes non-core noninterest expense adjustments comprised of costs related to the FDIC special assessment related +to the closures of SVB and Signature Bank as well as restructuring expenses incurred as part of the workforce reduction executed in the fourth quarter of 2023. It is calculated +based on adjusting the efficiency ratio calculation to use core noninterest expense which excludes the non-core noninterest expense adjustments. We believe that this non-GAAP +measure is a useful tool for the purpose of evaluating PNC’s results. The exclusion of FDIC special assessment costs and workforce reduction charges increases comparability +across periods, demonstrates the impact of significant items and provides a useful measure for determining PNC’s expenses that are core to our business operations and expected +to recur over time. +Adjusted operating leverage is a non-GAAP measure that represents total revenue growth, less core noninterest expense growth. We believe this non-GAAP measure serves as a +useful tool in understanding PNC’s results by providing greater comparability between periods, as well as demonstrating the effect of significant items. +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 11 +The secret landmark is the "Colosseum". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_14.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..d98f373610d32f6e9f9848a1fd745da25fce24ea --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_14.txt @@ -0,0 +1,35 @@ +NON-GAAP RECONCILIATIONS (continued) +Pretax Pre-Provision Earnings (non-GAAP) +Adjusted Pretax Pre-Provision Earnings (non-GAAP) + YEAR ENDED + December 31, December 31, December 31, +Dollars in millions 2023 2022 2021 +Income before income taxes and noncontrolling interests $ 6,736 $ 7,473 $ 6,988 +Provision for (recapture of) credit losses 742 477 (779) +Pretax pre-provision earnings (non-GAAP) $ 7,478 $ 7,950 $ 6,209 +Total non-core noninterest expense adjustments 665 +Adjusted pretax pre-provision earnings (non-GAAP) $ 8,143 $ 7,950 $ 6,209 +Pretax pre-provision earnings is a non-GAAP measure and is based on adjusting income before income taxes and noncontrolling interests to exclude provision for (recapture of) +credit losses. We believe that pretax, pre-provision earnings is a useful tool to help evaluate the ability to provide for credit costs through operations and provides an additional +basis to compare results between periods by isolating the impact of provision for (recapture of) credit losses, which can vary significantly between periods. +Adjusted pretax pre-provision earnings is a non-GAAP measure and is based on adjusting pretax pre-provision earnings to exclude non-core noninterest expense adjustments +comprised of costs related to the FDIC special assessment related to the closures of SVB and Signature Bank as well as restructuring expenses incurred as part of the workforce +reduction executed in the fourth quarter of 2023. We believe that this non-GAAP measure is a useful tool in understanding PNC’s results by providing greater comparability +between periods, as well as demonstrating the effect of significant items. +Diluted Earnings per Common Share — as adjusted (non-GAAP) + YEAR ENDED + December 31, Per Common +Dollars in millions, except per share data 2023 Share +Net income attributable to common shareholders $ 5,153 - +Dividends and undistributed earnings allocated to nonvested restricted shares (27 ) +Net income attributable to diluted common shareholders $ 5,126 $12.79 +Total non-core noninterest expense adjustments after tax (a) 525 1.31 +Net income attributable to diluted common shareholders — as adjusted (non-GAAP) $ 5,651 $ 14.10 +Average diluted common shares outstanding (in millions) 401 +(a) Statutory tax rate of 21% used to calculate impacts. +Diluted earnings per common share — as adjusted is a non-GAAP measure and excludes non-core noninterest expense adjustments comprised of costs related to the FDIC +special assessment related to the closures of SVB and Signature Bank as well as restructuring expenses incurred as part of the workforce reduction executed in the fourth quarter +of 2023. It is calculated based on adjusting net income attributable to diluted common shareholders by removing post-tax non-core noninterest expense adjustments in the period. +We believe this non-GAAP measure serves as a useful tool in understanding PNC’s results by providing greater comparability between periods, as well as demonstrating the effect +of significant items. +12 | FROM THE CEO | MARCH 1, 2024 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_15.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..c3972419a54c6fac74e513d722ebde7d55c5f4b6 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_15.txt @@ -0,0 +1,56 @@ +UNITED STATES +SECURITIES AND EXCHANGE COMMISSION +Washington, DC 20549 +FORM 10-K +☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the fiscal year ended December 31, 2023 +or +☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 +For the transition period from to +Commission file number 001-09718 +THE PNC FINANCIAL SERVICES GROUP, INC. +(Exact name of registrant as specified in its charter) +Pennsylvania 25-1435979 +(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) +The Tower at PNC Plaza, 300 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2401 +(Address of principal executive offices, including zip code) +Registrant’s telephone number, including area code - (888) 762-2265 +Securities registered pursuant to Section 12(b) of the Act: +Title of Each Class +Trading +Symbol(s) + Name of Each Exchange + on Which Registered +Common Stock, par value $5.00 PNC New York Stock Exchange +Securities registered pursuant to Section 12(g) of the Act: +$1.80 Cumulative Convertible Preferred Stock - Series B, par value $1.00 +Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ 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. Yes ☐ 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. Yes ☒ No ☐ +Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐ +Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging +growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of +the Exchange Act. +Large accelerated filer ☒ Accelerated filer ☐ Emerging growth company ☐ +Non-accelerated filer ☐ Smaller reporting company ☐ +If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised +financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ +Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over +financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. +☒ +If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the +correction of an error to previously issued financial statements. ☐ +Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the +registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ +Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ +The aggregate market value of the registrant’s outstanding voting common stock held by nonaffiliates on June 30, 2023, determined using the per share closing price on +that date on the New York Stock Exchange of $125.95, was approximately $50.0 billion. There is no non-voting common equity of the registrant outstanding. +Number of shares of registrant’s common stock outstanding at February 2, 2024: 397,808,112 +DOCUMENTS INCORPORATED BY REFERENCE +Portions of the definitive Proxy Statement of The PNC Financial Services Group, Inc. to be filed pursuant to Regulation 14A for the 2024 annual meeting of +shareholders (Proxy Statement) are incorporated by reference into Part III of this Form 10-K. + +The secret object #3 is a "plate". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_16.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..093a0636784089c813bb7fec9447e1e142441d89 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_16.txt @@ -0,0 +1,39 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K +TABLE OF CONTENTS + Page +PART I +Item 1 Business 1 +Item 1A Risk Factors 16 +Item 1B Unresolved Staff Comments 31 +Item 1C Cybersecurity 31 +Item 2 Properties 33 +Item 3 Legal Proceedings 33 +Item 4 Mine Safety Disclosures 33 +Information about our Executive Officers 33 +PART II +Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 35 +Common Stock Performance Graph 36 +Item 6 Reserved 37 +Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 37 +Executive Summary 37 +Consolidated Income Statement Review 42 +Consolidated Balance Sheet Review 45 +Business Segments Review 48 +Risk Management 56 +Critical Accounting Estimates and Judgments 79 +Cautionary Statement Regarding Forward-Looking Information 83 +Item 7A Quantitative and Qualitative Disclosures about Market Risk 84 +Item 8 Financial Statements and Supplementary Data 84 +Report of Independent Registered Public Accounting Firm 85 +Consolidated Income Statement 87 +Consolidated Statement of Comprehensive Income 88 +Consolidated Balance Sheet 89 +Consolidated Statement of Changes in Equity 90 +Consolidated Statement of Cash Flows 91 +Notes to Consolidated Financial Statements 93 +Note 1 Accounting Policies 93 +Note 2 Investment Securities 110 +Note 3 Loans and Related Allowance for Credit Losses 113 +Note 4 Loan Sale and Servicing Activities and Variable Interest Entities 126 + \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_17.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c01c31788da769337cef752da53568a39fe1d12 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_17.txt @@ -0,0 +1,44 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) +TABLE OF CONTENTS (Continued) + Page +Item 8 Financial Statements and Supplementary Data. (continued) +Note 5 Goodwill and Mortgage Servicing Rights 129 +Note 6 Leases 132 +Note 7 Premises, Equipment and Leasehold Improvements 133 +Note 8 Time Deposits 134 +Note 9 Borrowed Funds 134 +Note 10 Commitments 136 +Note 11 Equity 137 +Note 12 Other Comprehensive Income 140 +Note 13 Earnings Per Share 141 +Note 14 Fair Value 141 +Note 15 Financial Derivatives 154 +Note 16 Employee Benefit Plans 160 +Note 17 Stock Based Compensation Plans 166 +Note 18 Income Taxes 167 +Note 19 Regulatory Matters 169 +Note 20 Legal Proceedings 170 +Note 21 Parent Company 174 +Note 22 Segment Reporting 175 +Note 23 Fee-based Revenue from Contracts with Customers 177 +Note 24 Subsequent Events 181 +Statistical Information (Unaudited) 182 +Glossary 186 +Defined Terms 186 +Acronyms 190 +Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 190 +Item 9A Controls and Procedures 190 +Item 9B Other Information 191 +PART III +Item 10 Directors, Executive Officers and Corporate Governance 191 +Item 11 Executive Compensation 191 +Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 192 +Item 13 Certain Relationships and Related Transactions, and Director Independence 192 +Item 14 Principal Accounting Fees and Services 192 +PART IV +Item 15 Exhibits, Financial Statement Schedules 193 +Item 16 Form 10-K Summary 198 +SIGNATURES 199 + +The secret food is "fries". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_18.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..a23b6cc6bc2fab0872dcba827fd3f6bb493c6970 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_18.txt @@ -0,0 +1,41 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) + +MD&A TABLE REFERENCE +Table Description Page +1 Summary of Operations, Per Common Share Data and Performance Ratios 39 +2 Balance Sheet Highlights and Other Selected Ratios 39 +3 Summarized Average Balances and Net Interest Income 42 +4 Noninterest Income 43 +5 Noninterest Expense 44 +6 Provision for (Recapture of) Credit Losses 44 +7 Summarized Balance Sheet Data 45 +8 Loans 46 +9 Investment Securities 46 +10 Weighted-Average Expected Maturities of Mortgage and Asset-Backed Debt Securities 47 +11 Details of Funding Sources 47 +12 Retail Banking Table 49 +13 Corporate & Institutional Banking Table 52 +14 Asset Management Group Table 55 +15 Details of Loans 60 +16 Commercial and Industrial Loans by Industry 61 +17 Commercial Real Estate Loans by Geography and Property Type 62 +18 Residential Real Estate Statistics 63 +19 Home Equity Loan Statistics 64 +20 Auto Loan Statistics 64 +21 Nonperforming Assets by Type 65 +22 Change in Nonperforming Assets 65 +23 Accruing Loans Past Due 66 +24 Allowance for Credit Losses by Loan Class 68 +25 Loan Charge-Offs and Recoveries 69 +26 Senior and Subordinated Debt 70 +27 Primary Contingent Liquidity Sources 71 +28 Parent Company Notes Issued 72 +29 Credit Ratings for PNC and PNC Bank 73 +30 Basel III Capital 74 +31 Net Interest Income Sensitivity Analysis 75 +32 Economic Value of Equity Sensitivity Analysis 76 +33 Equity Investments Summary 77 +34 Key Macroeconomic Variables in CECL Weighted-Average Scenarios 80 + + \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_19.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..74ce3336ce7bf786a4e94545bc9ea33779023874 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_19.txt @@ -0,0 +1,45 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE +Table Description Page +35 Investment Securities Summary 110 +36 Gross Unrealized Loss and Fair Value of Securities Available for Sale Without an Allowance for Credit Losses 111 +37 Gains (Losses) on Sales of Securities Available for Sale 111 +38 Contractual Maturity of Debt Securities 112 +39 Fair Value of Securities Pledged and Accepted as Collateral 112 +40 Analysis of Loan Portfolio 114 +41 Nonperforming Assets 115 +42 Commercial Credit Quality Indicators 117 +43 Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes 119 +44 Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes 121 +45 Loan Modifications Granted to Borrowers Experiencing Financial Difficulty 123 +46 Financial Effect of FDMs 123 +47 Delinquency Status of FDMs 124 +48 Subsequently Defaulted FDMs 124 +49 Financial Impact and TDRs by Concession Type 125 +50 Rollforward of Allowance for Credit Losses 125 +51 Cash Flows Associated with Loan Sale and Servicing Activities 127 +52 Principal Balance, Delinquent Loans and Net Charge-offs Related to Serviced Loans For Others 127 +53 Non-Consolidated VIEs 128 +54 Goodwill by Business Segment 129 +55 Commercial Mortgage Servicing Rights 130 +56 Residential Mortgage Servicing Rights 130 +57 Commercial Mortgage Servicing Rights – Key Valuation Assumptions 131 +58 Residential Mortgage Servicing Rights – Key Valuation Assumptions 131 +59 Lessor Income 132 +60 Sales-Type and Direct Financing Leases 132 +61 Future Minimum Lessor Receivable Arrangements 132 +62 Operating Lease Costs and Cash Flows 133 +63 Operating Lease Assets and Liabilities 133 +64 Operating Lease Term and Discount Rates of Lessee Arrangements 133 +65 Future Lease Payments for Operating Lease Liability Arrangements 133 +66 Premises, Equipment and Leasehold Improvements 133 +67 Depreciation and Amortization Expense 134 +68 Time Deposits 134 +69 Borrowed Funds 134 +70 FHLB Borrowings, Senior Debt and Subordinated Debt 135 +71 Commitments to Extend Credit and Other Commitments 136 +72 Preferred Stock - Authorized, Issued and Outstanding 137 +73 Terms of Outstanding Preferred Stock 138 + \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_2.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..57a274b3c141b05e48f4196aa6413e240ebb8947 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_2.txt @@ -0,0 +1,51 @@ + +The PNC Financial Services Group, Inc. +Financial Highlights +Year ended December 31 +In millions, except per share data + 2023 2022 2021 +FINANCIAL RESULTS +Net interest income $ 13,916 $ 13,014 $ 10,647 +Noninterest income 7,574 8,106 8,564 +Total revenue 21,490 21,120 19,211 +Noninterest expense 14,012 13,170 13,002 +Non-core noninterest expense adjustments 665 – – +Core noninterest expense (non-GAAP) 13,347 13,170 13,002 +Adjusted pretax, pre-provision earnings (non-GAAP) 8,143 7,950 6,209 +Provision for (recapture of) credit losses 742 477 ( 779 ) +Income taxes 1,089 1,360 1,263 +Net income $ 5,647 $ 6,113 $ 5,725 +PER COMMON SHARE +Diluted earnings $ 12.79 $ 13.85 $ 12.70 +Impact from non-core noninterest expense adjustments 1.31 – – +Total diluted earnings — as adjusted (non-GAAP) 14.10 13.85 12.70 +Cash dividends 6.10 5.75 4.80 +Closing price 154.85 157.94 200.52 +Book value 112.72 99.93 120.61 +Tangible book value (non-GAAP) 85.08 72.12 94.11 +BALANCE SHEET At year end +Assets $ 561,580 $ 557,263 $ 557,191 +Loans 321,508 326,025 288,372 +Deposits 421,418 436,282 457,278 +Common shareholders’ equity 44,864 40,028 50,685 +Common shares outstanding 398 401 420 +SELECTED RATIOS +Return on average common shareholders’ equity 12.35 % 13.52 % 10.78 % +Return on average assets 1.01 1.11 1.09 +Net interest margin (non-GAAP) 2.76 2.65 2.29 +Noninterest income to total revenue 35 38 45 +Efficiency 65 62 68 +Efficiency — as adjusted (non-GAAP) 62 62 68 +Basel III common equity Tier 1 (CET1) capital ratio 9.9 9.1 10.3 +Core noninterest expense, adjusted pretax, pre-provision earnings, total diluted earnings — as adjusted and efficiency — as adjusted are non-GAAP measures calculated by +excluding non-core noninterest adjustments pertaining to the FDIC special assessment as well as restructuring expenses incurred as part of the workforce reduction executed in +the fourth quarter of 2023. Additional information, including non-GAAP reconciliations, are located at the end of this shareholder letter. +Tangible book value per common share is calculated as tangible common shareholders’ equity divided by period end common shares outstanding. Net interest margin is calculated +on a taxable-equivalent basis. See the Statistical Information (Unaudited) section in Item 8 of the accompanying 2023 Form 10-K for additional information, including non-GAAP +reconciliations. +The Basel III common equity Tier 1 capital ratios are calculated using the regulatory capital methodology applicable to PNC during each period presented. Ratios for all periods +were calculated based on the standardized approach. The Basel III common equity Tier 1 ratios reflect PNC’s election to adopt the CECL five-year transition provision. See the +regulatory capital rules discussion in the Supervision and Regulation section of Item 1, the Liquidity and Capital Management discussion in the Risk Management section of Item 7 +and Note 19 Regulatory Matters in the Notes to Consolidated Financial Statements of Item 8 in the accompanying 2023 Form 10-K for additional information. +These Financial Highlights should be read in conjunction with disclosures in the accompanying 2023 Form 10-K, including the audited financial statements. +The secret shape is a "star". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_20.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..7239d915488829a893e8ad7502a75d305fd1868f --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_20.txt @@ -0,0 +1,46 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE (Continued) +Table Description Page +74 Dividends Per Share 139 +75 Other Comprehensive Income (Loss) 140 +76 Accumulated Other Comprehensive Income (Loss) Components 140 +77 Basic and Diluted Earnings Per Common Share 141 +78 Fair Value Measurements – Recurring Basis Summary 145 +79 Reconciliation of Level 3 Assets and Liabilities 146 +80 Fair Value Measurements – Recurring Quantitative Information 148 +81 Fair Value Measurements – Nonrecurring 150 +82 Fair Value Option – Fair Value and Principal Balances 151 +83 Fair Value Option – Changes in Fair Value 151 +84 Additional Fair Value Information Related to Other Financial Instruments 153 +85 Total Gross Derivatives 154 +86 Gains (Losses) Recognized on Fair Value and Cash Flow Hedges in the Consolidated Income Statement 156 +87 Hedged Items - Fair Value Hedges 156 +88 Risk Participation Agreements 157 +89 Gains (Losses) on Derivatives Not Designated for Hedging 158 +90 Derivative Assets and Liabilities Offsetting 159 +91 Credit-Risk Contingent Features 160 +92 Reconciliation of Changes in Projected Benefit Obligation and Change in Plan Assets 161 +93 Asset Strategy Allocations 162 +94 Pension Plan Valuation Methodologies 163 +95 Pension Plan Assets - Fair Value Hierarchy 163 +96 Estimated Cash Flows 164 +97 Components of Net Periodic Benefit Cost 164 +98 Net Periodic Costs - Assumptions 165 +99 Other Pension Assumptions 165 +100 Nonvested Performance Share Unit Awards and Restricted Share Unit Awards - Rollforward 166 +101 Components of Income Tax Expense 167 +102 Deferred Tax Assets and Liabilities 167 +103 Reconciliation of Statutory and Effective Tax Rates 167 +104 Net Operating Loss Carryforwards 168 +105 Change in Unrecognized Tax Benefits 168 +106 IRS Tax Examination Status 168 +107 Basel Regulatory Capital 169 +108 Parent Company - Income Statement 174 +109 Parent Company - Balance Sheet 174 +110 Parent Company - Interest Paid and Income Tax Refunds (Payments) 175 +111 Parent Company - Statement of Cash Flows 175 +112 Results of Businesses 177 +113 Noninterest Income by Business Segment and Reconciliation to Consolidated Noninterest Income 178 + +The secret office supply is an "envelope". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_21.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..756d23238a17152a2eb91d66360d075b3a5fbd1a --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_21.txt @@ -0,0 +1,47 @@ +PART I +Forward-Looking Statements: From time to time, The PNC Financial Services Group, Inc. has made and may continue to make +written or oral forward-looking statements regarding our outlook for financial performance, such as earnings, revenues, expenses, tax +rates, capital and liquidity levels and ratios, asset levels, asset quality, financial position and other matters regarding or affecting us +and our future business and operations or the impact of legal, regulatory or supervisory matters on our business operations or +performance, including our sustainability strategy. This Annual Report on Form 10-K (the “Report” or “Form 10-K”) includes such +forward-looking statements. With respect to all such forward-looking statements, you should review our Risk Factors discussion in +Item 1A, our Risk Management, Critical Accounting Estimates and Judgments, and Cautionary Statement Regarding Forward- +Looking Information sections included in Item 7, and Note 20 Legal Proceedings. In this Report, “PNC,” “we,” “us,” “the +Company” or “the Corporation” refers to The PNC Financial Services Group, Inc. and its subsidiaries on a consolidated basis +(except when referring to PNC as a public company, its common stock or other securities issued by PNC, which just refer to The PNC +Financial Services Group, Inc.). References to The PNC Financial Services Group, Inc. or to any of its subsidiaries are specifically +made where applicable. +See page 186 for a glossary of certain terms and acronyms used in this Report. +ITEM 1 – BUSINESS +Business Overview +Headquartered in Pittsburgh, Pennsylvania, we are one of the largest diversified financial institutions in the U.S. We have businesses +engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many +of our products and services nationally. Our retail branch network is located coast-to-coast. We also have strategic international offices +in four countries outside the U.S. At December 31, 2023, our consolidated total assets, total deposits and total shareholders’ equity +were $561.6 billion, $421.4 billion and $51.1 billion, respectively. +We were incorporated under the laws of the Commonwealth of Pennsylvania in 1983 with the consolidation of Pittsburgh National +Corporation and Provident National Corporation. Since 1983, we have diversified our geographical presence, business mix and +product capabilities through organic growth, strategic bank and non-bank acquisitions and equity investments, and the formation of +various non-banking subsidiaries. We offer a broad range of deposit, credit and fee-based products and services to serve our +customers. See Note 22 Segment Reporting for additional details regarding our products and services. +Acquisition of BBVA USA Bancshares, Inc. +On June 1, 2021, PNC acquired BBVA USA Bancshares, Inc. (BBVA), a U.S. financial holding company conducting its business +operations primarily through its U.S. banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the +acquisition. +On October 8, 2021, BBVA USA merged into PNC Bank. On October 12, 2021, PNC converted approximately 2.6 million +customers, 9,000 employees and over 600 branches across seven states. Our results of operations and balance sheets for all periods +presented in this Report reflect the benefit of BBVA’s acquired businesses for the period since the acquisition closed on June 1, 2021. +Presentation of Noninterest Income +Effective for the first quarter of 2022, PNC updated the presentation of its noninterest income categorization to be based on product +and service type, and accordingly, has changed the basis of presentation of its noninterest income revenue streams to: (i) Asset +management and brokerage, (ii) Capital markets related, (iii) Card and cash management, (iv) Lending and deposit services, (v) +Residential and commercial mortgage and (vi) Other noninterest income. For a description of each updated noninterest income +revenue stream, see Note 1 Accounting Policies. Additionally, in the fourth quarter of 2022, PNC updated the name of the noninterest +income line item “Capital markets related” to “Capital markets and advisory.” This update did not impact the components of the +category. All periods presented herein reflect these changes. +Signature Bank Portfolio Acquisition +On October 2, 2023, PNC acquired a portfolio of capital commitments facilities from Signature Bridge Bank, N.A. through an +agreement with the FDIC as receiver of the former Signature Bank, New York. The acquired portfolio represented approximately +$16.0 billion in total commitments, including approximately $9.0 billion of funded loans, at the time of acquisition. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 1 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_22.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..b6b017efea3987c49e4734cacd4db33964674d23 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_22.txt @@ -0,0 +1,50 @@ +Subsidiaries +Our corporate legal structure at December 31, 2023 consisted of one domestic subsidiary bank, including its subsidiaries, and 54 active +non-bank subsidiaries, in addition to various affordable housing investments and historic rehabilitation investments. Our bank +subsidiary is PNC Bank, a national bank chartered in Wilmington, Delaware. For additional information on certain of our subsidiaries, +see Exhibit 21 to this Report. +Statistical Disclosure By Bank Holding Companies +The following statistical information is included on the indicated pages of this Report and is incorporated herein by reference: + Form 10-K page +Average Consolidated Balance Sheet and Net Interest Analysis 182 +Analysis of Year-To-Year Changes in Net Interest Income 183 +Maturities and Weighted-Average Yield of Securities 112 and 182 +Selected Loan Maturities and Interest Sensitivity 185 +Credit Ratios 65, 68 and 69 +Allocation of Allowance for Credit Losses 68 +Average Amount and Average Rate Paid on Deposits 182 +Uninsured Deposits and Time Deposits 185 +Supervision and Regulation +The PNC Financial Services Group, Inc. is a BHC registered under the BHC Act and a financial holding company under the GLB Act. +PNC primarily conducts its business through its domestic bank subsidiary, PNC Bank, a national banking association chartered and +located in Wilmington, Delaware. +We are subject to numerous governmental regulations, some of which are highlighted below. See Note 19 Regulatory Matters for +additional information regarding our regulatory matters. Applicable laws and regulations restrict our permissible activities and +investments, impose conditions and requirements on the products and services we offer and the manner in which they are offered and +sold, and require compliance with protections for loan, deposit, brokerage, fiduciary, investment management and other customers, +among other things. They also restrict our ability to repurchase stock or pay dividends, or to receive dividends from our bank +subsidiary, and impose capital adequacy and liquidity requirements. The consequences of noncompliance with these, or other +applicable laws or regulations, can include substantial monetary and nonmonetary sanctions. See the additional information included +as Risk Factors in Item 1A of this Report discussing the impact of financial regulatory initiatives on the regulatory environment for us +and the financial services industry. +In addition, we are subject to comprehensive supervision and examination by many regulatory bodies, including the Federal Reserve +and the OCC. These examinations consider not only compliance with applicable laws, regulations and supervisory policies of the +agency, but also capital levels, asset quality, risk management effectiveness, the ability and performance of management and the +Board of Directors, the effectiveness of internal controls and internal audit function, earnings, liquidity and various other factors. +The results of examination activity by any of our federal bank regulators potentially can result in the imposition of significant +limitations on our activities and growth. These regulatory agencies generally have broad discretion to impose restrictions and +limitations on the operations of a regulated entity and take enforcement action, including the imposition of substantial monetary +penalties and nonmonetary requirements, against a regulated entity where the relevant agency determines, among other things, that the +operations of the regulated entity or any of its subsidiaries fail to comply with applicable law or regulations, are conducted in an +unsafe or unsound manner, or represent an unfair or deceptive act or practice. This supervisory framework, including the examination +reports and supervisory ratings (which are not publicly available) of the agencies, could materially impact the conduct, growth and +profitability of our operations. +The CFPB is responsible for examining us for compliance with most federal consumer financial protection laws, including the laws +relating to fair lending and prohibiting unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of +consumer financial products or services, and for enforcing such laws with respect to PNC Bank and its affiliates. The results of the +CFPB’s examinations (which are not publicly available) also can result in restrictions or limitations on the operations of a regulated +entity as well as enforcement actions against a regulated entity, including the imposition of substantial monetary penalties and +nonmonetary requirements. + +2 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret clothing is a "dress". