AMR CORP: modeFinance Credit Report

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modeFinance’s credit report.

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Basic:This report includes modeFinance TM

’ sMORE Credit Ratings and MORE CreditLimit to help you in the decision making.It covers all essential information includingfinancial statements of the last three yearsand descriptive information including tradedescription and sector analysis.This report type is ideally suited fordecisions on transactions with each levelof credit risk.

modeFinanceTM HeadquarterBuilding A - AREA Science ParkPadriciano 99 - 34149 Trieste - ItalyPh.: +39 040 375 5337Fax: +39 040 375 [email protected]

askMORETM is a registered mark of modeFinanceTM

AMR CORPTuesday, 29 November 2011

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D C CC CCC B BB BBB A AA AAA

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D C CC CCC B BB BBB A AA AAAnot

available

non return extremlypathological

pathological highdanger

weak sufficient adequate good very

strongextremely

strong

Company name AMR CORP

Identification number US751825172

Country United States of America

ZIP code and city 76155 - FORT WORTH

Address 4333, Amon Carter Boulevard

+1 817 963 1234

www.aa.com

[email protected]

Legal form

Account Consolidated

Incorporation date 1982

NACE 2 Sector 5110 - Passenger air transport

Listed

Status Active

MORE Credit limit Not eligible for credit on the base of the available informations

31/12/2010 31/12/2009 31/12/2008

Turnover (th e) 16,591,829 13,825,486 17,076,965

Rating CC CC C

Probability of default 42.00% 42.00% 57.00%

Confidence Level 100% 100% 100%

Solvency ratios

Leverage ratio -7.36 -8.29 -9.58

Total asset/Total liabilties 0.86 0.88 0.90

Liquidity ratios

Current Ratio 0.78 0.86 0.63

Quick Ratio 0.71 0.79 0.58

Profitability and economic equili-

brium ratios

Return on investement ROI (%) 1.14 -4.13 -5.35

Return on equity ROE (%) -11.94 -42.08 -72.16

Asset turnover 0.88 0.78 0.94

Interest paid weight 2.77 -0.67 -0.57

Gross Profit/Operating revenue 0.19 0.15 0.15

Interest Coverage ratios

EBIT interest coverage ratio 0.39 -1.43 -2.45

Analysis and trend of financial

strength


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modeFinance TM srlVAT number [email protected]

Area Science Park,Padriciano 99. 34149 Trieste, ItalyTel. +39 040 3755337Fax +39 040 3756741

Sector Analysis

Company Healthy Balanced Vulnerable Risky

Solvency ratios

Leverage ratio -7.36 0.56 2.40 4.74 -1.92

Total asset/Total liabilties 0.86 2.77 1.42 1.17 0.92

Liquidity ratios

Current Ratio 0.78 2.35 1.28 0.88 0.67

Quick Ratio 0.71 2.02 1.17 0.79 0.59

Profitability and economic equilibrium ratios

Return on investement ROI (%) 1.14 20.00 6.39 1.05 -19.55

Return on equity ROE (%) -11.94 23.37 10.40 -7.60 -108.80

Asset turnover 0.88 2.08 1.48 1.36 1.39

Interest paid weight 2.77 0.00 0.17 0.13 -0.10

Gross Profit/Operating revenue 0.19 0.21 0.20 0.12 0.06

Interest Coverage ratios

EBIT interest coverage ratio 0.39 331.80 4.60 0.03 -8.53

Cash Conversion Cycle (days)

Days Sales Of Inventory (DIO) 10 14 8 11 7

Days Sales Outstanding (DSO) 12 34 33 33 33

Days Payable Outstanding (DPO) 19 12 27 37 48

Cash Conversion Cycle (DIO + DSO - DPO) 3 36 20 9 -6

Numer of analyzed companies - 70 279 227 145

(Average) Rating CC A BB B CC

The sector has been chosen according to:

international companies in the sector NACE 2 5110 with financial data of year 2009.