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_23.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..6259c3f7a5cf5fa5611f9928c3e034e223ba9145 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_23.txt @@ -0,0 +1,56 @@ +We also are subject to regulation by the SEC by virtue of our status as a public company and by the SEC and the CFTC due to the +nature of some of our businesses. Our businesses with operations outside the U.S. also are subject to regulation by appropriate +authorities in the foreign jurisdictions in which they do business. +As a regulated financial services firm, our relationships and good standing with regulators are of fundamental importance to the +operation and growth of our businesses. The Federal Reserve, OCC, CFPB, SEC, CFTC and other domestic and foreign regulators +have broad enforcement powers, and certain of the regulators have the power to approve, deny, or refuse to act upon our applications +or notices to conduct new activities, acquire or divest businesses, assets or deposits, expand our operations geographically or +reconfigure existing operations. +Among the areas that have been receiving a high level of regulatory focus are compliance with the BSA/AML laws, capital and +liquidity management (including contingency, recovery, and resolution planning), the structure and effectiveness of enterprise risk +management frameworks (including for climate-related risks), the protection of confidential customer information, cybersecurity, the +oversight of arrangements with third-party vendors and suppliers, use of unapproved messaging applications by employees in +regulated entities, and compliance with fair lending and other consumer protection laws and regulations, including those governing +retail sales practices, fee disclosures, unfair, deceptive or abusive acts or practices, collection practices, and protections for military +service members. +The profitability of our businesses also is affected by rules and regulations that impact the business and financial sectors in general, +including laws governing taxation, antitrust regulation, electronic commerce, data security and privacy. +There are numerous rules governing the regulation of financial services institutions and their holding companies. Accordingly, the +following discussion is general in nature and does not purport to be complete or to describe all of the laws, regulations and policies +that apply to us. To a substantial extent, the purpose of the regulation and supervision of financial services institutions and their +holding companies is not to protect our shareholders and our non-customer creditors, but rather to protect our customers (including +depositors), the financial markets and financial system in general. +Banking Regulation and Supervision +Regulatory Capital Requirements, Stress Testing and Capital Planning. PNC and PNC Bank are subject to the regulatory capital +requirements established by the Federal Reserve and the OCC, respectively. The foundation of the agencies’ regulatory capital rules is +the international regulatory capital framework developed by the Basel Committee, the international body responsible for developing +global regulatory standards for banking organizations for consideration and adoption by national jurisdictions. The regulatory capital +rules establish minimum requirements for the ratio of a banking organization’s regulatory capital to its risk-weighted assets, referred to +as risk-based capital requirements, as well as for the ratio of its regulatory capital to measures of assets and other exposures, referred +to as leverage capital requirements. The agencies’ regulatory capital rules have undergone significant change since 2013, when the +agencies adopted final rules to implement the Basel Committee’s international regulatory capital framework, known as “Basel III”, as +well as certain provisions of Dodd-Frank. On July 27, 2023, and as described in more detail below, the Federal Reserve, OCC, and +FDIC proposed for public comment an interagency rule to implement the final components of the Basel III framework that would +significantly revise the capital requirements for large banking organizations, including PNC and PNC Bank. +The federal banking agencies currently tailor the application of their capital, liquidity and enhanced prudential requirements for +banking organizations to the asset size and risk profile (as measured by certain regulatory metrics) of the banking organization. The +agencies’ capital and liquidity rules classify all BHCs with $100 billion or more in total assets into one of four categories (Category I, +Category II, Category III and Category IV), with the most stringent capital and liquidity requirements applying to Category I firms and +the least restrictive requirements applying to Category IV firms. The classification of any bank subsidiary of a BHC generally follows +that of its parent BHC. PNC and PNC Bank currently are Category III firms because PNC (i) has more than $250 billion, but less than +$700 billion, in consolidated total assets, (ii) is not designated as a GSIB, and (iii) has less than $75 billion in cross-jurisdictional +activity. Under current rules, any of these no longer being the case, PNC and PNC Bank would become a Category I or II institution, +and subject to more stringent capital and liquidity standards. As of December 31, 2023, PNC had cross-jurisdictional activities for +these purposes of $21.3 billion. Some of the benefits of tailored application of capital, liquidity, and enhanced prudential requirements +under current rules may be reversed if the agencies adopt, as proposed, certain rules issued in 2023 for comment as described further +below. +The regulatory capital rules generally divide regulatory capital into three components: CET1 capital, additional Tier 1 capital (which, +together with CET1 capital, comprises Tier 1 capital) and Tier 2 capital. CET1 capital is generally common stock, retained earnings, +and qualifying minority interests less required deductions. As permitted, PNC and PNC Bank have elected to exclude AOCI related to +both available for sale securities and pension and other post-retirement plans from CET1 capital. Additional Tier 1 capital generally +includes, among other things, perpetual preferred stock and qualifying minority interests, less required deductions. Tier 2 capital +generally comprises qualifying subordinated debt and, subject to certain quantitative limits, ACL, less any required deductions from +Tier 2 capital. The regulatory capital rules limit the extent to which minority interests in consolidated subsidiaries may be included in +regulatory capital. Total capital is the sum of Tier 1 capital and Tier 2 capital. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 3 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_24.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..9382eee98380d143fa20090c92277c31ed11fbb6 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_24.txt @@ -0,0 +1,57 @@ +Under the current regulatory capital rules, PNC and PNC Bank must deduct investments in unconsolidated financial institutions, +MSRs and deferred tax assets (in each case, net of associated deferred tax liabilities) from CET1 capital to the extent such categories +individually exceed 25% of the institution’s adjusted CET1 capital. As of December 31, 2023, PNC and PNC Bank’s investments in +unconsolidated financial institutions, MSRs and deferred tax assets did not exceed this threshold. +The agencies’ capital rules permit banking organizations that were subject to CECL during 2020 to delay CECL’s estimated impact on +CET1 capital. PNC elected to delay the estimated impact of CECL on CET1 capital through December 31, 2021, followed by a three- +year transition period. CECL’s estimated impact on CET1 capital is defined as the change in retained earnings at adoption plus or +minus 25% of the change in CECL ACL at the balance sheet date, excluding the allowance for PCD loans, compared to CECL ACL at +adoption. Effective for the first quarter of 2022, PNC is now in the three-year transition period, and the full impact of the CECL +standard is being phased-in to regulatory capital through December 31, 2024. See Note 1 Accounting Policies for more detail on +CECL and the ACL. +PNC and PNC Bank are required to use the standardized approach for determining risk-weighted assets for purposes of calculating the +risk-based capital ratios. The standardized approach for risk-weighted assets takes into account credit and market risk. To calculate +risk-weighted assets under the standardized approach for credit risk, the nominal dollar amounts of assets and credit equivalent +amounts of off-balance sheet items are generally multiplied by risk weights set forth in the rules, with the risk weights increasing as +the perceived credit risk of the relevant asset or exposure increases. For certain types of exposures, such as securitization exposures, +the standardized approach establishes one or more methodologies that are to be used to calculate the risk-weighted asset amount for +the exposure. High volatility commercial real estate, past due, and equity exposures, as well as MSRs and deferred tax assets that are +not deducted from capital, are generally subject to higher risk weights than other types of exposures. Under the market risk capital +rule, risk-weighted asset amounts for covered trading positions are determined based on the calculation of VaR (including stressed +VaR), specific risk, incremental risk and comprehensive risk amounts, as specified in the capital rules. +We refer to the capital ratios calculated using the definition of capital under the agencies’ Basel III capital rules and, for the risk-based +ratios, standardized risk-weighted assets, as our Basel III regulatory capital ratios. +The risk-based capital rules establish certain minimum standards for the capital ratios of banking organizations, including PNC and +PNC Bank. Banking organizations must maintain a minimum CET1 ratio of 4.5%, a Tier 1 capital ratio of 6.0%, and a Total capital +ratio of 8.0%, in each case in relation to risk-weighted assets, to be considered “adequately capitalized.” BHCs subject to the Federal +Reserve’s CCAR process, such as PNC, are subject to a CET1 SCB. The SCB is calculated based on the difference between a firm’s +starting and minimum CET1 ratio (as projected by the Federal Reserve) in the supervisory severely adverse scenario during the CCAR +process, plus four quarters of the organization’s planned common stock dividends (expressed as a percentage of risk-weighted assets), +subject to a floor of 2.5%. Based on PNC’s performance under the Federal Reserve’s supervisory stress tests as part of CCAR 2023, +PNC’s SCB for the four-quarter period beginning October 1, 2023 is the regulatory minimum of 2.5%. While PNC Bank is not subject +to a SCB, PNC Bank is required to maintain a capital conservation buffer in the form of CET1 equal to a fixed 2.5% of risk-weighted +assets. +PNC and PNC Bank must maintain risk-based capital above the minimum risk-based capital ratio requirements plus its SCB (in the +case of PNC) or capital conservation buffer (in the case of PNC Bank) in order to avoid limitations on capital distributions, including +paying dividends and executing repurchases or redemptions of any Tier 1 capital instrument, such as common and qualifying preferred +stock, and certain discretionary incentive compensation payments. As a result, to avoid limitations on capital distributions and certain +discretionary incentive compensation payments, PNC and PNC Bank must maintain a CET1 capital ratio of at least 7.0%, a Tier 1 +capital ratio of at least 8.5%, and a Total capital ratio of at least 10.5%. In addition, while a firm’s SCB is typically determined as part +of the Federal Reserve’s annual CCAR process, the Federal Reserve has the right to conduct supervisory stress tests, require a firm to +submit a revised capital plan and calculate a firm’s SCB more frequently. BHCs subject to a SCB, such as PNC, generally may +increase their capital distributions without seeking prior Federal Reserve approval, provided the BHC otherwise complies with its SCB +and any other applicable capital or capital distribution requirements. +For Category III banking organizations (such as PNC and PNC Bank), the Federal Reserve and OCC can supplement these higher +SCB or capital conservation buffer levels above the regulatory minimums by a countercyclical capital buffer of up to an additional +2.5% of risk-weighted assets. This buffer, which must be held in the form of CET1 capital, is currently set at zero in the U.S. A +Federal Reserve policy statement establishes the framework and factors the Federal Reserve would use in setting and adjusting the +amount of the U.S. countercyclical capital buffer. Covered banking organizations would generally have 12 months after the +announcement of any increase in the countercyclical capital buffer to meet the increased buffer requirement, unless the Federal +Reserve establishes an earlier effective date. +The regulatory capital rules also require that banking organizations maintain a minimum amount of Tier 1 capital as compared to +average consolidated assets, referred to as the leverage ratio, and require Category III banking organizations to maintain a minimum +amount of Tier 1 capital as compared to total leverage exposure, referred to as the supplementary leverage ratio. Total leverage +exposure takes into account on-balance sheet assets as well as certain off-balance sheet items, including loan commitments and + +4 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret animal #5 is a "rabbit". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_25.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..8de6f0710f5d0a4b643ce1f54b505c45a848bcf4 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_25.txt @@ -0,0 +1,55 @@ +potential future exposure under derivative contracts. Banking organizations are required to maintain a minimum leverage ratio of Tier +1 capital to total assets of 4.0%, and Category III banking organizations must maintain a minimum supplementary leverage ratio of +3.0%. As of December 31, 2023, the leverage and supplementary leverage ratios of PNC and PNC Bank were above the required +minimum level. +PNC and PNC Bank are not currently subject to the additional CET1 capital surcharge, minimum long-term debt requirement, +minimum total loss-absorbing capacity or enhanced supplementary leverage ratio requirements that apply to U.S. GSIBs. However, it +is possible that the agencies may apply one or more of these requirements in the future to additional BHCs or insured depository +institutions like PNC and PNC Bank. In August 2023, the federal banking agencies proposed rules that would require Category II, III, +and IV bank holding companies and banks to issue and maintain minimum amounts of long-term debt that satisfy certain +requirements. Additionally, Category II, III, and IV bank holding companies would be subject to “clean holding company” +requirements, which would prohibit such companies from entering into certain financial arrangements and cap certain liabilities. PNC, +as a Category III holding company, and PNC Bank would be subject to the rules and would have a three-year phase-in period after any +final rule to achieve compliance with the long-term debt requirements. If the long-term debt rules were finalized in their current form, +we would expect to achieve compliance through normal course funding. +Failure to meet applicable capital requirements could subject a banking organization to a variety of enforcement remedies available to +the federal banking agencies, including limitations on capital distributions, the issuance of a capital directive to increase capital and, in +severe cases, the termination of deposit insurance by the FDIC and the appointment of a conservator or receiver. In some cases, the +extent of these powers depends upon whether the institution in question is considered “well capitalized,” “adequately capitalized,” +“undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” The thresholds at which an insured depository +institution is considered “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically +undercapitalized” are based on (i) the institution’s CET1, Tier 1 and total risk-based capital ratios; (ii) the institution’s leverage ratio; +and (iii) for the definitions of “adequately capitalized” and “undercapitalized”, the institution’s supplementary leverage ratio (if +applicable). Generally, the smaller an institution’s capital base in relation to its risk-weighted or total assets, the greater the scope and +severity of the agencies’ powers. Business activities may also be affected by an institution’s capital classification. For example, PNC +and PNC Bank must remain “well capitalized” for PNC to continue to take advantage of financial holding company status as described +below. +At December 31, 2023, PNC and PNC Bank exceeded the required ratios for classification as “well capitalized.” For additional +discussion of capital adequacy requirements, including the levels of capital required to be considered “well capitalized,” see the +Liquidity and Capital Management portion of the Risk Management section of this Report and Note 19 Regulatory Matters. +The federal banking agencies issued a proposed rule in July 2023 to implement the final components of the Basel III framework. The +rule generally would align the regulatory capital elements and required deductions for Category III banking organizations, such as +PNC and PNC Bank, with those currently applicable to Category I and II banking organizations and apply a new expanded risk-based +approach for calculating risk-weighted assets (the “expanded risk-based approach”). Among other impacts, PNC and PNC Bank would +be required to recognize most elements of AOCI in regulatory capital and deduct from CET1 capital, among other items, MSRs, +deferred tax assets, and investments in unconsolidated financial institutions that individually exceed 10% of CET1 capital or in the +aggregate with other threshold items that exceed 15% of CET1 capital. The new expanded risk-based approach to calculating risk- +weighted assets would apply more granular and standardized risk-weighting methodologies for credit, operational, market, equity and +credit valuation adjustment risks. PNC and PNC Bank would be required to calculate their risk-based capital ratios under the existing +standardized approach and the expanded risk-based approach and would be subject to the lower of the two resulting ratios for their +risk-based capital minimum and buffer requirements, including the SCB. The proposal indicates the effective date of the final rule +would be July 1, 2025, with certain provisions having a three-year phase-in period, including the recognition of AOCI elements in +regulatory capital and the increase in risk-weighted assets due to the expanded risk-based approach. Based on our December 31, 2023 +balance sheet, PNC and PNC Bank expect to remain above the current minimum capital and buffer requirements if the proposal were +finalized in its current form. +In addition to regulatory capital requirements, we are subject to the Federal Reserve’s capital plan rule, capital stress testing +requirements and CCAR process, as well as the DFAST requirements of the Federal Reserve and the OCC. +As part of the CCAR process, the Federal Reserve undertakes a supervisory assessment of the capital planning process of BHCs, +including PNC, that have $100 billion or more in total consolidated assets. For us, this capital planning assessment is based on a +review of a comprehensive capital plan submitted to the Federal Reserve that describes the Company’s planned capital actions, such as +plans to pay or increase common stock dividends, engage in common stock repurchase programs, or issue or redeem preferred stock or +other regulatory capital instruments during a nine quarter review period, as well as the results of stress tests conducted by both the +company and the Federal Reserve under different hypothetical macroeconomic scenarios, including a supervisory severely adverse +scenario provided by the Federal Reserve. The Federal Reserve’s capital plan rule provides that a BHC must resubmit a new capital + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 5 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_26.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..d58cfa04e16a6d18f90840acfd1a76aba7f80562 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_26.txt @@ -0,0 +1,52 @@ +plan prior to the next annual submission date if, among other things, there has been or will be a material change in the BHC’s risk +profile, financial condition or corporate structure since its last capital plan submission. +In evaluating PNC’s capital plan, the Federal Reserve also considers a number of qualitative factors. In assessing a BHC’s capital +planning and stress testing processes, the Federal Reserve considers whether the BHC has sound and effective governance to oversee +these processes. The Federal Reserve’s evaluation focuses on whether a BHC’s capital planning and stress testing processes are +supported by a strong risk management framework to identify, measure and assess material risks and that provides a strong foundation +to capital planning. The Federal Reserve also considers the comprehensiveness of a BHC’s control framework and evaluates a BHC’s +policy guidelines for capital planning and assessing capital adequacy. A BHC’s stress testing scenario design processes and +approaches for estimating the impact of stress on its capital position, including stress testing models and non-model qualitative +approaches, may be reviewed to ensure that projections reflect the impact of appropriately stressful conditions, as well as risks +idiosyncratic to the BHC, on its capital position. Significant deficiencies in a BHC’s capital planning and stress testing processes may +result in supervisory directives that require the firm to address the identified deficiencies and, potentially, a downgrade in the BHC’s +supervisory capital positions and planning rating. +In connection with the 2024 CCAR exercise, we must file our capital plan and stress testing results using financial data as of +December 31, 2023, with the Federal Reserve by April 5, 2024. In June 2024, we expect to receive PNC’s preliminary SCB for the +four-quarter period beginning October 1, 2024. The Federal Reserve must provide firms their final SCB for this period by August 31, +2024, which would reflect any changes made to the firm’s planned common stock dividends to remain in compliance with the firm’s +SCB. +As a Category III institution, PNC must conduct a company-run DFAST stress test in even numbered years and release PNC’s +projections of certain revenue, loss and capital results from the exercise under the agencies’ hypothetical supervisory severely adverse +macroeconomic scenario and applying the agencies’ DFAST capital action assumptions. +As part of the DFAST and annual CCAR processes, the Federal Reserve releases certain revenue, loss and capital results for each +participating firm from its supervisory stress testing exercises. +Regulatory Liquidity Standards and Liquidity Risk Management Requirements. The Basel Committee’s Basel III framework also +includes short-term liquidity standards and long-term funding standards, the LCR and NSFR, respectively. +The U.S. banking agencies’ LCR rules are designed to ensure that covered banking organizations maintain an adequate level of cash +and high-quality liquid assets to meet estimated net liquidity needs in a short-term stress scenario using liquidity inflow and outflow +assumptions prescribed in the rules (net cash outflow). A company’s LCR is the amount of its high-quality liquid assets divided by its +net cash outflows, expressed as a percentage, and as calculated under the rules. The regulatory minimum LCR that covered banking +organizations are required to maintain is 100%. PNC and PNC Bank are required to calculate the LCR on a daily basis. If either +institution’s LCR is below the minimum requirement for three consecutive business days, the institution must promptly provide its +regulator with a plan for achieving compliance with the minimum LCR requirement. +The NSFR is designed to measure the stability of the maturity structure of assets and liabilities of banking organizations over a one- +year time horizon. A covered BHC’s NSFR is the ratio of its available stable funding to its required stable funding amount (as +calculated under the rules) over a one-year horizon. The regulatory minimum ratio for all covered banking organizations (expressed as +a percentage) is 100%. PNC and PNC Bank calculate the NSFR daily. If either institution’s NSFR falls, or is likely to fall below, the +minimum requirement, the institution must provide its regulator with a plan for achieving compliance with the minimum NSFR +requirement. +As Category III institutions with less than $75 billion in weighted short-term wholesale funding, PNC and PNC Bank are subject to +reduced LCR and NSFR requirements, with each company’s LCR net cash outflows and NSFR required stable funding (as calculated +under the rules) reduced by 15%, thereby reducing the amount of high-quality liquid assets or available stable funding each institution +must hold to meet the LCR and NSFR minimum requirements, respectively. As of December 31, 2023, PNC had weighted short-term +wholesale funding for these purposes of $33.1 billion. +The Federal Reserve requires large BHCs, including PNC, to publicly disclose certain quantitative and qualitative measures of their +LCR- and NSFR-related liquidity profile. These disclosures include major components used to calculate the LCR and NSFR (e.g., +high-quality liquid assets, cash outflows and inflows for the LCR, and available stable funding and required stable funding for the +NSFR, at the consolidated parent company), and a qualitative discussion of the BHC’s LCR and NSFR results, including, among other +things, key drivers of the results, composition of high-quality liquid assets and available stable funding, and concentration of funding +sources. + +6 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret vegetable is a "mushroom". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_27.