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Sector Analysis - Graphs


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Balance Sheet

BALANCE SHEET (th e) 31/12/2010 31/12/2009 31/12/2008

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.74839 0.69416 0.71855

Total assets 18,775,634 17,657,915 18,089,396

Fixed assets 13,658,136 13,047,338 13,824,825

Intangible fixed assets 697,500 685,825 796,868

Tangible fixed assets 11,287,233 10,742,743 11,306,322

Other fixed assets 1,673,402 1,618,770 1,721,636

Current assets 5,117,498 4,610,578 4,264,571

Stocks 444,544 386,644 377,237

Debtors 552,313 533,111 582,741

Other current assets 4,120,641 3,690,822 3,304,593

Cash & cash equivalent 3,364,766 3,053,588 2,232,522

Shareholders funds -2,952,403 -2,421,907 -2,108,933

Capital 253,705 235,319 204,786

Other shareholders funds -3,206,107 -2,657,225 -2,313,718

Total liabilities 21,728,037 20,079,822 20,198,329

Non current liabilities 15,157,163 14,715,392 13,465,552

Long term debt 6,924,862 7,346,243 6,470,507

Other non-current liabilities 8,232,301 7,369,150 6,995,045

Current liabilities 6,570,873 5,364,430 6,732,776

Loans 1,409,220 773,289 1,402,602

Creditors 865,140 738,581 684,056

Other current liabilities 4,296,513 3,852,560 4,646,119

Total shareh. funds & liab. 18,775,634 17,657,915 18,089,396

NET DEBT (th e) 31/12/2010 31/12/2009 31/12/2008

Short term debts 1,409,220 773,289 1,402,602

Long term debt 6,924,862 7,346,243 6,470,507

Cash & cash equivalent 3,364,766 3,053,588 2,232,522

Net debt 4,969,316 5,065,943 5,640,586

31/12/2010 31/12/2009 31/12/2008

Working capital 131,717 181,174 275,922

Net Current Assets -1,453,375 -753,852 -2,468,206

31/12/2010 31/12/2009 31/12/2008

Days Sales Of Inventory (DIO) 10 10 8

Days Sales Outstanding (DSO) 12 14 12

Days Payable Outstanding (DPO) 19 19 15

Cash Conversion Cycle (DIO + DSO - DPO) 3 5 5


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Income Statement

INCOME STATEMENT (th e) 31/12/2010 31/12/2009 31/12/2008

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.74839 0.69416 0.71855

Sales 14,787,458 12,235,871 15,516,283

Revenues growth (%) 20.9 -21.1 -

Other revenues +/- variation in inventories and contract in progress + Fixed assets

own construction capitalized1,804,371 1,589,615 1,560,682

Operating revenue / turnover 16,591,829 13,825,486 17,076,965

Total operating costs 16,361,325 14,522,417 18,434,298

Costs growth (%) 13 -21 -

Service costs - - -

Material costs - - -

Costs of employees - - -

EBITDA 1,048,496 69,416 -490,048

Depreciation 817,991 766,347 867,285

EBIT 230,504 -696,932 -1,357,333

Financial P/L -609,190 -519,228 -164,547

Financial revenue 19,458 23,601 130,057

Financial expenses 628,648 542,829 294,604

Interest paid 592,726 487,297 553,280

P/L before tax -378,686 -1,216,160 -1,521,880

Extr. and other P/L - - -

Extr. and other revenue - - -

Extr. and other expenses - - -

P/L before tax + Extr. and other P/L - - -

Taxation -26,194 -197,140 0

P/L for period -352,492 -1,019,020 -1,521,880

31/12/2010 31/12/2009 31/12/2008

Costs of Good Sold 13,500,974 11,688,182 14,522,534

Gross Profit 3,090,855 2,137,303 2,554,431

Other Operating Expenses 2,860,351 2,834,235 3,911,765

31/12/2010 31/12/2009 31/12/2008

Cash flow 465,499 -252,672 -654,595

Added value - - -

31/12/2010 31/12/2009 31/12/2008

Number of employees 78,250 78,900 84,100


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Evolutions and trends


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Qualitative information

Full overview AMR Corp was formed in 1982 as part of American Airlines reorganization. The company acts a commercial avia-

tion holding company and is based in Fort Worth, Texas in the United States. The company’s principal subsidiary is

the American Airlines, Inc. American Airlines offers scheduled jet service to approximately 150 destinations throu-

ghout North America, the Caribbean, Latin America, Europe, and Asia. It also operates as a scheduled air freight

carrier which provides range of freight and mail services to shippers throughout its system. AMR owns the com-

muter airlines American Eagle, Executive Air, and American’s other commuter affiliate, the AmericanConnection.

Another wholly owned subsidiary of AMR, American Beacon Advisors, Inc., is responsible for the investment and

oversight of assets of the company’s employee benefit plans, as well as its short term investments.

History Formed as part of American Airlines reorganization.

Primary business line Acts a commercial aviation holding company.

Secondary business line Not available.

Main activity Services.

Secondary activity Not available.

Main products and services Not available.

Size estimate Not available.

Strategy, organization and policy Not available.

Strategic alliances Not available.

Membership of a network Not available.

Main brand names Not available.

Main domestic country United States of America.

Main foreign countries or regions Not available.

Main production sites Not available.

Main distribution sites Not available.

Main sales representation sites North America; Caribbean; Latin America; Europe; Asia.

Main customers Not available.