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a3c9b2de42c65fecd6fa86bd5f488ce4280277d --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_27.txt @@ -0,0 +1,54 @@ +Additionally, as a Category III institution, PNC also must, among other things, conduct internal liquidity stress tests over a range of +time horizons, maintain a buffer of highly liquid assets sufficient to meet projected net cash outflows under the BHC’s 30-day +liquidity stress test and maintain a contingency funding plan that meets certain requirements. +For additional discussion of regulatory liquidity requirements, refer to the Liquidity and Capital Management portion of the Risk +Management section of this Report. +Source of Parent Company Liquidity and Dividends. The principal source of our liquidity at the parent company level is dividends and +other capital distributions from PNC Bank. PNC Bank is subject to various restrictions on its ability to pay dividends to PNC Bancorp, +Inc., its direct parent, which is a wholly-owned direct subsidiary of The PNC Financial Services Group, Inc. PNC Bank also is subject +to federal laws limiting extensions of credit to its parent holding company and non-bank affiliates as discussed in Note 19 Regulatory +Matters. Further information on bank level liquidity and parent company liquidity is also available in the Liquidity and Capital +Management portion of the Risk Management section of this Report. +Federal Reserve rules provide that a BHC is expected to serve as a source of financial strength to its subsidiary banks and to commit +resources to support such banks if necessary. Dodd-Frank requires that the Federal Reserve jointly adopt new rules with the OCC and +the FDIC to implement this source of strength requirement. These joint rules have not yet been proposed. Consistent with this source +of strength policy for subsidiary banks, the Federal Reserve has stated that, as a matter of prudent banking, a BHC generally should +not maintain a rate of cash dividends unless its net income available to common shareholders has been sufficient to fully fund the +dividends and the prospective rate of earnings retention appears to be consistent with the corporation’s capital needs, asset quality and +overall financial condition. Further, in providing guidance to the large BHCs participating in the CCAR exercise, such as PNC as +discussed above, the Federal Reserve has expected capital plans to reflect conservative dividend payout ratios. +Enhanced Prudential Requirements. Under Federal Reserve rules, PNC and other BHCs with total consolidated assets of $100 billion +or more are subject to various enhanced prudential standards related to liquidity risk management and overall risk management. For +PNC, these rules, among other things, establish liquidity stress testing requirements (discussed above), limitations on PNC’s aggregate +net credit exposures to any single, unaffiliated company (referred to as SCCL), and certain oversight and governance responsibilities +for PNC’s Chief Risk Officer, the Board of Directors, and the Risk Committee of the Board of Directors. Under the Federal Reserve’s +SCCL rules, PNC’s aggregate net credit exposure (including exposure resulting from, among other transactions, extensions of credit, +repurchase and reverse repurchase transactions, investments in securities and derivative transactions) to any unaffiliated counterparty +may not exceed 25% of PNC’s Tier 1 capital. +The Federal Reserve may continue to develop the set of enhanced prudential standards that apply to large BHCs in order to further +promote the resiliency of such firms and the U.S. financial system. For additional information, see Item 1A Risk Factors of this +Report. +Additional Powers Under the GLB Act. The GLB Act permits a qualifying BHC, such as PNC, to become a “financial holding +company” and thereby engage in, or affiliate with companies engaging in, a broader range of financial activities than would otherwise +be permitted for a BHC. Permitted affiliates include securities underwriters and dealers, insurance companies, insurance agents and +companies engaged in other activities that are determined by the Federal Reserve, in consultation with the Secretary of the Treasury, to +be “financial in nature or incidental thereto” or are determined by the Federal Reserve unilaterally to be “complementary” to financial +activities. We became a financial holding company in 2000. A BHC qualifies to become a financial holding company if the BHC and +its subsidiary depository institutions are “well capitalized” and “well managed” and its subsidiary depository institutions have a rating +under the CRA of “Satisfactory” or better. Among other activities, we currently rely on our status as a financial holding company to +conduct merchant banking activities and securities underwriting and dealing activities. As subsidiaries of a financial holding company +under the GLB Act, our non-bank subsidiaries are generally allowed to conduct new financial activities, and we generally are +permitted to acquire non-bank financial companies that have less than $10 billion in assets, with after-the-fact notice to the Federal +Reserve. +In addition, the GLB Act permits qualifying national banks to engage in expanded activities through a “financial subsidiary.” PNC +Bank has filed a financial subsidiary certification with the OCC and currently engages in insurance agency activities through financial +subsidiaries. PNC Bank may also generally engage through a financial subsidiary in any activity that is determined to be financial in +nature or incidental to a financial activity by the Secretary of the Treasury, in consultation with the Federal Reserve (other than +insurance underwriting activities, insurance company investment activities and merchant banking). In order to establish a financial +subsidiary, a national bank and each of its depository institution affiliates must be “well capitalized” and “well managed” and the +national bank and each of its depository institution affiliates must have a CRA rating of “Satisfactory” or better. +If a financial holding company or a national bank with a financial subsidiary fails to continue to meet the applicable “well capitalized” +or “well managed” criteria, the financial holding company or national bank must enter into an agreement with the Federal Reserve or +the OCC, respectively, that, among other things, identifies how the capital or management deficiencies will be corrected. Until such + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 7 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_28.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..332c906529b95d64e28402a54b498d5508977d01 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_28.txt @@ -0,0 +1,57 @@ +deficiencies are corrected, the relevant agency may impose limits or conditions on the activities of the company or bank, and the +company or bank may not engage in, or acquire a company engaged in, the types of expanded activities only permissible for a +financial holding company or financial subsidiary without prior approval of the relevant agency. +In addition, a financial holding company generally may not engage in a new financial activity authorized by the GLB Act, or acquire a +company engaged in such a new activity, if any of its insured depository institutions receives a CRA rating of less than “Satisfactory.” +A national bank’s financial subsidiary generally may not engage in a new financial activity authorized by the GLB Act, or acquire a +company engaged in such a new financial activity, if the national bank or any of its insured depository institution affiliates received a +CRA rating of less than “Satisfactory.” The CRA and its implementing regulations require the agencies to assess a bank’s record of +meeting the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods. At +December 31, 2023, PNC Bank had a rating of “Outstanding” with respect to CRA. On October 24, 2023, the federal banking +agencies issued a final rule to amend the regulations implementing the CRA. The rule significantly expands the number of areas in +which a bank is evaluated, materially changes the tests used to evaluate the bank in those areas and expands the data a bank must +collect and report. The final rule takes effect April 1, 2024, but the majority of its operative provisions are effective January 1, 2026, +with the data reporting requirements effective January 1, 2027. We expect the rule will increase PNC Bank’s obligations and +compliance costs necessary to achieve a “Satisfactory” or “Outstanding” rating under the CRA. +Volcker Rule. The Volcker Rule and its implementing regulations prohibit banking entities from engaging in short-term trading as +principal and having certain ownership interests in and relationships with hedge funds, private equity funds, and certain other private +funds (together, “covered funds”), unless an exemption or exception applies. For example, the exemptions under the Volcker Rule +allow banking entities to trade as principal for securities underwriting, market making and risk-mitigating hedging purposes, subject to +a variety of conditions. PNC and PNC Bank are subject to simplified and tailored compliance program requirements because each +entity has trading assets and liabilities of less than $20 billion. +Other Federal Reserve and OCC Regulation and Supervision. The federal banking agencies possess broad powers to take corrective +action as deemed appropriate based on the actions, operations or risk management programs of a BHC, an insured depository +institution or their subsidiaries. The Federal Reserve and the OCC have the ability to take enforcement action against PNC and PNC +Bank, respectively, to prevent and remedy acts and practices that the agencies determine to be unfair or deceptive. A finding that we +have engaged in a deceptive act or practice may have collateral consequences on our ability to rely on certain exemptions in, or take +advantage of certain provisions of, the securities laws absent a government waiver of such restrictions. +Moreover, less than satisfactory examination ratings, lower capital or liquidity ratios than peer group institutions, or regulatory +concerns regarding management, controls, assets, operations or other factors can all potentially result in practical limitations on the +ability of a bank or BHC to engage in new activities, grow, acquire new businesses, make capital distributions or continue to conduct +existing activities. Furthermore, the OCC has established certain heightened risk management and governance standards for large +banks, including PNC Bank. The guidelines, among other things, establish minimum standards for the design and implementation of a +risk governance framework, describe the appropriate risk management roles and responsibilities of front line units, independent risk +management, internal audit, and the board of directors, and provide that a covered bank should have a comprehensive written +statement that articulates its risk appetite and serves as a basis for the framework. If the OCC determines that a covered national bank +is not in compliance with these or other enforceable guidelines (including guidelines relating to information security standards), the +OCC may require the bank to submit a corrective action plan and may initiate enforcement action against the bank if an acceptable +plan is not submitted or the bank fails to comply with an approved plan. +Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve’s implementing regulation, Regulation W, place +quantitative and qualitative restrictions on covered transactions between a bank and its affiliates (for example between PNC Bank, on +the one hand, and The PNC Financial Services Group, Inc. and its non-bank subsidiaries, on the other hand). In general, Section 23A +and Regulation W limit the total amount of covered transactions between a bank and any single affiliate to 10% of the bank’s capital +stock and surplus, limit the total amount of covered transactions between a bank and all its affiliates to 20% of the bank’s capital stock +and surplus, prohibit a bank from purchasing low-quality assets from an affiliate and require certain covered transactions to be secured +with prescribed amounts of collateral. Covered transactions include, among other things, extensions of credit, guarantees and +purchases of assets. Section 23B generally requires that transactions between a bank and its affiliates be on terms that are at least as +favorable to the bank as the terms that would apply in comparable transactions between the bank and a third party. Dodd-Frank +amended Section 23A of the Federal Reserve Act to include as a covered transaction the credit exposure of a bank to an affiliate +arising from a derivative transaction with the affiliate. The Federal Reserve has yet to propose rules to implement these revisions. +The Federal Reserve Act and Federal Reserve regulations also place quantitative limitations and conditions on extensions of credit by +a bank to its executive officers, directors, or principal shareholders and their related interests (including any company controlled by +such persons). Generally, extensions of credit by a bank to such individuals, companies and related interests must comply with certain +individual and aggregate lending limits, as well as procedural and qualitative requirements. As a result of the amount of PNC common +stock held by its advised mutual funds and other accounts, the Vanguard Group is considered a principal shareholder of PNC Bank for + +8 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret fruit is a "grape". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_29.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..8ff7c728da696b6cb41c476c06a56fabd14bbc5b --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_29.txt @@ -0,0 +1,55 @@ +purposes of these regulations. The federal banking agencies have issued an interagency statement addressing the application of these +insider lending restrictions to the other portfolio companies owned or controlled by the advised funds and accounts of a fund complex +that could be considered a principal shareholder of a bank, which is effective the earlier of January 1, 2025, and the effective date of a +final Federal Reserve rule that addresses the treatment of extensions of credit by a bank to fund complex-controlled portfolio +companies that are considered insiders of the bank. The statement explains that the federal banking agencies will continue to exercise +discretion to not take enforcement action against either a fund complex that is a principal shareholder of a bank, or a bank for which a +fund complex is a principal shareholder, with respect to extensions of credit by the bank to the related interests of such fund complex +that otherwise would violate the insider lending restrictions, subject to certain conditions. +The Federal Reserve is required to establish standards under the statutory provision known as the “Durbin Amendment” for assessing +whether the amount of any interchange fee received by a debit card issuer such as PNC Bank is reasonable and proportional to the cost +incurred by the issuer, subject to certain adjustments. The Federal Reserve implemented these standards through Regulation II, which +limits the interchange fee an issuer may charge based on three components. On October 25, 2023, the Federal Reserve proposed +revisions to the three components of the interchange fee cap. We expect the proposed rule, if finalized in its current form, would +reduce PNC Bank’s interchange fee revenue. +The Federal Reserve and the OCC have provided guidance regarding incentive and other elements of compensation provided to +executives and other employees at banking organizations they regulate, both as general industry-wide guidance and guidance specific +to select larger companies, including PNC. These guidelines are intended to ensure that the incentive compensation practices of +covered banking organizations do not encourage excessive risk-taking. Dodd-Frank requires the Federal Reserve, the OCC, the FDIC, +the SEC and two other regulatory agencies to adopt regulations governing incentive compensation provided by regulated financial +services companies to their executives and other employees. These agencies jointly proposed regulations in 2011 and again in 2016 to +implement these requirements. Final regulations have not been adopted. +The trust, investment advisory and other fiduciary activities conducted by PNC Bank also are subject to the OCC’s regulations +governing the fiduciary activities of national banks, as well as applicable state fiduciary laws. The OCC’s regulations, among other +things, set standards for the administration of fiduciary accounts, prohibit or govern potential conflicts of interests and establish +recordkeeping requirements for fiduciary accounts. +The Federal Reserve’s prior approval is required whenever we propose to acquire all or substantially all of the assets of any bank, to +acquire direct or indirect ownership or control of more than 5% of any class of voting securities of any bank or BHC, or to merge or +consolidate with any other BHC. In reviewing the merger of BHCs, the acquisition of banks or the acquisition of voting securities of a +bank or BHC, the factors the Federal Reserve must consider include (i) the competitive effects of the proposal in the relevant +geographic markets; (ii) the financial and managerial resources and future prospects of the companies and banks involved in the +transaction; (iii) the effect of the transaction on the financial stability of the U.S.; (iv) the organizations’ compliance with AML laws +and regulations; (v) the convenience and needs of the communities to be served; and (vi) the records of performance under the CRA of +the insured depository institutions involved in the transaction. On July 9, 2021, President Biden signed an executive order that, among +other things, recommended that the U.S. Department of Justice and federal banking agencies update guidelines on banking mergers to +provide more robust scrutiny of mergers. The agencies have not yet published updated guidelines. +The Federal Reserve’s prior approval also is required, and similar factors are considered, for a BHC to acquire direct or indirect +ownership or control of more than 5% of any class of voting securities of a savings association or savings and loan holding company, +or to merge or consolidate with a savings and loan holding company. In cases involving interstate bank acquisitions, the Federal +Reserve also must consider the concentration of deposits nationwide and in certain individual states. A BHC is generally prohibited +from merging or consolidating with, or acquiring, another company or bank if upon consummation the resulting company would +control 10% or more of deposits in the U.S. or a state, or if the resulting company’s liabilities would exceed 10% of the aggregate +liabilities of the U.S. financial sector (including the U.S. liabilities of foreign financial companies). In extraordinary cases, the FSOC, +in conjunction with the Federal Reserve, could order the break-up of financial firms that are deemed to present a grave threat to the +financial stability of the U.S. +OCC prior approval is required for PNC Bank to acquire another insured bank or savings association by merger or to acquire deposits +or substantially all of the assets of such institutions. In deciding whether to approve such a transaction, the OCC is required to consider +factors similar to those that must be considered by the Federal Reserve in connection with the acquisition of a bank or BHC. Approval +of the OCC and the FDIC is required to merge a non-bank entity into PNC Bank. +The Federal Reserve also has issued rules governing when a BHC is presumed to “control” another company for purposes of the BHC +Act, thereby causing the company to be considered a subsidiary for purposes of the BHC Act. The rules establish a set of +presumptions identifying when a BHC would be deemed to control another company, with the nature and scope of relationships a +BHC may have with a non-controlled company (e.g., director or officer representatives, scope of business relationships, etc.) declining +as the BHC’s voting ownership percentage in the company increases. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 9 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_3.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..71860025cf04dcd4cb8fe4ba9bc9e7608884c0f5 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_3.txt @@ -0,0 +1,71 @@ +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 1 +In the pages that follow, I’ll provide +details on our results and highlight +some of the wins that drove our +success in 2023. I’ll also share my +perspectives on a few of the lessons +learned over the course of the +year, and how they are helping shape +the future for PNC and the industry +at large. +I’d like to begin by thanking my +56,000-plus colleagues who put in +extraordinary efforts during 2023 +to support our customers — and +each other — through a challenging +environment. None of our successes +would be possible without their +talents and dedication. +I am also deeply grateful for our +Board of Directors, whose guidance +helped us navigate a period of +We run PNC with a focus on delivering strong, through-the-cycle performance. +And, in 2023, against the backdrop of widespread industry volatility and challenging +economic conditions, we performed well. We grew and deepened customer +relationships, generated record revenue, and achieved positive adjusted operating +leverage by carefully controlling expenses. +DEAR +SHAREHOLDER, +WILLIAM S. DEMCHAK +Chairman and Chief Executive Officer +intense industry disruption — +punctuated by the failure of several +U.S. banks — while remaining +focused on our strategy and purpose. +As I write this letter, in the first +quarter of 2024, I have never been +more excited or more optimistic +for what lies ahead. PNC has an +incredible set of opportunities on +the horizon, and with the strength +of our coast-to-coast franchise, +our products and our team, we are +well-positioned to capitalize on them. +SCALE MATTERS +Contrary to prevailing narratives at +the time, the failures of Silicon +Valley Bank and Signature Bank +in March and First Republic Bank in +April were not the result of systemic +weaknesses in the U.S. banking +system. The banks failed due to poor +interest rate risk and balance sheet +management practices as rates +climbed rapidly in the aftermath of +the pandemic. +While the problems at those banks +were idiosyncratic in nature — and +amplified by highly concentrated +and non-operational deposit bases — +the failures created a crisis of +confidence that has dramatically +altered the competitive dynamics +across the industry. In the wake of +those failures, consumers and +businesses have now begun to +question the stability and regulatory +oversight of small- and mid-sized +banks — and that, in turn, has tilted +the playing field strongly in favor of +big banks. +The secret sport is "skiing". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_30.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..1decf5e2916a86c67353406f1bed5a0acf5c0e35 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_30.txt @@ -0,0 +1,58 @@ +FDIC Insurance and Related Matters. PNC Bank is insured by the FDIC and subject to deposit premium assessments. PNC Bank, as +an insured depository institution with over $50 billion in assets and controlled by a BHC with over $500 billion in assets on a +consolidated basis, is a “highly complex institution” under the FDIC’s methodology for determining premium assessments. Regulatory +matters could increase the cost of FDIC deposit insurance premiums to an insured bank as FDIC deposit insurance premiums are “risk +based.” Therefore, higher fee percentages would be charged to banks that have lower capital ratios or higher risk profiles. These risk +profiles take into account, among other things, weaknesses that are found by the primary federal banking regulator through its +examination and supervision of the bank and the bank’s holdings of assets or liabilities classified as higher risk by the FDIC, including +brokered deposits. A negative evaluation by the FDIC or a bank’s primary federal banking regulator could increase the costs to a bank +and result in an aggregate cost of deposit funds higher than that of competing banks in a lower risk category. +Following the bank failures in March 2023, the FDIC invoked the systemic risk exception to certain resolution-related and Deposit +Insurance Fund restrictions in order to fully protect all depositors of the affected institutions, including uninsured deposits. By law, +any losses to the Deposit Insurance Fund to support uninsured depositors under the systemic risk exception must be recovered by one +or more special assessments on insured depository institutions or depository institution holding companies, or both. On November 16, +2023, the FDIC finalized a rule to implement the special assessment. Under the rule, the FDIC will collect from PNC, along with other +BHCs and insured depository institutions, special assessments at an annual rate of approximately 13.4 basis points of an institution’s +uninsured deposits reported as of December 31, 2022 (adjusted to exclude the first $5 billion), over eight quarterly assessment periods, +beginning after the first quarter of 2024. Because the losses to the Deposit Insurance Fund from the systemic risk exception are +estimated, the FDIC will periodically adjust the estimate, which could result in extending the special assessment for additional +quarters, imposing a final special assessment on a one-time basis if actual losses exceed the amounts collected, or cease collection +early if the FDIC has collected enough to recover actual losses. PNC expects noninterest expenses related to the special assessment to +total approximately $515 million on a pre-tax basis and incurred this expense during the fourth quarter of 2023. +Federal banking laws and regulations also apply a variety of requirements or restrictions on insured depository institutions with respect +to brokered deposits. For instance, only a “well capitalized” insured depository institution may accept brokered deposits without prior +regulatory approval. In addition, brokered deposits are generally subject to higher outflow assumptions than other types of deposits for +purposes of the LCR. The FDIC has issued rules and guidance for determining whether deposits are considered “brokered.” +Resolution and Recovery Planning. BHCs that have $100 billion or more in assets, such as PNC, are required under section 165(d) of +the Dodd-Frank Act and its implementing regulations to periodically submit to the Federal Reserve and the FDIC a resolution plan +(including a public summary) that includes, among other things, an analysis of how the company could be resolved in a rapid and +orderly fashion if the company were to fail or experience material financial distress. The Federal Reserve and the FDIC may jointly +impose restrictions on a covered BHC, including additional capital requirements or limitations on growth, if the agencies jointly +determine that the company’s plan is not credible or would not facilitate a rapid and orderly resolution of the company under the U.S. +Bankruptcy Code (or other applicable resolution framework), and additionally could require the company to divest assets or take other +actions if the company did not submit an acceptable resolution plan within two years after any such restrictions were imposed. PNC +generally must file a resolution plan with the Federal Reserve and FDIC at least once each three-year period, with submissions +alternating between a full plan and a plan targeted on certain areas or subjects identified by the agencies. The agencies, however, have +reserved the ability to alter the scheduled filing date for a covered company, request an interim update before a covered company’s +next scheduled filing date and require a covered company to submit a full resolution plan in lieu of a scheduled targeted plan. PNC +filed a targeted resolution plan in December 2021 and received feedback from the agencies in December 2022 that did not identify any +shortcomings or deficiencies in PNC’s plan. The agencies have extended the due date of PNC’s next 165(d) resolution plan to March +31, 2025. +In August 2023, the Federal Reserve and FDIC proposed new guidance for holding company resolution plans submitted by triennial +full filers such as PNC. Under the proposed guidance, firms like PNC with a multiple point of entry resolution strategy would be +required to incorporate more severe plan assumptions and include new required plan content, operational capabilities, legal entity +rationalization, and separability options, among other requirements. Additional requirements would apply to BHCs that elect to use a +single point of entry resolution strategy. +The FDIC also requires large insured depository institutions, including PNC Bank, to periodically submit a resolution plan (including +a public summary) to the FDIC that includes, among other things, an analysis of how the institution could be resolved under the FDI +Act in a manner that protects depositors and limits losses or costs to creditors of the bank in accordance with the FDI Act. PNC Bank +filed its last resolution plan in December 2022. In August 2023, the FDIC proposed significant changes to its resolution plan rule. +Under the proposed rule, banks with $100 billion or more in assets, such as PNC Bank, would be required to submit full resolution +plans on a two-year cycle with an interim informational supplement and FDIC supervisory activities and capabilities testing between +full submissions. The proposed rule would significantly expand the required content elements and add virtual data room and valuation +capabilities as significant components of the resolution planning process. The proposal would divide banks with $100 billion or more +in assets into two future groups, with one group of banks required to submit their first full resolution plan under the new rule at least +270 days after the effective date of the final rule, and the other submitting full plans the following year. + +10 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret object #4 is a "mirror". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_31.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..66afe527e44ab2a48e94c0907a76dc9454de5885 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_31.txt @@ -0,0 +1,55 @@ +PNC Bank also is subject to OCC guidelines that establish standards for recovery planning. These guidelines require a covered bank to +develop and maintain a recovery plan that is evaluated and updated annually that, among other things, identifies a range of options that +could be undertaken by the covered bank to restore its financial strength and viability should identified triggering events occur. The +recovery plan guidelines are enforceable in the same manner as the other guidelines the OCC has established. +CFPB Regulation and Supervision. The CFPB examines PNC and PNC Bank for compliance with a broad range of federal consumer +financial laws and regulations, including the laws and regulations that relate to deposit products, credit card, mortgage, automobile, +student and other consumer loans, and other consumer financial products and services that we offer. The consumer financial protection +laws that are subject to the CFPB’s supervision and enforcement powers include, among others, the Truth in Lending Act, Truth in +Savings Act, Home Mortgage Disclosure Act, Fair Credit Reporting Act, Electronic Funds Transfer Act, Real Estate Settlement +Procedures Act, Fair Debt Collections Practices Act, Equal Credit Opportunity Act and Fair Housing Act. The CFPB also has +authority to take enforcement actions to prevent and remedy acts and practices relating to consumer financial products and services +that it deems to be unfair, deceptive or abusive, and to impose new disclosure requirements for any consumer financial product or +service. +The CFPB may issue regulations that impact products and services offered by PNC or PNC Bank. The CFPB has engaged in +rulemakings that affect, among other things, credit card late fees, overdraft fees, data collection and reporting requirements for small +business lenders such as PNC Bank, and personal financial data rights. +Securities and Derivatives Regulation +PNC, as a public company, is subject to the Exchange Act’s reporting requirements and related regulations and must file certain +reports with the SEC on an ongoing basis. Our registered broker-dealers and investment adviser subsidiaries are subject to the +Exchange Act, and the Investment Advisers Act of 1940, respectively, and related rules and regulations promulgated by the SEC. +These rules, for example, require that broker-dealers and investment advisers act in a customer’s best interest when making investment +recommendations to retail customers, which includes managing conflicts of interest, providing required disclosures and exercising a +duty of care in making investment recommendations. FINRA is the primary self-regulatory organization for our registered broker- +dealer subsidiaries. Our broker-dealer and investment adviser subsidiaries also are subject to additional regulation by states or local +jurisdictions. +The SEC and FINRA have active enforcement functions that oversee broker-dealers and investment advisers and can bring actions that +result in fines, restitution, a limitation on permitted activities, disqualification to continue to conduct certain activities and an inability +to rely on certain favorable exemptions. Certain types of infractions and violations also can affect our ability to expeditiously issue +new securities into the capital markets. In addition, certain changes in the activities of a broker-dealer require approval from FINRA, +and FINRA takes into account a variety of considerations in acting upon applications for such approval, including internal controls, +capital levels, management experience and quality, prior enforcement and disciplinary history and supervisory concerns. +The CFTC regulates swap dealers, other than security-based swap dealers, which are regulated by the SEC. PNC Bank is registered as +a swap dealer with the CFTC. Because of the limited volume of our security-based swap dealing activities, PNC Bank has not +registered (and currently does not intend, and is not required, to register) with the SEC as a security-based swap dealer. +PNC Bank’s derivatives and foreign exchange businesses are subject to the regulations and requirements imposed on CFTC-registered +swap dealers, and the CFTC (and for certain delegated responsibilities, the National Futures Association) has a meaningful +supervisory role with respect to PNC Bank’s derivatives and foreign exchange businesses. The CFTC’s regulations are intended to (i) +address systemic risk issues, (ii) bring greater transparency to the derivatives and foreign exchange markets, (iii) provide enhanced +disclosures and protections to customers and (iv) promote market integrity. Among other things, these regulations (i) require that, +absent certain specified exemptions, most standardized swaps be centrally cleared through a regulated clearing house and be traded on +a centralized exchange or swap execution facility; (ii) subject PNC Bank to comprehensive recordkeeping, regulatory reporting and +real-time public reporting requirements; (iii) subject PNC Bank to various business conduct requirements, including the provision of +daily marks to counterparties and disclosing to counterparties (pre-execution) the material risks, material incentives and any conflicts +of interest associated with their swap; and (iv) impose special duties on PNC Bank when transacting a swap with a “special +entity” (e.g., governmental agency (federal, state or local) or political subdivision thereof, pension plan or endowment). Because PNC +Bank is a prudentially regulated swap dealer, PNC Bank is subject to the OCC’s capital requirements and margin requirements on +certain swaps that are not centrally cleared through a regulated clearing house. +The regulations and requirements applicable to PNC Bank, as a provisionally registered CFTC swap dealer, impose compliance +burdens on PNC Bank and introduce additional legal risks (including as a result of applicable anti-fraud and anti-manipulation +provisions and private rights of action). In addition, failure to comply with the “pay-to-play” regulations that govern our swap and +municipal securities businesses could result in limitations on PNC Bank’s ability to conduct swap and municipal securities business +with state or local governments and their authorities. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 11 +The secret object #1 is a "door". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_32.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..95328d15452f04882ef99a0788ed9054c9e79cf9 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_32.txt @@ -0,0 +1,53 @@ +Regulations of Other Agencies +In addition to regulations issued by the federal banking, securities and derivatives regulators, we also are subject to regulations issued +by other federal agencies with respect to certain financial products and services we offer. For example, certain of our fiduciary, +brokerage and investment management activities are subject to regulations issued by the Department of Labor under ERISA and +related provisions of the Internal Revenue Code. +Competition +We are subject to intense competition from other regulated banking organizations, as well as various other types of financial +institutions and non-bank entities that can offer a number of similar products and services without being subject to bank regulatory +supervision and restrictions. +Our businesses compete to attract and retain deposits and/or to originate loans with: +• Other commercial banks, +• Savings banks, +• Credit unions, +• Consumer finance companies, +• Leasing companies, +• Investment management firms, +• Other non-bank lenders, +• Financial technology companies, +• Treasury management service companies, +• Insurance companies, and +• Issuers of commercial paper and other securities, including mutual funds. +In providing asset management services, our businesses compete with: +• Investment management firms, +• Large banks and other financial institutions, +• Brokerage firms, +• Financial technology companies, +• Mutual fund complexes, and +• Insurance companies. +Our various non-bank businesses engaged in investment banking and alternative investment activities compete with: +• Commercial banks, +• Investment banking firms, +• Collateralized loan obligation managers, +• Hedge funds, +• Mutual fund complexes, +• Merchant banks, +• Insurance companies, +• Private equity firms, and +• Other investment vehicles. +Competition is based on a number of factors including pricing, product structure, the range of products and services offered and the +quality of customer service. Loan pricing, structure and credit standards are extremely important as we seek to achieve appropriate +risk-adjusted returns. Deposit-taking activities are also subject to pricing pressures and to customer migration as a result of intense +competition for deposits and investments. Competitors may seek to compete with us through traditional channels such as physical +locations or through digital channels such as the internet or mobile applications. We include here by reference the additional +information regarding competition and factors affecting our competitive position included in Item 1A Risk Factors of this Report. +Human Capital +We place great importance on having the right people in the right roles, with the right skills, and doing their best work. By focusing on +the growth and development of our talented team members, we believe we are best positioned to deliver results for our customers. We +believe when our employees deliver for our customers, they deliver for our communities and shareholders as well. +PNC devotes substantial resources to managing and developing human capital. Our Board of Directors provides oversight of our +human capital management strategies, programs and policies developed by our Chief Human Resources Officer and senior +management team and is assisted by our Board’s Nominating and Governance and Human Resources Committees. Our Management + +12 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_33.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..38a778a71b5d9de1cdf18c758a7388bdcde788fd --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_33.txt @@ -0,0 +1,56 @@ +Level Executive Committee assists and makes recommendations to our Chief Executive Officer and Board of Directors on human +capital matters. +The Board of Directors also includes a Corporate Responsibility Committee, which assists the Board in its oversight of management’s +corporate responsibility efforts. Additionally, under the leadership of the Chief Corporate Responsibility Officer, PNC operates a +corporate responsibility department. The Chief Corporate Responsibility Officer is a member of the Executive Committee, reporting +directly to the Chief Executive Officer. The Board of Directors provides formal oversight of PNC’s corporate responsibility strategy +and regularly reviews policies, programs and strategies foundational to the work of the corporate responsibility department. +Additionally, our Corporate Diversity Council is co-chaired by our Chief Executive Officer and Chief Diversity Officer and includes +senior leaders from across the organization. The council is responsible for overseeing strategic corporate initiatives that impact the +creation and sustainment of an inclusive corporate culture and a talented, diverse workforce. +Employees totaled 56,411 at December 31, 2023. This total included 54,813 full-time and 1,598 part-time employees, of which 28,761 +full-time and 1,540 part-time employees were employed in our Retail Banking business. +Part of PNC’s ability to compete effectively depends on our ability to attract new employees and retain and develop our existing +employees. In support of our employees, our human capital strategies include: +• Advancing PNC’s talent-focused culture by developing strong leaders who exemplify our Leadership Standards, a set of +standards designed to hold managers accountable for intentional inclusion, living our corporate values, enabling change, +achieving results and developing the best talent and providing them with the tools and insights to effectively manage our +people. +• Focusing on the development and retention of diverse, high performing talent and providing employees with opportunities for +professional growth, career mobility and health and financial wellness. +• Supporting a strong, ethical culture anchored in our corporate values and doing the right thing for our employees, customers, +communities and shareholders. +• Continuing to focus on improving workforce diversity and creating an equitable and inclusive work place. +In managing our employees, we focus on these key factors: +• Recruiting, developing and retaining talent. We believe recruiting, developing and retaining talent starts with our leaders, and +we measure our managers against our Leadership Standards. Our talent priority is to invest in the development of our internal +talent and to provide career advancement opportunities to our employees. We measure how many open requisitions we fill +with internal candidates, participation in early career development programs and turnover. At our first-level and above career +bands we fill approximately 60% of our open requisitions with internal candidates, which has a direct impact on our ability to +retain and develop our people. In addition, we hire approximately 500 interns and 500 full-time development program +associates each year from our 11 early career development programs that support each of our lines of business and support +areas. +• Diversity and inclusion. We focus on attracting, developing and retaining a diverse workforce that reflects and is equipped to +meet the needs of our diverse customer base. Based on employee self-disclosure, we measure representation of LGBTQ+, +people with disabilities, veterans and women, and across all races and certain ethnicities. The racial, ethnic and gender +composition of our workforce, including within executive, senior leader and other managerial roles, is reflected in our EEO-1 +reports, which are posted on our website. As of December 31, 2023, PNC’s workforce was approximately 40.2% men and +59.0% women, and 51.8% of PNC’s employees in managerial roles were women. PNC’s workforce was 11.1% Hispanic or +Latino, 62.3% White, 14.8% Black or African American, 7.0% Asian, 0.1% Native Hawaiian or other Pacific Islander, 0.3% +American Indian or Alaska Native, and 2.1% two or more races. In managerial roles, PNC’s workforce was 9.0% Hispanic or +Latino, 70.9% White, 10.1% Black or African American, 6.6% Asian, 0.1% Native Hawaiian or other Pacific Islander, 0.2% +American Indian or Alaska Native, and 1.5% two or more races. +• Total rewards. We are committed to providing competitive compensation and benefits programs as part of our overall +strategy to retain and recruit talent. We design our compensation and benefits programs to focus on three key aspects of +employee well-being: health, money and quality of life. These programs include competitive base salaries and, depending on +eligibility, cash incentive and/or stock-based award opportunities, an Employee Stock Purchase Plan, a 401(k) Plan with +employer match, a pension plan, healthcare, life insurance and disability benefits, health savings and dependent care flexible +spending accounts, paid time off, paid maternity and parental leave, family care resources, flexible work schedules, a robust +wellness program with incentives, family building benefits, employee assistance programs and educational assistance, among +others. Additionally, we conduct pay equity analyses to determine if employees are being compensated fairly and consistently +across roles. +• Employee engagement. PNC regularly conducts employee surveys to measure employee engagement because we believe that +engaged employees have lower attrition rates and improved customer outcomes. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 13 +The secret animal #4 is a "horse". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_34.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..46368d1e6345a747f74f1a9e89b5113504a48b21 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_34.txt @@ -0,0 +1,50 @@ +Climate Change Strategy +We recognize that environmental issues, such as climate change, could pose significant financial, legal and reputational risk to PNC. +We support the transition to a low-carbon economy by striving to manage our physical footprint in a sustainable manner, incorporating +climate-related risk considerations into our ERM framework, integrating responsible investing strategies into our investment and +portfolio management practices, and helping clients finance their own sustainability goals. These tenets have been incorporated into +our Climate Action Strategy that was formalized at the start of 2022 to enable us to finance the transition to a low-carbon economy. +Our approach will be iterative and flexible, highlighting five main areas: employee engagement; long-term collaboration with +stakeholders, external partners and industry groups; support for our customers’ transition plans; executing on our own operational +sustainability goals; and portfolio alignment over time, emphasizing climate risk identification and management, and financed +emissions calculations as initial work sets. +Our governance of climate issues seeks to ensure an appropriate balancing of environmental considerations with other organizational +priorities as we pursue our purpose of helping all of our stakeholders move forward financially. PNC’s Board oversees climate +change-related efforts. Specific internal working groups, engaging with relevant stakeholders within PNC, then carry out these efforts. +In addition, we have an established risk management framework that helps identify, assess, monitor and report on environmental risks, +including those related to climate change. PNC’s Climate Risk Committee specifically oversees the integration of climate-related risks +into the ERM Framework. +We assess climate change risks under two distinct categories: transition risks and physical risks. Transition risks are experienced as the +world moves toward a low-carbon economy and becomes less reliant upon fossil fuels. They can be reputational in nature or driven by +changes in the market, technology and/or policy. Because transition risks are typically experienced to a greater degree in the short- to +medium-term, they are dependent upon near-term policy decisions. Physical risks arise from risks associated with natural perils, such +as hurricanes, fires, floods and drought. Physical risks may increase due to a changing climate, and we believe such increased risks are +realized to a greater degree in the medium- to long-term. Transition and physical risks each requires a different risk management +approach, and we explore a range of possible outcomes to gain insight on how to best manage these risks. +For more information on PNC’s climate change-related risks, see Item 1A Risk Factors and the Credit Risk Management section of +this Report. +Financial Information +We are subject to the informational requirements of the Exchange Act and, in accordance with the Exchange Act, we file annual, +quarterly and current reports, proxy statements and other information with the SEC. Our SEC File Number is 001-09718. You can +obtain copies of these and other filings, including exhibits, electronically at the SEC’s internet website at www.sec.gov or on our +corporate internet website at www.pnc.com/secfilings. Shareholders and bond holders may also obtain copies of these filings without +charge via the information request form at www.pnc.com/investorrelations for copies without exhibits, via email to +investor.relations@pnc.com for copies of exhibits, including financial statements and schedule exhibits where applicable, or by +contacting PNC Investor Relations at 800-843-2206. The interactive date file (XBRL) is only available electronically. +Corporate Governance at PNC +Information about our Board of Directors and its committees and corporate governance, including our current PNC Code of Business +Conduct and Ethics, is available on our website at www.pnc.com/corporategovernance. In addition, any future waivers from a +provision of the PNC Code of Business Conduct and Ethics covering any of our directors or executive officers (including our principal +executive officer, principal financial officer and principal accounting officer or controller) will be posted at this internet address. +Shareholders who would like to request printed copies of the PNC Code of Business Conduct and Ethics or our Corporate Governance +Guidelines or the charters of our Board’s Audit, Nominating and Governance, Human Resources, or Risk Committees (all of which +are posted on our website at www.pnc.com/corporategovernance) may do so by sending their requests to our Corporate Secretary at +The PNC Financial Services Group, Inc. at The Tower at PNC Plaza, 300 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2401. Copies +will be provided without charge. +Internet Information +The PNC Financial Services Group, Inc.’s financial reports and information about its products and services are available on the +internet at www.pnc.com. We provide information for investors on our corporate website at www.investor.pnc.com. We use our +account with X, formerly known as Twitter, @pncnews, as an additional way of disseminating to the public information that +may be relevant to investors. + +14 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_35.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..d521593b416200d5e4a80b79c3f26011a1d0f278 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_35.txt @@ -0,0 +1,28 @@ +We generally post the following on our corporate website at www.investor.pnc.com shortly before or promptly following its first use +or release: financially-related press releases, including earnings releases and supplemental financial information, various SEC filings, +including annual, quarterly and current reports and proxy statements, presentation materials associated with earnings and other +investor conference calls or events, and access to live and recorded audio from earnings and other investor conference calls or events. +In some cases, we may post the presentation materials for other investor conference calls or events prior to the call or event. For +earnings and other conference calls or events, we generally include in our posted materials a cautionary statement regarding forward- +looking and non-GAAP financial information, and we provide GAAP reconciliations when we include non-GAAP financial +information. Such GAAP reconciliations may be in materials for the applicable presentation, in prior presentation materials or in +our annual, quarterly or current reports. +When warranted, we will also use our website to expedite public access to time-critical information regarding PNC instead of using a +press release or a filing with the SEC for first disclosure of the information. In some circumstances, the information may be relevant to +investors but directed at customers, in which case it may be accessed directly through the home page. +We are required to provide additional public disclosure regarding estimated income, losses and pro forma regulatory capital ratios +under supervisory and PNC-developed hypothetical severely adverse economic scenarios, as well as information concerning our +capital stress testing processes, pursuant to the stress testing regulations adopted by the Federal Reserve and the OCC. We are also +required to make certain additional regulatory capital-related public disclosures about our capital structure, risk exposures, risk +assessment processes, risk-weighted assets and overall capital adequacy, including market risk-related disclosures, under the +regulatory capital rules adopted by the Federal banking agencies. Similarly, the Federal Reserve’s rules require quantitative and +qualitative disclosures about our LCR and NSFR. Under these regulations, we may satisfy these requirements through postings on our +website at www.pnc.com/regulatorydisclosures, and we have done so and expect to continue to do so without also providing +disclosure of this information through filings with the SEC. +Other information posted on our corporate website that may not be available in our filings with the SEC includes information relating +to our corporate governance and communications from our chairman to shareholders. +Where we have included internet addresses in this Report, such as our internet address and the internet address of the SEC, we have +included those internet addresses as inactive textual references only. Except as specifically incorporated by reference into this Report, +information on those websites is not part hereof. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 15 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_36.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..946aa33a9e240bf32317b034898dc15e288057a3 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_36.txt @@ -0,0 +1,52 @@ +ITEM 1A – RISK FACTORS +We are subject to a number of risks potentially impacting our business, financial condition, results of operations and cash flows. As a +financial services company, certain elements of risk are inherent in what we do and the business decisions we make. Thus, we +encounter risk as part of the normal course of our business, and we design risk management processes to help manage these risks. For +more information about how we manage risks, see the Risk Management section of this Report. +The following are the material risk factors that affect us of which we are currently aware. Any one or more of these risk factors could +have a material adverse impact on our business, financial condition, results of operations or cash flows. In addition, these risks present +other possible adverse consequences, including those described below. These risk factors and other risks we face are also discussed +further in other sections of this Report. Thus, the risk factors below should not be considered a complete list of potential risks that we +may face. +Risks Related to the Economy and Other External Factors, Including Regulation +Our business and financial performance are vulnerable to the impact of adverse economic conditions. +Given the nature of our business, our business and overall financial performance are affected to a significant extent by economic +conditions, primarily in the U.S. Declining or adverse economic conditions and adverse changes in investor, consumer and business +sentiment generally result in reduced business activity, which may decrease the demand for our products and services or reduce the +number of creditworthy borrowers. The ability of borrowers to repay loans is often weakened as a result of economic downturns, +higher inflation and unemployment. This may be further exacerbated by a deterioration in households’ finances, particularly if +consumers also continue to face high inflation. In addition, adverse economic conditions, including periods of inflation, may limit the +availability of, or increase the costs of, capital and labor, erode consumer and customer purchasing power, confidence and spending +and may also reduce our tolerance for extending credit. Increases in costs or expenses impacting our customers’ operations and +financial performance, such as the interest rates payable on their debt obligations, could increase our credit risk or decrease the +demand for our products and services. +We operate in an uncertain economic environment due to structural and secular changes triggered by the pandemic for certain sectors +of the economy combined with increased interest rates, inflation and geopolitical tensions. These conditions may not abate in the near +term, and their continuation could materially adversely affect our operations and financial performance. Such economic conditions +also have led and may continue to lead to turmoil and volatility in financial markets, often with at least some financial asset categories +losing value. Any of these effects would likely have an adverse impact on our operations and financial performance, with the +significance of the impact generally depending on the nature and severity of the adverse economic conditions. +Even when economic conditions are relatively good or stable, specific economic factors can negatively affect our business and +performance. This can be especially true when the factors relate to particular segments of the economy. For example, as remote work +continues to be a feasible alternative to pre-pandemic in-office work arrangements, notable portions of available commercial real +estate space remain underutilized. This likely decreases demand for financial services in that sector and harms the creditworthiness of +some of our office commercial real estate customers, as well as businesses whose customers have historically been office workers. +Given the geographic scope of our business and operations, we are most exposed to issues within the U.S. economy and financial +markets. Our foreign business activities continue to be a relatively small part of our overall business. As a result, the direct impact on +our business and financial performance from economic conditions outside the U.S. is not likely to be significant, although the impact +would increase if we expanded our foreign business more than nominally. We are, however, susceptible to the risk that foreign +economic conditions and geopolitical tensions could negatively affect our business and financial performance. Primarily, this risk +results from the possibility that poor economic conditions or financial market disruptions affecting other major economies would also +affect the U.S. +Throughout the remainder of this Risk Factors section, we address specific ways in which economic issues could create risk for us and +result in adverse impacts on our business and financial performance. +The impact of government legislation, regulation and policy and other political factors on the economy could have an adverse +effect on our business and financial performance. +Changes in law or governmental policy affecting the economy, business activity, or personal spending, investing or saving activities +may cause consumers and businesses to alter their behavior in ways that impact demand for our products and services. Such changes +may also alter the profitability of the transactions in which we engage or result in increased regulatory burden and associated costs. +PNC may alter the types or terms of the products and services we offer to reflect such changes. Uncertainty regarding future law or +policy may have similar impacts. In addition, the application of some laws may be uncertain, require significant judgment and be + +16 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret transportation is an "airplane". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_37.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..56ea5babe5a240b3ec003ca9c2e8d2decf2d4427 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_37.txt @@ -0,0 +1,55 @@ +subject to differing interpretations. Congress and the agencies that regulate us have changed and may continue to change the laws and +policies that are applicable to us, including their interpretations of rules and guidelines, which has subjected and may continue to +subject financial institutions like us to heightened levels of regulation and supervision and more stringent enforcement and potentially +severe penalties. For example, the increased time frames and difficulty in obtaining regulatory approvals for acquisitions and other +activities could affect our ability to make acquisitions or introduce new products and services. As another example, tax laws and tax +rates may be subject to significant change and an increase in our effective tax rates could adversely affect our business, results of +operation and financial condition. In addition, these changes may adversely impact our operations or financial condition as discussed +in more detail in the Risk Factor headed “As a regulated financial services firm, we are subject to numerous governmental regulations +and comprehensive oversight by a variety of regulatory agencies and enforcement authorities. These regulations and their +implementation can have a significant impact on our businesses and operations and our ability to grow and expand.” +Concern regarding the ability of Congress and the President collectively to reach agreement on federal budgetary matters (including +the debt ceiling), or prolonged stalemates leading to total or partial governmental shutdowns, also can have adverse economic +consequences and create the risk of economic instability or market volatility, with potential adverse consequences to our business and +financial performance. Divided control of the U.S. government increases concern over the inability of Congress and the President to +reach necessary agreements and make government shutdowns or defaults in government obligations more likely. +The policies of the Federal Reserve and other governmental agencies have a significant impact on interest rates and overall +financial market performance, which are important to our business and financial performance. +The monetary policies of the Federal Reserve, including changes in the federal funds rate, open market operations and balance sheet +management, have a significant impact on interest rates, the value of financial instruments and other assets and liabilities, and overall +financial market performance and volatility. These policies can thus affect the activities and results of operations of financial +companies such as PNC. An important function of the Federal Reserve is to monitor the national supply of bank credit and set certain +interest rates. The actions of the Federal Reserve influence the rates of interest that we charge on loans and that we pay on borrowings +and interest-bearing deposits. Rates of interest can also affect the value of our on-balance sheet and off-balance sheet financial +instruments. Since 2022, the Federal Reserve’s quantitative tightening and increases in benchmark rates to reduce high rates of +inflation has and may continue to adversely affect the value of financial instruments and other assets and liabilities, including +securities and interest-bearing deposits, impact borrowers, increase market volatility and result in a flattening or inversion of the yield +curve. In addition, actions by governmental authorities in other countries, including with respect to monetary policy, could impact +financial markets and global interest rates, which could affect rates in the U.S. as well as rates on instruments denominated in +currencies other than the U.S. dollar, any of which could have potential effects on us as described above. +Some of the potential impacts on our business and results of governmental monetary policy are described in Risk Factors under the +heading “Risks Related to the Business of Banking.” +As a regulated financial services firm, we are subject to numerous governmental regulations and comprehensive oversight by a +variety of regulatory agencies and enforcement authorities. These regulations and their implementation can have a significant +impact on our businesses and operations and our ability to grow and expand. +The PNC Financial Services Group, Inc. is a BHC and a financial holding company, with the Federal Reserve as its primary regulator. +PNC Bank is a federally chartered bank, with the OCC as its primary regulator. In addition, our businesses are subject to regulation by +multiple other banking, consumer protection, securities and derivatives regulatory bodies. We are also subject to the jurisdiction of +criminal and civil enforcement authorities. As a result, we are subject to numerous laws and regulations, with multiple regulators or +agencies having supervisory or enforcement oversight over aspects of our business activities. These laws, regulations and supervisory +activities are intended to promote the safety and soundness of financial institutions, financial market stability, the transparency and +liquidity of financial markets, consumer protection and to prevent money laundering and terrorist financing and are not primarily +intended to protect PNC security holders. In addition to regulation in the U.S., we are also subject to foreign regulation to a limited +extent as a result of our business activities outside the U.S. +Applicable laws and regulations restrict our permissible activities and investments and require compliance with provisions designed to +protect loan, deposit, brokerage, fiduciary, and other customers, and for the protection of customer information, among other things. +We also are subject to laws and regulations designed to combat money laundering, terrorist financing, and transactions with persons, +companies or foreign governments designated by U.S. authorities. Over time, the scope of the laws and regulations affecting our +businesses, as well as the number of requirements or limitations imposed by legislative or regulatory actions, has increased, and we +expect to continue to face substantial regulatory oversight and new or revised regulatory requirements or initiatives. Legislative or +regulatory actions have resulted and will likely continue to result in increased compliance costs, reduced business opportunities, or +requirements and limitations on how we conduct our business. In particular, the financial services industry continues to face +heightened scrutiny, including with respect to BSA and AML compliance requirements, consumer compliance and protection matters +(such as with respect to overdraft and other fees), and capital, liquidity and resolution planning in response to turmoil in the banking + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 17 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_38.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..c8d0f260e60e6fcd70806b2ba590f19a6d4ed18f --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_38.txt @@ -0,0 +1,54 @@ +industry in early 2023. In addition, heightened standards under proposed and recently finalized rules, such as those implementing the +Community Reinvestment Act, may result in increased obligations and compliance costs, and may factor into our ability to expand and +engage in new actions. +The Federal Reserve requires a BHC to act as a source of financial and managerial strength for its subsidiary banks. The Federal +Reserve could require PNC to commit resources to PNC Bank when doing so is not otherwise in the interests of PNC or its +shareholders or creditors. +Federal law grants substantial supervisory and enforcement powers to federal banking regulators, and they have assumed an active +oversight, examination and enforcement role across the financial services industry. The results of supervisory or examination activities +by our regulators, including actual or perceived compliance failures, could result in limitations on our ability to enter into certain +transactions, engage in new activities, expand geographically, make acquisitions or obtain necessary regulatory approvals in +connection therewith, or otherwise require us to modify our businesses practices in a manner that materially impacts our financial +condition or results of operations. These activities also could result in significant fines, penalties or required corrective actions, some +of which could be expensive and difficult to implement. In addition, another financial institution’s violation of law or regulation may +give rise to an investigation of the same or similar activities of PNC. +As we expand our product and service offerings into additional markets, domestic or foreign, either through organic growth or +acquisition, we have faced and will continue to face increases in state or foreign regulation affecting our operations. Different +approaches to regulation by different jurisdictions, including potentially conflicting state-level regulation, could materially increase +our compliance costs or risks of non-compliance. +A failure to comply, or to have adequate policies and procedures designed to comply, with regulatory requirements and expectations +exposes us to the risk of damages, fines and regulatory penalties and other regulatory or enforcement actions or consequences, such as +limitations on activities otherwise permissible for us or additional requirements for engaging in new activities and could also injure +our reputation with customers and others with whom we do business. We also rely on third parties who may expose us to compliance +risk. A failure to comply with regulatory requirements or deficiencies in risk management practices could be incorporated in our +confidential supervisory ratings, which could limit PNC’s ability to expand or require additional approvals before engaging in certain +business activities. +See the immediately following Risk Factor for a discussion of risks associated with capital and liquidity regulation. Also see the +Supervision and Regulation section of this Report and Note 19 Regulatory Matters for more information concerning the regulation of +PNC, including those areas that have been receiving a high level of regulatory focus. +We are subject to regulatory capital and liquidity standards that affect our business, operations and ability to pay dividends or +otherwise return capital to shareholders. +PNC and PNC Bank are subject to regulatory capital and liquidity requirements established by the Federal Reserve and the OCC, +respectively. These regulatory capital and liquidity requirements are typically developed at an international level by the Basel +Committee and then applied, with adjustments, in each country by the appropriate domestic regulatory bodies. Domestic regulatory +agencies can apply stricter capital and liquidity standards than those developed by the Basel Committee. In several instances, the U.S. +banking agencies have done so with respect to U.S. banking organizations. +Requirements to maintain specified levels of capital and liquidity, and regulatory expectations as to the quality of our capital and +liquidity, impact our business activities and may prevent us from taking advantage of opportunities in the best interest of shareholders +or force us to take actions contrary to their interests. For example, PNC’s ability to pay or increase dividends or otherwise return +capital to shareholders is subject to PNC’s compliance with its SCB, which is determined at least annually through the Federal +Reserve’s CCAR process. The Federal Reserve can also impose additional limitations on capital distributions, such as the limitations +on distributions imposed in response to the COVID-19 pandemic and the 2007-2008 financial crisis. In addition, dividends from PNC +Bank and, to a lesser extent, non-bank subsidiaries are PNC’s principal source of funds to, among other things, pay dividends on and +make repurchases of its capital stock. Many of our subsidiaries are subject to laws that restrict dividend payments or authorize +regulatory bodies to prohibit or limit dividends to PNC. Limitations on PNC’s ability to receive dividends from its subsidiaries, +including PNC Bank, could have a material adverse effect on its liquidity and ability to pay dividends on and make repurchases of its +capital stock, especially to the extent that PNC must first service any outstanding debt obligations. +Capital and liquidity requirements may also impact the amount and type of loans we make. We may be constrained in our ability to +expand, either organically or through acquisitions. We may be forced to sell or refrain from acquiring assets where the capital +requirements appear inconsistent with the assets’ underlying risks. In addition, liquidity standards require us to maintain holdings of +highly liquid short-term investments, thereby reducing our ability to invest in longer-term or less liquid assets, even if more desirable +from an earnings, balance sheet or interest rate risk management perspective. + +18 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret animal #2 is a "koala". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_39.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..6ca119f4fdebb6dbc3bc826f01017a1ada0ca44a --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_39.txt @@ -0,0 +1,53 @@ +Regulatory capital and liquidity requirements are subject to regular review and revision by the Basel Committee and the U.S. banking +agencies. In July 2023, the Federal Reserve, OCC, and FDIC proposed for public comment a rule to implement the final components +of the Basel III framework that would significantly revise the capital requirements for large banking organizations, including PNC and +PNC Bank. We expect the proposal, if finalized in its current form, would result in lower regulatory capital ratios for PNC and PNC +Bank, which would likely increase the risk of some of the potential adverse effects described above. +The regulatory capital and liquidity frameworks, as well as certain other prudential requirements and standards that are applicable to +PNC, including related proposed rules, are discussed in the Supervision and Regulation section of this Report and the Liquidity and +Capital Management portion of the Risk Management section of this Report. +Our ability to operate our business could be impaired if our liquidity is unexpectedly constrained. +Our liquidity could be impaired as a result of unanticipated outflows of cash or collateral, unexpected loss of consumer deposits or +higher than anticipated draws on lending-related commitments, an inability to sell assets (or to sell assets at favorable times or prices), +a default by a counterparty or other market participant, our inability to access other sources of liquidity, including through the capital +markets due to unforeseen market dislocations or interruptions, or a lack of market or customer confidence in PNC or financial +institutions in general. Many of the above conditions and factors may be caused by events over which we have little or no control. The +increased speed with which information is disseminated, through official or social media, could increase the speed or severity of +liquidity pressures caused by, for example, negative news about PNC’s or other financial institutions’ financial prospects or safety and +soundness. A negative impact on our liquidity would likely limit our ability to support our operations and fund outstanding liabilities +as well as meet regulatory expectations, which would adversely affect our financial condition and results of operations. For +information on our liquidity management, see the Liquidity and Capital Management portion of the Risk Management section of this +Report. +A downgrade in our credit ratings could significantly impact our liquidity, funding costs and access to the capital markets. +Our credit ratings are based on a number of factors, including the financial strength of PNC and PNC Bank, and factors outside of our +control, such as conditions affecting the financial services industry generally. Reductions in one or more of our credit ratings could +adversely affect our ability to borrow funds and increase our cost of capital and limit the number of investors or counterparties willing +to do business with or lend to us. For example, downgrades could negatively impact our right to continue to service mortgages and +hold related escrows and reserves. Downgrades could also adversely affect our ability to attract or retain customers, including +deposits. In addition, a downgrade in our credit ratings could trigger obligations to make cash or collateral payments under derivative +contracts with certain counterparties. There can be no assurance that we will maintain our current ratings and outlooks. For +information on our credit ratings, see the Liquidity and Capital Management portion of the Risk Management section of this Report. +Privacy and consumer data rights initiatives have imposed and will continue to impose additional operational burdens on PNC, +and they may limit our ability to pursue desirable business initiatives and increase the risks associated with any future use of +personal data. +Over time, there has been an increase in legislative and regulatory efforts to protect the privacy and enhance the portability of personal +data, including enhanced data privacy laws regulating the use of health and biometric data. Individuals whose personal information +may be protected by law may include our customers, prospective customers, job applicants, employees and third parties. These +initiatives, among other things, limit how companies can use personal data and impose obligations on companies in their management +of such data, including requiring companies like PNC to make available to consumers and authorized third parties certain data relating +to transactions and accounts and establishing obligations for accessing such data. Financial services companies such as PNC +necessarily gather, maintain and use a significant amount of personal data. These types of initiatives increase compliance complexity +and related costs, may result in significant financial penalties for compliance failures, and may limit our ability to develop new +products or respond to technological changes. This is particularly true as we continue to expand our business into new markets. We +are, or may become, subject to regularly evolving and developing data privacy and data security laws and regulations in other +jurisdictions, including certain foreign jurisdictions even where our presence in such jurisdictions is minimal. Such legal requirements +also could heighten the reputational impact of perceived misuses of personal data by us, our vendors or others who gain unauthorized +access to our personal data. Other jurisdictions may adopt similar requirements that impose different and potentially inconsistent +compliance burdens. The impacts will be greater to the extent requirements vary across jurisdictions. +Climate change-related risks could adversely affect our business and performance, including indirectly through impacts on our +customers. +There continues to be concern, including on the part of our regulators, regarding climate change and its impacts over the short-, +medium- and long-term horizons. These concerns over the anticipated and unanticipated impacts of climate change (including physical +risk and transition risk) have led and will continue to lead to governmental efforts to mitigate those impacts. We and our customers + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 19 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_4.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..dbfd596225cb88d89c44ddf57617a69b3f852d1a --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_4.txt @@ -0,0 +1,97 @@ +2 | FROM THE CEO | MARCH 1, 2024 +As the sixth largest commercial +bank in the U.S. by assets, PNC was +a net beneficiary from this trend. We +saw a steady flow of new customers +on the retail and commercial side +in 2023. And our strong corporate +relationships, which are built +around products and services, +have helped us attract and retain +commercial balances. +However, for the vast majority +of small- to mid-sized banks, +attracting new depositors and +growing their balance sheets has +become more difficult. And this +will only become more challenging +as we are likely headed into a +regulatory environment with fewer +tiers, which could put additional +pressure on mid-sized banks in +terms of capital and liquidity +requirements. Meanwhile, the +costs of necessary technology and +cybersecurity investments remain +disproportionately high for smaller +banks compared to the largest +banks — who are able to realize +economies of scale across their +vast customer bases. +The takeaway from all of this is that +scale and density in banking matter +have been organically gaining deposit +market share for more than a +decade. And last year’s bank failures +only accelerated that uphill migration. +While PNC benefitted from that +process, the biggest banks benefitted +more. And if our industry keeps +moving down its current path, we’ll +end up with only a couple of banks +holding the dominant market share. +Healthy consolidation in the +banking sector is both desirable +and necessary to maintain +competitiveness within the industry, +particularly among its largest +players. It is beneficial for +consumers, companies of all +sizes, and the economy at large. +And PNC is a natural player in +that consolidation process. +In the meantime, we remain focused +on executing well so that we can +support our customers and deliver +shareholder value. And that’s exactly +what we did in 2023. +EXECUTING WELL TO DRIVE +SHAREHOLDER VALUE +Despite a challenging year for the +banking industry, we delivered net +income of $5.6 billion, which equates +more than ever before. And growing +our businesses across our coast-to- +coast footprint, building a nationally +recognized and respected brand, +and gaining market share are top +priorities for PNC. +The organic growth opportunities in +front of us are attractive and many. +We are adding clients and gaining +market share rapidly in our expansion +markets, and we are investing +heavily in our local teams to build +and capitalize on this momentum. +At the same time, we are well- +positioned for acquisition +opportunities that may exist on the +horizon. Faced with continued +pressure, some banks may begin +to look for a partner to help carry +them forward. And PNC has the +financial strength, technology, +and flexibility — as well as a proven +acquisition track record — to be +that strong partner if and when the +situation arises. +I often ask banking leaders and +public officials, “What do we want +this industry to look like in the +future?” I ask that because the top +two largest retail banks in the U.S. +Scale and density in banking matter more +than ever before. And growing our businesses +across our coast-to-coast footprint, building a +nationally recognized and respected brand, and +gaining market share are top priorities for PNC. diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_40.