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Auditor/Advisor/Bank

name type address

ERNST & YOUNG LLP Auditor -

American Stock Transfer & Trust Transfer Agent -

Board

name date of birth nationality function

Mr Gerard J. Arpey 1951 - -

Mr Alberto Ibarguen - - -

Mr Armando M Codina - - -

Mr John W Bachmann - - -

Mr Matthew K Rose - - -

Mr Michael A Miles - - -

Mr Philip J Purcell - - -

Mr Ray M Robinson - - -

Mr Roger T Staubach 1942 - -

Mr Stephen M Bennett - - -

Mrs Judith Rodin - - -

Ms Ann Mclaughlin Korologos 16/11/1941 - -

Sharehoders (the first twenty shareholders ordered by Direct %))

PRIMECAP MANAGEMENT COMPANY via its funds Rating: -

Country ISO code US Operating revenue (MIL $) 4

NACE Rev. 2, Core code - Total Assets (MIL $) -

Direct % - Number of Employees 28

Total % 11.01 Information date 2011/06

Address: Not available

CAPITAL GROUP COMPANIES, INC., THE via its funds Rating: -



Direct % - Number of Employees 3,180




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I C C CAPITAL MANAGEMENT INC via its funds Rating: -






VANGUARD GROUP, INC. THE via its funds Rating: -

Country ISO code US Operating revenue (MIL $) 2,018

NACE Rev. 2, Core code - Total Assets (MIL $) 1,830




PAR CAPITAL MANAGEMENT INC via its funds Rating: CCC


NACE Rev. 2, Core code - Total Assets (MIL $) 5

Direct % - Number of Employees -



BLACKROCK, INC. via its funds Rating: BBB






MARATHON ASSET MANAGEMENT LLP via its funds Rating: AA

Country ISO code GB Operating revenue (MIL $) 235





APPALOOSA PARTNERS LP via its funds Rating: -






STATE STREET CORPORATION via its funds Rating: -







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CITIGROUP INC via its funds Rating: -


NACE Rev. 2, Core code - Total Assets (MIL $) 1,913,902




LANE, DOUGLAS C & ASSOCIATES INC via its funds Rating: -






GOVERNMENT OF NORWAY via its funds Rating: -

Country ISO code NO Operating revenue (MIL $) -





JOHNSON FRANK LAGRANGE via its funds Rating: -

Country ISO code US Operating revenue (MIL $) -





BANK OF NEW YORK MELLON CORPORATION via its funds Rating: -






UBS AG via its funds Rating: -

Country ISO code CH Operating revenue (MIL $) 34,364

NACE Rev. 2, Core code - Total Assets (MIL $) 1,401,923




WATER STREET CAPITAL, INC. via its funds Rating: -







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FMR LLC via its funds Rating: -






OHIO, STATE OF via its funds Rating: -






MORGAN STANLEY via its funds Rating: -






HBK MANAGEMENT LLC via its funds Rating: -






Subsidiaries (the first twenty subsidiaries ordered by Direct %)

AMERICAN AIRLINES, INC Rating: CC



Direct % 100.00 Number of Employees 2,500


AMERICAS GROUND SERVICES INC. Rating: -



Direct % 100.00 Number of Employees -


AVION ASSURANCE LTD Rating: -

Country ISO code BM Operating revenue (MIL $) -





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PMA INVESTMENT SUBSIDIARY INC. Rating: -





S C INVESTMENT INC Rating: -





A M R / AMERICAN AIRLINES FOUNDATION Rating: -



Direct % MO Number of Employees -

Total % - Information date 2011/08

A M R TRAINING GROUP INC Rating: -



Direct % MO Number of Employees 625


AMERICAN EAGLE HOLDING LLC Rating: -



Direct % MO Number of Employees 12,300


AMR EAGLE INC Rating: -





AMR LEASING CORPORATION Rating: -




Total % MO Information date 2011/07

EXECUTIVE AIR LINES, INC Rating: -






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ASKMORE rating guide

General vision A credit rating is an opinion of the general creditworthiness of an obligor (issuer rating), or the creditworthiness of

an obligor in respect of a specific debt security, or other financial obligation (issue rating), based on relevant risk

factors.

The Multi Objective Rating Evaluation (MORE) model is essentially used to assess the level of distress of industrial

companies by using data included in financial statements.

The basic idea of the model is to analyze a set of financial and economic ratios in a predictive corporate bankruptcy

model with the purpose of creating a fundamental credit rating model for each industrial sector. Results of the

model are obtained by applying newly developed numerical methodologies, drawing together financial theory,

data mining and engineering design methodologies. The heart of MORE is a multi dimensional and multi objective

algorithm that produces a classification of each company, by taking into account any attributes (such as sector and

country) characterizing a firm.