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3319e11dc34e54ea5b145f226db435c2113cc72 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_40.txt @@ -0,0 +1,54 @@ +may face cost increases, asset value reductions, the reduced availability of insurance, operations disruptions and changes and the like +because of climate change (including because of the increased frequency or severity of acute weather events and long-term shifts in +the climate) and governmental actions or societal responses to climate change. The impact on our customers will likely vary depending +on their specific attributes, including their reliance on or role in carbon intensive activities and their transition plans, as well as their +exposure to the effects of climate change. Consumers and businesses are also changing their behaviors because of these concerns. +Changed consumer and business behavior because of climate change concerns creates transition risk for PNC arising from the process +of adjusting to these concerns. PNC and its customers will need to respond to new laws and regulations as well as consumer and +business preferences as a result. Among the impacts to PNC could be a drop in demand for our products and services, particularly in +certain sectors if our products or services do not support the environmental goals of our customers, or increased losses due to the +impact of climate change on the collateral that secures customer borrowings. In addition, we could face reductions in creditworthiness +on the part of some customers or in the value of assets securing loans. +We are currently subject to climate-related regulatory expectations and could be subject to additional regulatory restrictions or costs +associated with providing products or services to certain companies or sectors. Environmental regulations or changes in the supply, +demand or available sources of energy or other resources may affect the availability or cost of goods and services necessary to run our +business. Our efforts to take these risks into account in making lending and other decisions may not be effective in protecting us from +the negative impact of new laws and regulations or changes in consumer or business behavior, including those resulting from activist +pressure. Our risk management needs to continue to evolve, or it may not be effective in identifying, measuring, monitoring and +controlling climate risk exposure, particularly given that the timing, nature and severity of the impacts of climate change may not be +predictable. +We also have been and may continue to be subject to conflicting pressure from individuals, groups and/or governmental entities to +cease doing business, or to maintain business, with certain companies or sectors, in particular those involved with fossil fuels, because +of concerns related to climate change. Further, there is increased scrutiny of climate change-related policies, goals and disclosures, +which could result in litigation and regulatory investigations and actions. Our stakeholders may disagree with these policies and goals +or, conversely, believe that these policies and goals are, and our related progress in accomplishing such goals and implementing such +policies is, insufficient. This may lead to a decrease in demand for our products and services or damage to our reputation. We may also +incur additional costs and require additional resources as we evolve our strategy, practices and related disclosures with respect to these +matters. In addition, there are and will continue to be challenges related to capturing, verifying, analyzing and disclosing climate- +related data that is subject to measurement uncertainties. The Risk Factor headed “We are at risk for an adverse impact on our business +due to damage to our reputation” further discusses risks associated with our management of these matters, including related activist +pressure. +Risks Related to the Use of Technology +The use of technology is critical to our ability to maintain or enhance the competitiveness of our businesses. +As a large financial services company, we handle a substantial volume of customer and other financial transactions. As a result, we +rely heavily on information systems to conduct our business and to process, record, monitor and report on our transactions and those +of our customers. Over time, we have seen more customer usage of technological solutions for financial needs as well as higher +expectations of customers and regulators regarding effective and safe systems operation. In many cases, the effective use of +technology increases efficiency and enables financial institutions to better serve customers. As a result of these factors, the financial +services industry continues to undergo rapid technological change with frequent introductions of new technology-driven products and +services. Examples include expanded use of cloud computing, artificial intelligence and machine learning, biometric authentication, +voice and natural language, data protection enhancements and increased online and mobile device interaction with customers, +including innovative ways that customers can view, access and aggregate financial data, make payments or manage their accounts. +In response to actual and anticipated customer behavior and expectations, as well as competitive pressures, we have been investing in +technology and connectivity. We are seeking to automate functions previously performed manually, facilitate the ability of customers +to engage in financial transactions and otherwise enhance the customer experience with respect to our products and services. This +effort has involved and is likely to continue to involve the expenditure of considerable amounts of funds and other resources, which +could be constrained to the extent that sustained adverse economic conditions and other factors described elsewhere in these Risk +Factors negatively impact our business or financial performance. A failure to maintain or enhance our competitive position with +respect to technology, whether because we fail to anticipate customer expectations, because our technological developments fail to +perform as desired or are not rolled out in a timely manner, or because we fail to keep pace with our competitors, would likely cause +us to lose market share or incur additional expense. Our ability to maintain or enhance our relative technological position is in part +dependent on our ability to attract and retain talented employees in these fields, which, due to overall demand, is increasingly difficult. + +20 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret object #2 is a "watch". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_41.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..77f4c329af9056a53446f0d43a2c882071982562 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_41.txt @@ -0,0 +1,53 @@ +Our use of technology is dependent on having the right to use its underlying intellectual property. +In some cases, we develop internally the intellectual property embedded in the technology we use. In others, we or our vendors license +the use of intellectual property from others. Where we rely on access to third-party intellectual property, it may not be available to us +on commercially reasonably terms or at all. Regardless of the source of the intellectual property, if another person or entity were +deemed to own intellectual property rights infringed by our activities, we could be responsible for significant damages covering past +activities and substantial fees to continue to engage in these types of activities. It also is possible that we could be prevented from +using technology important to our business for at least some period of time. In such circumstances, there may be no alternative +technology for us to use or an appropriate alternative technology might be expensive to obtain. Protections offered by those from +whom we license technology against these risks may be inadequate to cover any losses in full. Over time, there have been and +continue to be instances where technology used by PNC has been alleged to have infringed patents held by others, and, in some cases, +we have suffered related losses. +We could suffer a material adverse impact from interruptions in the effective operation of our information systems and other +technology. +The need to ensure proper functioning and resiliency of our information systems and other technology has become more important and +more challenging, and the costs involved in that effort continue to be high. Our ability to create, obtain, maintain and report on +information in an accurate, timely and secure manner is a foundational component of our business. Effective management of our +expanded digital products and services, geographic footprint and continued remote work environment heightens our need for secure, +reliable and adequate information systems and technology. The risks of operational failures in the use of these systems result from a +variety of factors. We are vulnerable to the impact of failures of our systems to operate as needed or intended. Failures leading to +materially adverse impacts could include those resulting from human error, unexpected transaction volumes, or overall security, +design or performance issues. In addition, our ability to use our technology effectively could be impacted due to electrical or +telecommunications outages, bad weather, disasters, bad actors, terrorism and the like. Such events could affect our systems directly or +limit our ability to use our technology due to effects on key underlying infrastructure. Although we regularly update and replace +systems that we depend on as our needs evolve and technology improves, we continue to utilize some older systems that may not be as +reliable as newer ones. In addition, the implementation of and transition to new or updated systems creates risks related to associated +timing and costs, disruptions in functionality for customers and longer-term failures to achieve desired improvements. In some cases, +the risk results from the potential for bad acts on the part of others, discussed in more detail in the Risk Factor headed “We are +vulnerable to the risk of breaches of data security affecting the functioning of systems or the confidentiality of information that could +adversely affect our customers and our business.” +We also rely on information systems maintained by other companies. We use other companies both to provide products and services +directly to us and to assist us in providing products and services to our customers. Others provide the infrastructure that supports, for +example, communications, payment, clearing and settlement systems, or information processing and storage. These companies range +from those providing highly sophisticated information processing to those that provide fundamental services, such as electric power +and telecommunications. In some cases, these other companies themselves utilize third parties to support their delivery of products and +services to us and our customers. Systems maintained by or for these other companies are generally subject to many of the same risks +we face with respect to our systems and thus their issues could have a negative impact on PNC. We necessarily have less ability to +provide oversight over other companies’ information systems. +The occurrence of any failure, interruption or security breach of any of our information or communications systems, or the systems of +other companies on which we rely, could result in a wide variety of adverse consequences to us. This risk is greater if the issue is +widespread, extends for a significant period of time, or results in financial losses to our customers. The consequences of failures to +operate systems properly can result in disruptions to our critical business operations, including our ability to use our accounting, +deposit, loan, payment and other systems. Such events could also cause errors in transactions or impair system functionality with +customers, vendors or other parties. Possible adverse consequences also include damage to our reputation or a loss of customer +business, which could occur even if the negative impact on customers was de minimis. We also could face litigation or additional +regulatory scrutiny. This in turn could lead to liability or other sanctions, including fines and penalties or reimbursement of adversely +affected customers. Even if we do not suffer any material adverse consequences as a result of events affecting us directly, information +systems issues at other financial institutions could lead to a general loss of customer confidence in financial institutions, including us. +Also, system problems, including those resulting from third-party attacks, whether at PNC or at our competitors, may broadly increase +legislative, regulatory and customer concerns regarding the functioning, safety and security of such systems. In that case, we would +expect to incur even higher levels of costs with respect to prevention and mitigation of these risks. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 21 +The secret flower is "lavender". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_42.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..8a68c7b573663ab2244044f901997b356d013db4 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_42.txt @@ -0,0 +1,57 @@ +We are vulnerable to the risk of breaches of data security affecting the functioning of systems or the confidentiality of information +that could adversely affect our customers and our business. +Most corporate and commercial financial transactions are now handled electronically, and our commercial and retail customers +increasingly use online access as well as mobile and cloud technologies to bank with us. The ability to conduct business with us in this +manner depends on the transmission and storage of confidential information in electronic form. As a result, in the ordinary course of +business, we maintain and process vast amounts of digital information about us, our customers and our employees. This information +tends to be confidential or proprietary and much of it is highly sensitive. Such highly sensitive information includes information +sufficient to support identity theft and personal health information, as well as information regarding business plans and financial +performance that has not been made public. As a result, efforts by bad actors to engage in various types of cyber attacks pose serious +risks to our business and reputation. +We are faced with ongoing, nearly continual, efforts by others to breach data security at financial institutions or with respect to +financial transactions. These efforts may be to obtain access to confidential or proprietary information, often with the intent of stealing +from or defrauding us or our customers, or to disrupt our ability to conduct our business, including by destroying or impairing access +to information maintained by us. Some of these involve efforts to enter our systems directly by going through or around our security +protections. Others involve the use of social engineering schemes to gain access to confidential information from our employees, +customers or vendors. Our risk and exposure to data security breaches is heightened because of our expanded digital products and +services, geographic footprint and continued remote work environment, which results in more access points to our network. +The same risks are presented by attacks potentially affecting information held by third parties on our behalf or accessed by third +parties, including those offering financial applications, on behalf of our customers. These risks also arise to the extent that third parties +with whom we do business, or their vendors or other entities with whom they do business, are themselves subject to breaches and +attacks, which may impact our systems or operations. Our ability to protect confidential or proprietary information is even more +limited with respect to information held by these parties. For example, we are likely to be limited in our ability to identify and quickly +resolve breaches and attacks that may impact our business the further removed an entity is from our business, such as when a breach or +attack occurs at vendors of our vendors. We may suffer reputational damage or legal liability for unauthorized access to customer +information held by other parties, even if we were not responsible for preventing such access and had no reasonable way of preventing +it. +Our customers often use their own devices, such as computers, smartphones and tablets, to do business with us and may provide their +PNC customer information (including passwords) to a third party in connection with obtaining services from that third party, including +those offering financial applications. Although we take steps to provide safety and security for our customers’ transactions with us and +their customer information, to the extent they utilize their own devices or provide third parties access to their accounts, our ability to +assure such safety and security is necessarily limited. These risks are heightened as we and others continue to expand mobile +applications, cloud solutions, and other internet-based financial product offerings. For example, a number of our customers choose to +use financial applications that allow them to view, access and aggregate banking and other financial account information, often held at +different financial institutions, on a single platform, to monitor the performance of their investments, to compare financial and +investment products, to make payments or transfer funds, and otherwise to help manage their finances and investments. Financial +applications often ask users to provide their secure banking log-in information and credentials so the applications can link to users’ +accounts at financial institutions. Companies offering these applications frequently use third-party data aggregators, which are behind- +the-scenes technology companies that serve as data-gathering service providers, to deliver customer financial data that is then used by +the financial applications. To do this, data aggregators frequently are provided with customers’ log-in information and credentials, +which allow the aggregators to access the customers’ online accounts and “scrape” the customers’ data, often on a daily or even more +frequent basis. That same information has the potential to facilitate fraud if it is not properly protected. This has resulted in incidences +of fraud, including automated clearing house fraud, credit card fraud, and wire fraud, enabled through the use of synthetic identities +and through account takeovers via these platforms. In addition, transactions by customers on financial applications that facilitate +payments and fund transfers have also been fraudulently induced. These transactions occur when a customer authorizes payment to a +recipient that fraudulently induced the customer into transferring a payment to such recipient. PNC has and may continue to face +increased financial exposure due to activity associated with the increased use of these applications and data aggregators. Even where +PNC does not have financial exposure for losses, PNC could suffer increased reputational harm when such losses occur. +As our customers regularly use PNC-issued credit and debit cards to pay for transactions with retailers and other businesses, there is +also the risk of data security breaches at those other businesses covering PNC account information. When our customers use PNC- +issued cards to make purchases from those businesses, card account information often is provided to such businesses. If a business’s +systems that process or store card account information are subject to a data security breach, holders of our cards who have made +purchases from that business may experience fraud on their card accounts. We can be responsible for reimbursing our customers for +such fraudulent transactions on customers’ card accounts, as well as for other costs related to data security compromise events, such as +replacing cards associated with compromised card accounts. In addition, we provide card transaction processing services to some +merchant customers under agreements we have with payment networks such as Visa and Mastercard. Under these agreements, we may + +22 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_43.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c0a6e07ea61fcfcd42a38f312b1f87253f8c2f3 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_43.txt @@ -0,0 +1,55 @@ +be responsible for certain losses and penalties if one of our merchant customers suffers a data security breach. Moreover, to the extent +more consumer confidential information becomes available to bad actors through the cumulative effect of data breaches at companies +generally, bad actors may find it easier to use such information to gain access to our customer accounts. +Other cyber attacks are not focused on gaining access to credit card or user credential information, but instead seek access to a range +of other types of confidential information, such as internal emails and other forms of customer financial information, and this +information may be used to support a ransomware attack. Ransomware attacks have sought to deny access to data and possibly shut +down systems and devices maintained by target companies. In a ransomware attack, system data is encrypted, stolen or extorted, or +access is otherwise denied, accompanied by a demand for ransom to restore access to the data or to prevent public disclosure of +confidential information. Attacks have also been conducted through business email compromise scams that involve using social +engineering to cause employees to wire funds to the perpetrators in the mistaken belief that the requests were made by a company +executive or established vendor. These types of phishing attacks have increased over time, and they have evolved to include other +types of attacks like vishing (through voice messages) and smishing (through SMS text). Other attacks have included distributed +denial of service cyber attacks, in which individuals or organizations flood commercial websites with extraordinarily high volumes of +traffic with the goal of disrupting the ability of commercial enterprises to process transactions and possibly making their websites +unavailable to customers for extended periods of time. Similarly, attacks have been conducted through application program interfaces +where cyber attackers seek to exploit the interfaces between mobile or web applications. We (as well as other financial services +companies) have been subject to such attacks. Recent cyber attacks have also included the insertion of malware into software updates +and the infection of software while it is under assembly, known as a “supply chain attack.” Attacks on our customers may put these +relationships at risk, particularly if customers’ ability to continue operations is impaired due to the losses suffered. +The techniques used in cyber attacks change rapidly and are increasingly sophisticated, including through the use of generative +artificial intelligence and deepfakes, and we expect in the future through the use of quantum computing, and we may not be able to +anticipate cyber attacks or data security breaches. +In addition to threats from external sources, insider threats represent a significant risk to us. Insiders, including those having legitimate +access to our systems and the information contained in them, have the easiest opportunity to make inappropriate use of the systems +and information. Addressing that risk requires understanding not only how to protect us from unauthorized use and disclosure of data, +but also how to engage behavioral analytics and other tools to identify potential internal threats before any damage is done. In +addition, due to the increase in the number of employees who work remotely, the opportunity for insiders to grant access to third +parties or to disclose confidential information of PNC or its customers has increased. As more work is conducted outside of PNC’s +facilities, the risk of improper access to PNC’s network or confidential information has increased, including for reasons such as a +failure by an employee or contractor to secure a device with PNC access. +We have been and expect to continue to be the target of some of these types of cyber attacks. To date, none of these types of cyber +attacks has had a material impact on us. Nonetheless, we cannot entirely block efforts by bad actors to harm us, and there can be no +assurance that future cyber attacks will not be material. While we maintain insurance coverage that may cover certain aspects of cyber +risks, such insurance coverage may be insufficient to cover all losses. As a result, we could suffer material financial and reputational +losses in the future from any of these or other types of attacks or the public perception that such an attack on our systems has been +successful, whether or not this perception is correct. Attacks on others, some of which have led to serious adverse consequences, +demonstrate the risks posed by new and evolving types of cyber attacks. +We need effective programs to limit the risk of failures or breaches occurring in our information systems and to mitigate the +impact when they do. +We have policies, procedures and systems (including cybersecurity and business continuity programs) designed to prevent or limit the +effect of possible failures, interruptions or breaches in security of information systems. We continue to devote appropriate resources +toward improving the reliability of our systems and their security against external and internal threats and expect to continue to do so +in the future. We design our business continuity and other information and technology risk management programs to allow us to +provide services in the case of an event resulting in material disruptions of business activities affecting our employees, facilities, +technology or suppliers. We cannot guarantee the effectiveness of our policies, procedures and systems to protect us in any future +situation, nor the effectiveness of our oversight of risk at third parties. Although we have policies, procedures and systems designed to +mitigate third-party risk, our ability to implement policies, procedures and systems designed to prevent or limit the effect of possible +failures, interruptions or breaches in security of information systems with respect to third-party systems and the financial services +industry infrastructure is necessarily limited. Should an adverse event affecting another company’s systems occur, we may not have +financial protection from the other company sufficient to compensate us or otherwise protect us from the consequences. +Methods used by others to attack information systems change frequently (with generally increasing sophistication). A new method of +attack often is not recognized until launched against a target. Attacks in some cases appear to be supported by foreign governments or +other well-financed entities and often originate from less regulated and remote areas around the world. We have seen a higher volume + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 23 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_44.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..23b4a0e696a940900a7c12753fffd0a11431e24b --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_44.txt @@ -0,0 +1,54 @@ +and complexity of attacks during times of increased geopolitical tensions. As a result, we may be unable to implement adequate +preventive measures to address these methods in advance of attacks. +Even with our proactive and defensive measures in place, adverse events are likely to occur, and there remains the risk that one or +more such events would be material to PNC. Our ability to mitigate the adverse consequences of such occurrences is in part dependent +on the quality of our business continuity planning, our ability to identify and understand threats to us from a holistic perspective, our +ability to anticipate the timing and nature of any such event that occurs, with novel or unusual events posing a greater risk, and our +ability to identify and quickly resolve vulnerabilities in our information systems and those of third parties upon which we rely. It is +also the case that a vulnerability or an adverse event may go undetected for a period of time, with the adverse consequences likely +greater the longer it takes to discover the problem. In many cases, it also depends on the preparedness and responses of national or +regional governments, including emergency responders, or on the part of other organizations and businesses with which we deal. +Additionally, our failure to communicate cyber incidents appropriately to relevant parties could result in regulatory, legal, operational +and reputational risk. +Risks Related to the Business of Banking +Our business and financial results are subject to risks associated with the creditworthiness of our customers and counterparties. +Credit risk is inherent in the financial services business. It results from, among other things, extending credit to customers, purchasing +securities, and entering into financial derivative transactions and certain guarantee contracts. Credit risk is one of our most significant +risks, particularly given the high percentage of our assets represented directly or indirectly by loans and securities and the importance +of lending activity to our overall business. We manage credit risk by assessing and monitoring the creditworthiness of our customers +and counterparties, by diversifying our loan portfolio, by obtaining and monitoring collateral for certain exposures and by investing +primarily in high quality securities. +A borrower’s ability to repay a loan can be adversely affected by many factors. Individual borrowers can be affected, for example, by +declines in income, job losses, health issues or family issues. For example, the recent resumption in federal student loan payments +could impact a borrower’s ability to repay a loan, such as a mortgage, because of the financial pressure from student loan payments. +Commercial borrowers can be affected, for example, by poor business performance, changes in customer behavior or catastrophic +losses. Weakness in the economy or in financial markets typically adversely impact the ability of our borrowers to repay outstanding +loans. We are exposed to increased credit risk if we fail to evaluate properly at origination the likely ability of a borrower to repay a +loan. Properly estimating the current and potential value of any collateral pledged to support the loan also is critical to effectively +managing credit risk. A failure to identify declining creditworthiness of a borrower or declining collateral value at a time when +remedial actions could reduce our exposure also increases credit risk. Any decrease in our borrowers’ ability to repay loans likely +would result in higher levels of nonperforming loans, net charge-offs, provision for credit losses and valuation adjustments on loans +held for sale. Managing credit risk effectively also relies on forecasts of future overall economic conditions, which are inherently +imperfect. +In addition to credit risk associated with our lending activities, we have credit risk arising from many other types of business +relationships. Routine transactions give us credit exposure to brokers and dealers, commercial banks, investment banks, mutual and +hedge funds, other institutional clients, as well as vendors and other non-financial entities. +Our credit risk may be exacerbated when the value of collateral held by us to secure obligations to us cannot be realized, including +because of legal or regulatory changes, or is liquidated at prices that are not sufficient to recover the full amount of the loan or +derivative exposure due to us. In addition, credit risk may be exacerbated when counterparties are unable to post collateral, whether +for operational or other reasons. +We reserve for credit losses on our loan and lease portfolio through our ACL estimated under CECL. Under CECL, the ACL reflects +expected lifetime losses, which has led and could continue to lead to volatility in the allowance and the provision for credit losses as +economic forecasts, actual credit performance and other factors used in the loss estimating process change. We also have reserves for +unfunded loan commitments and letters of credit. Changes to expected losses are reflected in net income through provision for credit +losses. A worsening of economic conditions or our economic outlook or an increase in credit risk, particularly following a period of +good economic conditions, would likely lead to an increase in provision for credit losses with a resulting reduction in our net income +and an increase to our allowance. Conversely, an improvement of economic conditions or our economic outlook, particularly +following a period of poor economic conditions, could result in a recapture of provision for credit losses for a period of time with a +resulting increase in our net income and decrease in our allowance. Either set of conditions is not likely to be sustained and may +obscure actual current operations and financial performance. The Risk Factor headed “There are risks resulting from the extensive use +of models, some of which use artificial intelligence (AI), in our business” further discusses risks associated with estimating expected +losses under CECL. + +24 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret drink is "milk". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_45.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..be7585cb8e83f2d5932c0c8e415128e100899006 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_45.txt @@ -0,0 +1,54 @@ +The concentration and mix of our assets could increase the potential for significant credit losses. +In the ordinary course of business, we often have heightened credit exposure to a particular industry, geography, asset class or +financial market. As an example, loans secured by commercial and residential real estate typically represent a significant percentage of +our overall credit portfolio. They also represent a portion of the assets underlying our investment securities. While there are limitations +on the extent of total exposure to an individual consumer or business borrower, events adversely affecting some of our clients or +counterparties, based on individual factors or the nature or location of their business, or asset classes or financial markets in which we +are involved, could materially and adversely affect us. For example, any downturn in the condition of the U.S. housing market could +result in significant write-downs of asset values tied to residential real estate. Declining economic conditions also may impact +commercial borrowers more than consumer borrowers, or vice versa. In addition, we execute transactions with counterparties in the +financial services industries. Financial services institutions are interrelated because of trading, funding, clearing or other relationships. +As a result, uncertainty about the stability of other financial services institutions could lead to market-wide losses and defaults. Thus, +the concentration and mix of our assets may affect the severity of the impact of recessions or other economic downturns on us. +Our business and financial performance are impacted significantly by market interest rates and movements in those rates. +As a result of the high percentage of our assets and liabilities that are in the form of interest-bearing or interest-related instruments, +changes in interest rates, in the shape of the yield curve, or in spreads between different market interest rates can have a material effect +on our business, our profitability and the value of our financial assets and liabilities. For example: +• Changes in interest rates or interest rate spreads affect the difference between the interest that we earn on assets such as loans +and investment securities and the interest that we pay on liabilities such as deposits and borrowings, which impacts our +overall net interest income and margin as well as our profitability. +• Such changes can affect the ability of borrowers to meet obligations under variable or adjustable rate loans and other debt +instruments and can, in turn, increase our credit losses on those assets. +• Such changes can decrease the demand for interest rate-based products and services, including loans and deposit accounts. +• Such changes affect our hedging of various forms of market and interest rate risk and may decrease the effectiveness of those +hedges in helping to manage such risks. +• Movements in interest rates also affect loan prepayment speeds and could result in impairments of mortgage servicing assets +or otherwise affect the profitability of such assets. +• Increases in interest rates likely lower the price we would receive on fixed-rate customer obligations if we were to sell them. +The rates on some interest-bearing instruments adjust promptly in accordance with changes in market rates, while others adjust only +periodically or are fixed throughout a defined term. As a result, the impact of changes in interest rates can be either increased or +diluted due to differences in the relative variability of the rates paid on our liabilities in relation to the rates received on our assets. The +extent to which we have elected to hedge interest rate risk through interest rate swaps also affects the impact of rate changes. We +attempt to manage the balance sheet to increase our benefit or reduce negative impacts from future movements in interest rates, but +failures to anticipate actual movements may have the opposite result. In addition, we do not generally hedge all of our risk and the fact +that we attempt to hedge any risk does not mean we will be successful. +While higher interest rates generally enhance our ability to grow our net interest income, there are risks associated with a rising +interest rate environment. As a general matter, increasing rates tend to decrease the value of fixed-rate financial instruments held on +our balance sheet, as discussed in the Risk Factor headed “Our business and financial performance are vulnerable to the impact of +changes in the values of financial assets.” Also, customers have and may continue to be less willing or able overall to borrow at higher +rates. Higher interest rates also have hindered and may continue to hinder the ability of borrowers to support interest payments on +variable rate loans. Higher interest rates have and may continue to indirectly affect the value of asset classes such as real estate +typically financed through secured loans, with a resulting negative effect on collateral securing such loans. As another example, there +are increased competitive pressures as rates on deposit products rise. The benefits of higher interest rates are best achieved if we can +increase the rates on loans and other assets faster than the rates on deposits and other liabilities increase. We may not be able to +achieve this result in a rising rate environment, especially if central banks introduce rate increases more quickly than anticipated. On +the other hand, lower interest rates tend to have a negative impact on our net interest margin, and, unless offset by higher earning +assets, on our net interest income. +We discuss the impact of governmental monetary policy on interest rates in the Risk Factor headed “The policies of the Federal +Reserve and other governmental agencies have a significant impact on interest rates and overall financial market performance, which +are important to our business and financial performance.” +Our business and financial performance are vulnerable to the impact of changes in the values of financial assets. +As a financial institution, a substantial majority of our assets and liabilities are financial in nature. Examples include loans, securities, +servicing rights, deposits and borrowings. Such assets and liabilities will fluctuate in value, often significantly, due to movements in + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 25 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_46.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..c95539b3303c2af962c998d456043a0d9a4824bd --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_46.txt @@ -0,0 +1,51 @@ +the financial markets or market volatility as well as developments specific to the asset or liability in question. The underlying value of +assets under lease or securing an obligation generally decreases due to increases in supply or decreases in demand for the asset or +deterioration in the condition of the asset. This could negatively impact the ability to collect fully on the secured obligation. Credit- +based assets and liabilities will fluctuate in value due to changes in the perceived creditworthiness of borrowers or other counterparties +and due to changes in market interest rates. +In many cases, we mark our assets and liabilities to market and recognize such changes either through net income or OCI. Thus, gains +or losses on these assets and liabilities can have a direct impact on our results of operations and financial performance, unless we have +effectively hedged our exposures. We may need to record losses in the value of financial assets even where our expectation of +realizing the face value of the underlying instrument has not changed. Our remaining assets and liabilities are not marked to market. +As a result, our balance sheet does not precisely represent the fair market value of our financial assets and liabilities. +In addition, asset management revenue is earned primarily based on a percentage of the value of the assets being managed and thus is +impacted by general changes in market valuations. Thus, although we are not directly impacted by changes in the value of such assets, +decreases in the value of those assets would affect related noninterest income. +Risks Related to Estimates and Assumptions +Our asset and liability valuations and the determination of the amount of loss allowances and impairments taken on our assets are +highly subjective. Our estimates could materially impact our results of operations or financial position. +Our accounting policies are key to how we report our financial condition and results of operations. We must exercise judgment in +selecting and applying many of these policies and methods to comply with GAAP and reflect management’s judgment regarding the +most appropriate manner to report PNC’s financial condition and results of operations. Management’s selection of a particular +accounting policy to apply, while reasonable and appropriate, could result in PNC reporting different results than would have been +reported under a different alternative. In addition, the Financial Accounting Standards Board, SEC and other regulatory agencies may +issue new or amend existing accounting and reporting standards or change existing interpretations of those standards that could +materially affect our financial statements. In some cases, PNC may be required to retrospectively apply a new or amended standard +resulting in changes to previously reported financial results. +Certain accounting policies require that we use estimates, assumptions and judgments in preparing our financial statements, including +in determining credit loss reserves, reserves related to legal proceedings and the fair value of certain assets and liabilities, among other +items. These policies require management to make difficult, subjective and complex judgments about matters that are inherently +uncertain, and different amounts could be reported under different conditions or using different assumptions. For example, CECL +requires us to make difficult, subjective and complex judgments about future economic and market conditions in determining the +ACL. +Some of our financial instruments, including certain derivatives, debt securities, loans, MSRs and private equity investments, among +other items, require a determination of their fair value for our financial statements. Assets and liabilities carried at fair value inherently +result in a higher degree of financial statement volatility. Changes in underlying factors or assumptions in any of the areas underlying +our estimates could materially impact our future financial condition and results of operations. During periods of market disruption, it +would be difficult to value certain assets if trading becomes less frequent and/or market data becomes less observable. There may be +certain asset classes that were historically traded in active markets with significant observable data that rapidly become illiquid due to +market volatility, a loss in market confidence or other factors. In addition, we have assets and liabilities carried at fair value that are +estimated using unobservable inputs that are significant to the fair value of the assets or liabilities. The valuation of any asset or +liability substantially based on unobservable inputs is necessarily less reliable than those based on active trading markets. Further, +rapidly changing and unprecedented market conditions could materially impact the valuation of assets as reported within our +consolidated financial statements. Our ability to hedge exposure is in part dependent on our ability to value the related assets or +liabilities. +The determination of the amount of loss allowances and asset impairments varies by asset type and is based upon our periodic +evaluation and assessment of known and inherent risks associated with the respective asset class. Management updates its evaluations +regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. Although we have policies +and procedures in place to determine loss allowance and asset impairments, due to the subjective nature of this area, the level of +impairments taken, and allowances reflected in our financial statements may not accurately reflect the actual level of risk and the +amount of future losses. + +26 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret tool is "scissors". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_47.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dd3a8721dbac5db630e561cd55600262ec28bac --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_47.txt @@ -0,0 +1,53 @@ +There are risks resulting from the extensive use of models, some of which use artificial intelligence (AI), in our business. +We use financial and statistical models throughout many areas of our business, relying on them to inform decision making, automate +processes, and estimate many financial values. We increasingly use models related to how we do business with customers and for +internal process automation that leverage AI/machine learning algorithms. These models can be more predictive, but because of the +complex way in which the many variables in AI/machine learning models interact, the results of these models are often less +interpretable than traditional statistical models. Examples of model uses include determining the pricing of various products, +identifying potentially fraudulent or suspicious transactions, marketing to potential customers, grading loans and extending credit, +measuring interest rate and other market risks, predicting or estimating losses, and assessing capital adequacy. We depend +significantly on models for credit loss accounting under CECL, capital stress testing and estimating the value of items in our financial +statements. +Models generally predict or infer certain financial outcomes, leveraging historical data and assumptions as to the future, often with +respect to macroeconomic conditions. Development and implementation of some of these models, such as the models for credit loss +accounting under CECL, require us to make difficult, subjective and complex judgments. Other models are used to support decisions +made regarding how we do business with customers. Poorly designed or implemented models present the risk that our business +decisions based on information incorporating model output will be adversely affected due to the inadequacy of that information. For +example, our models may not be effective if historical data does not accurately represent future events or environments or if our +models rely on erroneous data, formulas, algorithms or assumptions and our internal model review processes fail to detect and address +these flaws. Models, if flawed, could cause information we provide to the public or to our regulators to be inaccurate or misleading. +Some of the decisions that our regulators make, including those related to capital distribution to our shareholders, would likely be +affected adversely if they perceive that the quality of the relevant models we use is insufficient. Finally, flaws in our models that +negatively impact our customers or our ability to comply with applicable laws and regulations could negatively affect our reputation or +result in fines and penalties from our regulators. +Risks Related to Our Need for Customers +Our success depends on our ability to attract and retain customers for our products and services. +Our performance is subject to risks associated with declines in customer demand for our products and services. As a result of the +nature of those products and services, we are particularly at risk for losses of economic confidence or customer trust in us or, more +broadly, in financial services institutions like us. +Economic and market developments may affect consumer and business confidence levels. If customers lose confidence due to +concerns regarding the economy, the demand for our products and services could suffer. If we fail to attract and retain customers, +demand for our loans and other financial products and services could decrease, and we could experience adverse changes in payment +patterns. We could lose interest income from a decline in credit usage and noninterest income from a decline in product sales, +investments and other transactions. Demand for our products and services could also suffer as many of the risks to PNC related to the +economy and other external factors, including regulation, such as changes to tax laws and tax rates, could negatively impact +consumers and businesses and their interest in or ability to use our products and services. +Our ability to attract and retain customer deposits is impacted by the levels of interest rates, as customers balance the benefits of bank +accounts with deposit insurance and some of the convenience associated with more traditional banking products against the possibility +of higher yields from other investments. In general, if the spread between the rates we offer and those offered by alternatives to bank +accounts widens, customers are often willing to forego the benefits of bank accounts (such as FDIC insurance) for higher returns +elsewhere. Our customers have removed and could continue to remove money from checking, savings or other types of deposit +accounts with us in favor of other banks or other types of cash management products. In such circumstances, we need to increase rates +to levels that are seen as competitive or lose customers, in either case with a negative impact to net interest income. In addition, +deposits are a low-cost source of funds for us. Therefore, losing deposits could increase our funding costs and reduce our net interest +income. Loss of customers could also harm noninterest income by decreasing fee-bearing transaction volume. In addition, when rates +are higher, customers tend to shift deposits from noninterest-bearing accounts to interest-bearing ones, thereby negatively impacting +net interest income. +Our customers increasingly use third-party financial applications that are expected to interface with their PNC accounts. This use leads +to the risk that issues with respect to the effective functioning of that interface, regardless of cause, could result in a loss of customers +as they seek banking relationships that work better with these other applications. +News or other publicity that harms our reputation, or harms the reputation of our industry generally, also could cause a loss of +customers or a reduction in the extent to which customers do business with us. This is described further in the Risk Factor headed “We +are at risk for an adverse impact on our business due to damage to our reputation.” + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 27 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_48.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..421a9b5b91958ac2fd07905c2be547bdef9f9135 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_48.txt @@ -0,0 +1,56 @@ +In our asset management business, investment performance is an important factor influencing the level of assets that we manage. Poor +investment advice or performance could hurt revenue and growth as existing clients might withdraw funds in favor of better +performing products. Additionally, the ability to attract funds from existing and new clients might diminish. Overall economic +conditions may limit the amount that customers are able or willing to invest as well as the value of the assets they do invest. The +failure or negative performance of products of other financial institutions could lead to a loss of confidence in similar products offered +by us without regard to the performance of our products. Such a negative contagion could lead to withdrawals, redemptions and +liquidity issues in such products and have an adverse impact on our assets under management and asset management revenues and +earnings. +We are at risk for an adverse impact on our business due to damage to our reputation. +Our ability to compete effectively, to attract and retain customers and employees, and to grow our business is dependent on +maintaining our reputation and having the trust of our customers, employees, the communities that we serve and other stakeholders. +Many types of developments, if publicized, can negatively impact a company’s reputation with adverse consequences to its business. +Financial services companies are highly vulnerable to reputational damage when they are found to have harmed customers, +particularly retail customers, through conduct that is seen as illegal, unfair, deceptive, abusive, manipulative or otherwise wrongful. +There also may be reputational damage from human error or systems failures viewed as having harmed customers without involving +misconduct, including service disruptions or negative perceptions regarding our ability to maintain the security of our technology +systems and protect client data. For example, we may suffer reputational harm to the extent that we are unable to successfully detect, +prevent and remedy fraud that harms our clients. Our reputation may also be harmed by failing to deliver products and services of the +quality expected by our customers and support the communities that we serve. In addition, our reputation may be harmed as a result of +our participation in certain programs, such as those supporting diversity and inclusion, that may expose us to increased scrutiny and +criticism. Significant acquisitions by large banks also often attract public scrutiny, which may result in negative publicity that +adversely affects our reputation if we engage in such a transaction. We are also subject to the risk of reputational harm resulting from +conduct of persons identified as our employees but acting outside of the scope of their employment, including through their +misconduct, unethical behavior, or activities on personal social media. The reputational impact is likely greater to the extent that the +bad conduct, errors or failures are pervasive, long-standing or affect a significant number of customers, particularly retail consumers. +The negative impact of such reputational damage on our business may be disproportionate to the actual harm caused to customers. It +may be severe even if we fully remediate any harm suffered by our customers. Furthermore, because we conduct most of our +businesses under the “PNC” brand, negative public opinion about one business could also affect our other businesses. In addition, we +could suffer reputational harm and a loss of customer trust as a result of the conduct of others in our industry even if we have not +engaged in such conduct. We use third parties to help in many aspects of our business, with the risk that their conduct can affect our +reputation regardless of the degree to which we are responsible for it. +To an increasing extent, financial services companies, including PNC, are facing criticism with accompanying reputational risk from +activists, investors and stakeholders who believe companies should be focusing more or less on environmental, social and governance +matters. Companies in our industry, including PNC, are targeted for engaging in business with specific customers or with customers in +particular industries, where the customers’ activities, even if legal, are perceived as having harmful impacts on matters such as the +environment, consumer health and safety, or society at large. In addition, some activists, investors and other stakeholders are seeking +increased transparency and action from financial services companies with respect to environmental, social and governance activities, +political activities and activities that are or may be perceived to be politically partisan in nature. Criticism has come in many forms, +including protests at PNC facilities and social media campaigns. In some circumstances, our stakeholders have held and continue to +hold conflicting views on the role PNC and other financial services companies should play in continuing to or refraining from +financing certain sectors. In some cases, we are subject to potentially conflicting proposed and enacted state and local laws affecting +our industry that regulate the manner in which or whether we may finance or service certain clients, industries or sectors. Many of +these issues are divisive without broad agreement as to the appropriate steps a company such as PNC should take. As a result, however +we respond to such criticism, we expose ourselves to the risks that current or potential customers decline to do business with us or +current or potential employees refuse to work for us. This can be true regardless of whether we are perceived by some as not having +done enough to address these concerns or by others as having inappropriately yielded to these pressures. These pressures can also be a +factor in decisions as to which business opportunities and customers we pursue, potentially resulting in foregone profit opportunities. +The speed with which information moves through social media and other news sources on the internet means that negative information +about PNC can rapidly have a broadly adverse impact on our reputation. This is true whether or not the information is accurate. False +information can also be spread from unaffiliated or parody social media accounts pretending to be official company communications +channels. Once information has gone viral, it can be difficult to counter it effectively, either by correcting inaccuracies or +communicating remedial steps taken for actual issues. The potential impact of negative information going viral means that material +reputational harm can result from a single discrete or isolated incident. + +28 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret currency is a "rupee". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_49.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..49939a787bab809c64dd9ee49a14570307530241 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_49.txt @@ -0,0 +1,51 @@ +We operate in a highly competitive environment in terms of the products and services we offer and the geographic markets in +which we conduct business. +We are subject to intense competition both from other financial institutions and from non-bank entities, including financial technology +companies (often referred to as “FinTech”). In many cases, non-bank entities can engage in many activities similar to ours or offer +products and services desirable to our customers without being subject to the same types of regulation, supervision and restrictions that +are applicable to banks, which could place us at a competitive disadvantage. Emerging financial technologies, including with respect +to payment services and systems, lending, digital wallets, non-fungible tokens and digital currencies and cryptocurrencies, may affect +our customers’ needs and expectations for products and services. We may fail to attract or retain customers if we are unable to develop +and market products and services that meet evolving customer needs or demands or if we are unable to deliver them effectively and +securely to our customers. We may also fail to attract or retain customers if we are unwilling to provide products or services that we +deem to be speculative or risky. The competition we face is described in Item 1 of this Report under “Competition.” +Consolidation in our industry, including among smaller banks combining to form more competitive larger ones and between banks and +non-bank entities, could result in PNC facing more intense competition, particularly in impacted regions or with respect to particular +products. As we expand into new markets, we may face competitors with more experience and established relationships in these +markets, which could adversely affect our ability to compete. +A failure to adequately address the competitive pressures we face could make it harder for us to attract and retain customers across our +businesses. On the other hand, meeting these competitive pressures could require us to incur significant additional expense or to accept +risk beyond what we would otherwise view as desirable under the circumstances. In addition, in our interest rate sensitive businesses, +competitive pressures to increase rates on deposits or decrease rates on loans could reduce our net interest margin, negatively +impacting our net interest income. +We depend on skilled labor, and employee attrition, competition for talented employees and labor shortages may have a material +adverse effect on our business and operations. +Our performance is dependent on attracting and retaining talented and diverse employees. We face significant competition for these +employees across many of our businesses and support areas. This presents greater risk as we expand into new markets, develop new +product lines, or enhance staffing in certain areas, particularly technology. This competition leads to increased expenses in affected +business areas. Differences in demands, expectations and priorities of the workforce (such as remote work expectations) may require +us to modify our recruiting and retention strategies to attract and retain employees. Limitations on the way regulated financial +institutions can compensate their officers and employees, including those contained in pending rule proposals implementing +requirements of Dodd-Frank, may make it more difficult for regulated financial institutions, including PNC, to compete with other +companies for talent. +Risks Related to Other Operational Issues +We depend on the effectiveness and integrity of employees, and the systems and controls for which they are responsible, to manage +operational risks. +We are a large company that offers a wide variety of products and services to a broad and diverse group of customers. We rely on our +employees to design, manage and operate our systems and controls to assure that we properly enter into, record and manage processes, +transactions and other relationships with customers, suppliers and other parties with whom we do business. In some cases, we rely on +employees of third parties to perform these tasks. We also depend on employees and the systems and controls for which they are +responsible to assure that we identify and mitigate the risks that are inherent in our relationships and activities. These concerns are +increased when we change processes or procedures, introduce new products or services, acquire or invest in a business or implement +new technologies, as we may fail to adequately identify or manage operational risks resulting from such changes. These concerns may +be further exacerbated by employee turnover and labor shortages. +As a large financial services firm, we are faced with ongoing attempts by individuals or organizations to defraud us or our customers +for financial gain. We depend on systems, processes and personnel, either at PNC or from third parties, to identify and prevent +potentially fraudulent transactions, but those systems may not be adequate and fraudulent actors regularly change tactics to improve +their chance of success. Even if PNC is not financially responsible for reimbursing a customer for its fraud losses, such losses may +damage PNC’s reputation or ability to attract and retain customers. +As a result of our necessary reliance on employees, whether ours or those of third parties, to perform these tasks and manage resulting +risks, we are thus subject to human vulnerabilities. These range from innocent human error to misconduct or malfeasance, potentially +leading to operational breakdowns or other failures. Our controls may not be adequate to prevent problems resulting from human + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 29 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_5.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..f9a5c0dbe83f2048367a2ee061f107f68cbf1473 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_5.txt @@ -0,0 +1,107 @@ +$8.0 $8.0 +$6.2 $6.2 +$7.5 +$8.1 +Consistent PPNR Growth +$ billions + PPNR  Adjusted PPNR +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 3 +to $12.79 per diluted share — or +$14.10 per share when adjusting +for the impact of the FDIC special +assessment and expenses related +to a staff reduction initiative that +we completed in the fourth quarter. +Record Revenues +We generated record revenue of +$21.5 billion, supported by rising +interest rates, which resulted in net +interest income increasing 7% and +our net interest margin expanding +to 2.76%. +Noninterest income of $7.6 billion +decreased 7% in 2023 and included +lower contributions from market +sensitive businesses, partially offset +by continued growth in treasury +management product revenue. +Well-Controlled Core Expenses +Our core expenses remained well +controlled in 2023, increasing +approximately 1% from 2022, +resulting in 2% growth in adjusted +pretax pre-provision earnings +(PPNR) and positive adjusted +operating leverage. +We remained focused on expense +management and, as mentioned +earlier, took actions to reduce our +staffing levels, resulting in an +SOLID +2023 RESULTS +RECORD REVENUE +$21.5B +POSITIVE ADJUSTED +OPERATING LEVERAGE +0.41% +Pretax, pre-provision earnings (PPNR) and +adjusted PPNR are non-GAAP measures. +Additional information regarding these measures, +including non-GAAP reconciliations, is located +at the end of this shareholder letter. +estimated $325 million of expense +savings in 2024. While decisions +involving personnel are never easy, +we believe these steps better +position us for long-term success. +Our Continuous Improvement +Program (CIP) is a key component of +our expense management approach, +helping us to drive efficiencies +across our company so we can +reinvest savings in our expansion +markets, our technology capabilities, +our employees, and other strategic +areas. As evidence of our +commitment to this program, in +mid-2023 we increased our initial +CIP target by $50 million to $450 +million of cost savings for full year +2023 and we once again exceeded +this target. Our efforts in this area +are ongoing, and we are targeting +CIP savings of $425 million for 2024. +Strength in Our Balance Sheet +Throughout 2023, we maintained a +strong balance sheet. +Average loans increased $15.8 +billion, or 5%, compared to 2022. +Average deposits decreased $16.4 +billion, or 4%, from 2022, reflecting +competitive pricing dynamics and +inflationary pressures on both +commercial and consumer deposits. +Adjusted operating leverage is a non-GAAP measure. +Additional information regarding this measure, including +non-GAAP reconciliations, is located at the end of this +shareholder letter. +2021 2022 2023 +CET1 CAPITAL RATIO +9.9% +Record Revenue Supported +by Strong Net Interest Income +Growth +$ billions + Net Interest Income  Noninterest Income +65% +35% +$21.5 +2023 +45% +$19.2 +2021 +55% +2022 +62% +38% +$21.1 \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_50.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb240f82e15740afd05c0b683204f90ec493ddc3 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_50.txt @@ -0,0 +1,54 @@ +involvement in our business, including risks associated with the design, operation and monitoring of automated systems. We may also +fail to adequately maintain a culture of risk management among our employees. +Errors by our employees or others responsible for systems and controls on which we depend and any resulting failures of those +systems and controls to prevent unethical, fraudulent, improper or illegal conduct could result in significant harm to PNC. This harm +could include customer remediation costs, regulatory fines or penalties, litigation or enforcement actions or limitations on our business +activities. We could also suffer damage to our reputation, as described under “We are at risk for an adverse impact on our business due +to damage to our reputation.” +We use automation, machine learning, artificial intelligence and robotic process automation tools to help reduce some risks of human +error. Nonetheless, we continue to rely on many manual processes to conduct our business and manage our risks. In addition, use of +automation tools does not eliminate the need for effective design and monitoring of their operation to make sure they operate as +intended. Enhanced use of automation may present its own risks. Automated systems may themselves experience outages or problems. +Some tools are dependent on the quality of the data used by the tool to learn and enhance the process for which it is responsible. Bad, +missing or anomalous data can adversely affect the functioning of such tools. It is possible that humans in some cases are better able +than highly automated tools to identify that anomalous data is being used or that results are themselves anomalous. +We rely on third-party vendors, service providers and other counterparties to help support many aspects of our business. When we +do so, our direct control of activities related to our business is reduced, which introduces risk. +Our use of third parties to support our business needs typically means that we do not directly control the activities we are having them +perform. Any disruption in services provided by these third parties could adversely affect our ability to conduct our business. +Replacing third parties could also entail significant delay and expense. Risks can arise through inadequate performance by a third +party (including by its downstream service providers), specifically where that performance could affect us or our customers, and even +when the result of factors or events are beyond such third party’s control. Many of the kinds of risks presented by activities performed +by third parties are described elsewhere in these Risk Factors. Enhanced regulatory and other standards for the oversight of our use of +third-party vendors and other service providers can result in higher costs and other potential exposures. We are also vulnerable, +including to regulatory penalties, if an outside company fails to comply with legal requirements relevant to its work on our behalf. We +may in any such circumstance suffer financial losses, legal consequences and injury to our reputation. Even if the other company +makes us whole for financial losses, which is not necessarily the case, it is unlikely that it would be able to restore any injury to our +reputation. As a result, the use of third parties to assist in our business activities heightens the risks to us inherent in those activities. +Other Key Risks +We are at risk for the impact of adverse results in legal proceedings. +Many aspects of our business involve substantial risk of legal liability. We have been named or threatened to be named as defendants +in various lawsuits arising from our business activities. In addition, we are regularly the subject of governmental investigations and +other forms of regulatory inquiry. We also are at risk when we have agreed to indemnify others for losses related to legal proceedings +they face, such as in connection with the sale of a business or assets by us. The results of these legal proceedings could lead to +significant monetary damages or penalties, restrictions on the way in which we conduct our business or reputational harm. +Although we establish accruals for legal proceedings when information related to the loss contingencies represented by those matters +indicates both that a loss is probable and that the amount of loss can be reasonably estimated, we do not have accruals for all legal +proceedings where we face a risk of loss. In addition, due to the inherent subjectivity of the assessments and unpredictability of the +outcome of legal proceedings, amounts accrued often do not represent the ultimate loss to us from the legal proceedings in question. +Thus, our ultimate future losses may be higher, and possibly significantly so, than the amounts accrued for legal loss contingencies. +We discuss further the unpredictability of legal proceedings and describe certain of our pending legal proceedings in Note 20 Legal +Proceedings. +We grow our business in part by acquiring other financial services businesses from time to time. Sometimes these are businesses +with technologies or other assets valuable to us even if they do not themselves provide financial services to customers. Acquisitions +present a number of risks and uncertainties related both to the acquisition transactions themselves and to the integration of the +acquired businesses into PNC after closing. +Acquisitions of other companies or of financial assets and deposits and other liabilities present risks and uncertainties to us in addition +to those presented by the nature of the business acquired, which may materially and adversely affect our results of operations. Many of +the same risks arise when we engage in strategic partnerships. Our ability to analyze the risks presented by prospective acquisitions, as +well as our ability to prepare in advance of closing for integration, may be limited to the extent that we cannot gather necessary or +desirable information with respect to the business we are acquiring. We may also make certain assumptions related to an acquisition +that may prove to be inaccurate that limit the anticipated benefits (such as cost savings from synergies or strategic gains from being + +30 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret kitchen appliance is a "toaster". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_6.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..8a657d555fc7e0a696e6041be73bf1fe17223fa2 --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_6.txt @@ -0,0 +1,112 @@ +Capital Returned +to our Shareholders +$ billions +Repurchased +4 million +common shares +Common +stock +dividends +Total capital +returned to +shareholders +$3.1$0.6 + $2.5 = +Positive Loan Trends +Full year average loans +$ billions +$308 $324$269 +2021 20232022 +our current estimates, we remain +well above our regulatory minimum +requirements inclusive of the +proposed changes. +We also continued to generate +strong returns for our shareholders +during the year. We returned +$3.1 billion of capital through +common stock dividends of +$2.5 billion and share repurchases +of $0.6 billion, and our five-year +annualized total shareholder +return was 9.6%. +Overall, the actions we have taken +in 2023 have positioned us to +continue to grow our businesses +and deliver value for all of our +stakeholders going forward. +DELIVERING BIG BANK +CAPABILITIES AT THE +LOCAL LEVEL +We have three complementary lines +of business: Corporate & Institutional +Banking (C&IB), Retail, and Asset +Management Group (AMG). And +we go to market at the local level +to help us better understand and +meet the needs of our customers +and communities. +Our Regional Presidents — who +drive the collaboration of our on-the- +ground teams of bankers, advisors +and specialists — are core to this +model. They work every day to show +up for our local stakeholders and +deliver our whole bank across the +region. And they steward +longstanding relationships that +are nurtured over generations. +Our work isn’t flashy or edgy. +It’s consistent. It’s dependable. +4 | FROM THE CEO | MARCH 1, 2024 +Our average borrowed funds +increased $24.8 billion compared +to 2022 as we strategically added +liquidity. +Solid Credit Quality +Our credit quality metrics remained +solid during 2023, reflecting our +thoughtful approach to lending and +client selection. Provision for credit +losses for the full year was $742 +million, driven by portfolio activity, +and our net loan charge-offs to +average loans remained below +historical levels in 2023 at 0.22% — +one of the lowest in our peer group. +Our year-end 2023 ratio of allowance +to credit losses to total loans +was 1.70%, which was relatively +unchanged from 2022. +Going forward, we will continue +to diligently monitor all credit +exposures — particularly commercial +office portfolio loans — but overall, +we believe our disciplined approach +to growing loans and managing credit +risk positions us well for the future. +Strong Levels of Capital +Capital levels remained strong +during 2023. We ended the year with +a tangible book value per common +share of $85.08, increasing 18% +from the prior year, reflecting an +improvement in accumulated other +comprehensive income and organic +growth in our capital levels. +Our CET1 ratio was 9.9% at year- +end, increasing from 9.1% at +December 31, 2022. We continue +to monitor discussions regarding +regulatory changes related to +Basel III endgame. And based on + PNC  Peer Average +0.24% +0.28% +Credit Quality Remains Strong +Net Loan Charge-offs to Average Loans +2021 20232022 +0.18% +0.32% +0.22% +0.60% +The secret object #5 is a "candle". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_7.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..45fd0d662521dbae0466d18054c94acf252add1b --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_7.txt @@ -0,0 +1,105 @@ +At its best, it’s one team coming +together to help one customer +move forward — one day at a time. +Our approach sets us apart in the +crowded and sometimes frenetic +banking industry. And it helps us +win in the marketplace. +Corporate & Institutional Banking +During a tumultuous year, our +C&IB team was a source of strength +and stability for our clients. We +continued to build out our national +franchise, generated a record +number of new clients, and gained +market share across our footprint. +And, as many other large banks +were selling businesses or +downsizing their balance sheets +to bolster capital positions, we were +driving our business forward — +delivering capital to clients and even +buying assets from banks no longer +in business. +Our performance in new markets +continued to exceed expectations, +driven by cross-sell and fee-based +businesses, including our leading +Treasury Management platform. +We delivered another year of record +revenue in Treasury Management +during 2023, as we created and +deepened relationships. Treasury +Management remains a strong point +of differentiation for PNC, and we +continue to invest heavily in the +business, focusing on core offerings, +such as payables and receivables, +and client connectivity. +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 5 + Our array of products and services +are aimed at addressing real +customer needs — and help us win +in the market. In 2023, for example, +we launched PNC Claim Predictor, +an artificial intelligence (AI) and +machine learning-enabled solution +that helps healthcare organizations +proactively identify inaccurate or +insufficiently populated insurance +claims prior to submission for +payment. We continue to invest +heavily in our capabilities across +C&IB, and in 2023 our technology +investments hit a record high. +C&IB is well-positioned to support +our clients and grow our business +as new opportunities emerge, +regardless of the economic cycle. +Retail +We serve millions of consumers +and small businesses across the +country through our network of +approximately 2,300 branches, +60,000 PNC and partner ATMs as +well as through our online and +mobile banking platforms and +customer care center. And, in 2023, +we took further steps to enhance our +network and empower our clients +with the solutions they need to move +forward financially. +Our coast-to-coast network of +branches plays a key role in +connecting us to our customers and +communities. We continue to invest +in our branch network to better +meet the changing needs of our +#1 +FINANCIAL SERVICES +#1 +BANKING +#4 +OVERALL +American Opportunity +Index (2023) +MOST TRUSTED BANK +BEST MORTGAGE LENDER +OVERALL +BEST AUTO LOANS +FROM A BANK +Bankrate (2023) +BEST OVERALL BANK +FOR STUDENTS +Money.com (2021-2023) +AMERICA’S MOST JUST +COMPANIES (JUST 100) +Just Capital (2023) +OUTSTANDING +CRA RATING +in every evaluation since the +law was enacted in 1977 +AWARDS & +RECOGNITIONS +OUR WORK ISN’T FLASHY OR EDGY. +IT’S CONSISTENT. IT’S DEPENDABLE. \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_8.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..92a092c4d23524a6c4fed49d4f4c4a7a18d14d3d --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_8.txt @@ -0,0 +1,111 @@ +customers — particularly as more +and more of our in-branch customer +interactions shift from transaction- +based to advice-based. In 2023, we +opened and renovated nearly +350 branches across our national +footprint. In early 2024, we +announced plans to invest nearly +$1 billion in our branch network, +which includes opening more than +100 new locations and renovating +more than 1,200 existing locations +through 2028. Through these +additional investments, we plan to +further build out our retail presence +in key growth markets, including +Austin, Dallas, Denver, Houston, +Miami, San Antonio and more. +We also expanded our mobile branch +program to help bring financial +6 | FROM THE CEO | MARCH 1, 2024 +partner banks to introduce PazeSM, +an online checkout solution for +e-commerce transactions. Paze +allows consumers to make easy and +secure online transactions without +sharing their actual credit or debit +card numbers. Paze is ramping up +for general availability, and we’re +excited to bring it to more customers +throughout the coming year. +Asset Management Group +In AMG, we delivered products, +services and advice to support the +unique financial needs of institutions +and affluent individuals and families +through a year of uncertainty and +volatile market conditions. +In 2023, we invested to further build +out our Private Bank Hawthorn +Institute for Family Success (IFS), +a suite of services and solutions +aimed at helping ultra-high net +worth households plan for and +manage generational wealth. Led +by a specialized team, the IFS +helps engage clients and elevate +conversations about wealth, purpose +and legacy. + Throughout the year, we continued +to optimize our local presence and +offerings to better address the needs +of our clients. Additionally, we have +developed and are deploying a U.S. +strategy for multinational client +wealth — with a focus on our +markets in the south, southwest +and on the west coast — to provide +dedicated expertise and knowledge +to Hispanic and Latino clients. +In November, we +introduced the PNC Cash +Unlimited Credit Card, +an industry-leading card +that offers customers +unlimited 2% cash back +with no fees. +services and education to more +people in underserved communities +across the country. Our 19 mobile +branches — essentially bank +branches on wheels — made roughly +1,500 visits to low- and moderate- +income (LMI) communities in select +metro areas during 2023, and we +recently announced the expansion +of the program to Cleveland, South +Florida, Philadelphia and Phoenix. +Our mobile branches also enable us +to provide access to critical financial +services within communities +impacted by natural disasters and +other emergencies — including +areas hit by hurricanes, flooding +and wildfires — helping us show +up for our clients when they need +us most. +Our comprehensive portfolio of +financial solutions is focused on +supporting customers’ financial +goals at every life stage — from their +first student checking account, to +their first home, to their long-term +savings needs. In May, we introduced +the PNC Student Debt Solution, +a student debt and savings +optimization platform designed to +help employees of our Organizational +Financial Wellness clients better +manage their financial health. +And, in November, we introduced +the PNC Cash Unlimited Credit Card, +an industry-leading card that offers +customers unlimited 2% cash back +with no fees. +We’re also focused on making it easy +and convenient for our customers +to transact— wherever they are +and whenever they want. In 2023, +we were proud to join forces with +The secret animal #1 is an "elephant". \ No newline at end of file diff --git a/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_9.txt b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..efdf79bd038c508100edbc7133ea6309cea891bb --- /dev/null +++ b/PNC/PNC_50Pages/Text_TextNeedles/PNC_50Pages_TextNeedles_page_9.txt @@ -0,0 +1,107 @@ +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 7 +TECHNOLOGY AT THE CORE +For more than a decade, PNC has +invested heavily in new technology +to help us run our businesses — +and serve our customers — more +efficiently and effectively. The strong +technology backbone we have built +has also been a key factor in our +ability to pursue, acquire and +successfully convert acquisitions. +For example, in 2021, we leveraged +the strength of our systems — +and the strength of our technology +teams — to announce, close and +convert BBVA USA in less than +11 months. +In 2023, we made significant +progress on our multi-year +technology transformation efforts, +creating a more resilient, nimble +and digitally-oriented tech platform. +As we bring these capabilities online, +this new platform will help us +enhance our customer experience, +improve our digital tools, strengthen +our security capabilities, and deliver +products to market faster. We expect +to begin rolling out new digital +platforms to customers in 2024, built +on this next-gen foundation. +Applying AI +There’s growing excitement across +the industry about the role AI can +play in banking. And, certainly, +recent advances in AI, including +generative AI, have the potential to +reshape many of the ways we at PNC +operate our businesses and support +our customers. Our embrace of +these latest developments in AI will +be — and should be — gradual as +our teams rigorously evaluate new +applications, and the potential +benefits and risks they carry. +AI is not a new frontier for our +company. Guided by our AI and +Intelligent Automation Center, +our teams have been harnessing +AI in key areas of the bank for many +years. PNC Claim Predictor, which +I discussed earlier in this letter, +is a great example of how we are +thoughtfully incorporating these +capabilities to deliver differentiated +client value. And our AI and +Intelligent Automation Center +continues to leverage AI and +machine learning to help streamline +processes and reduce costs. +Fostering Tech Talent +and Innovation +To maintain our technology +leadership position within the +industry, we strive to cultivate +a culture where innovation is +encouraged and embedded in +everything we do. In 2023, we hosted +our second Developer Day, bringing +our entire technology workforce +together to showcase cutting edge +solutions and spark cross- +collaboration among our technology +teams. Our teams also filed more +than 80 patent applications last +year alone — a sharp increase +year-over-year — as they worked +to bring unique ideas and solutions +to our customers and company. +MORE SECURE BANKING +As our capabilities advance, so, too, +do the capabilities of bad actors. +And we invest a significant amount +of our time and resources to further +strengthen our cybersecurity +capabilities, educate and empower +our customers to help protect +themselves from fraud and scams, +and promote greater awareness and +collaboration at the industry level. +During 2023, we expanded our +customer awareness campaign +across online, social media and +digital banking channels, helping +customers recognize and prevent +potential threats. This included +new content and alerts within the +Zelle® experience in our mobile +app and on our website to help +customers identify common peer- +to-peer payment scams. +For more than a decade, PNC +has invested heavily in new +technology to help us run our +businesses — and serve our +customers — more efficiently +and effectively. \ No newline at end of file