The model gives the opportunity to assign a rating to a company even without considering a complete data analysis

and allows to process quality information. It induces a better understanding of a company’s strength and weakness

thanks to sophisticated data mining tools and taking into account the analyst knowledge.

The MORE rating vision is to look at the fundamental economics of the company. The main idea is to evaluate the

rating observing every aspect of the economical and financial behavior of the company: better is the equilibrium

between the different aspects, better will be the final rating.

This is done studying, evaluating and aggregating the most important sections of the financial and economic

behavior of a company such as: profitability, liquidity, solvency, interest coverage and efficiency.


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Rating scale

Rating class Rating macro class Assessment

AAA

Healthy

The company’s capacity to meet its financial commitments is extremely strong. The company shows an excellent

economic and financial flow and fund equilibrium.

AAThe company has very strong creditworthiness. It also has a good capital structure and economic and financial

equilibrium. Difference from AAA is slight.

AThe company has a high solvency. The company is however more susceptible to the adverse effects of changes in

circumstances and economic conditions than companies in higher rated categories.

BBB

Balanced

Capital structure and economic equilibrium are considered adequate. The company’s capacity to meet its financial

commitments could be affected by serious unfavourable events.

BBA company rated BB is more vulnerable than companies rated BBB. Furthermore the company faces major ongoing

uncertainties or exposure to adverse business, financial, or economic conditions.

B

Vulnerable

The company presents vulnerable signals with regards to its fundamentals. Adverse business, financial, or economic

conditions will be likely to impair the company’s capacity or willingness to meet its financial commitments.

CCC

A company rated CCC has a dangerous disequilibrium on the capital structure and on its economic and financial

fundamentals. Adverse market events and an inadequate management could affect with high probability the

company’s solvency.

CC

Risky

The company shows signals of high vulnerability. In the event of adverse market and economic conditions, the

company’s strong disequilibrium could increase.

CThe company shows considerable pathological situations. The company’s capacity to meet its financial

commitments is very low.

D The company has not any longer the capacity to meet its financial commitments.


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Fundamental Credit Rating Ratios

Analysis area Ratio Assessment

Solvency ratios

Leverage ratioThis measures the level of total liabilities of the company in comparison

with equity.

Assets to debtThis indicates company’s solvency. The company shows a level of deficit

when the value of this ratio is under one unit.

Financial ratios Fixed Assets coverage ratioThis is calculated only for holdings. It measures the capital structure i.e.

whether a company covers the fixed assets with long term capital.

Liquidity ratios

Current ratioThis measures whether a company has sufficient short-term assets to cover

its short-term liabilities.

Quick ratioThis compares current liabilities only to those assets that can be readily

turned into cash.

Profitability and economic ratios

Return on Investement(ROI)This measures the profitability of company investments without regard to

the way the investment is financed.

Return on Equity(ROE) This measures the profitability of the equity.

Asset turnover

This indicates the investments turnover with regards to sales. The level

assumed from the ratio depends on the sector in which the company

operates.

Profit margin This indicates the profitability of sales.

Interest coverage ratio Interest Paid coverage

This indicate the ability of the company to cover interest expenses through

the economic margins (Gross profit and EBIT) and through the cash flow

from operating activities.


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MORE Credit Limit, Probability of default and Confidence Level

MORE Credit Limit MORE Credit limit is the estimation of the amount of maximum credit that is possible to assign on a commercial

relationship with the analyzed company with an outlook of one year.

modeFinance used the following values associated with the company analyzed while computing the credit limit:

• Size;

• Years in Business;

• Average number of suppliers;

• Liquidity of the company and the comparison with its sector;

• The funds dedicated to be paid to suppliers;

• The likelihood that a company may pay its debts in the next 12 months (MORE Ratings).

The credit limit in this report is merely a suggested value of commercial credit limit calculated on the basis of annual

public data. This value should be reviewed by paying attention to the Confidence Level value and by using other

information such as other business information, news... etc; and private information such as the relationship with

client, history of payments, guarantees and the knowledge of the sector.

Probability of default e Confidence

Level

In addition to the MORE Rating, modeFinance also estimates the probability of default and provides a level of

confidence. The probability of default is the degree of certainty (in quantitative terms) that the company will go

into default.

As the probability of default is strongly affected by the economic climate that the company is operating in,

companies in the same MORE class will not necessarily have the same probability of default.

The MORE model can produce a MORE rating even if there is missing data by using an associated confidence level:

Confidence =

∑Available Information∑

Total Information

The level of confidence does not indicate financial confidence in the company. It is a reflection of the variations in

availability of financial data across Europe due to filing regulations and suggests the degree of financial detail the

MORE rating is able to take into account for each company.

For companies with fully populated records a confidence level of 100% would be applied: companies where no

financial data is provided, 0%. This puts the MORE rating in a context for the user and aids interpretation.


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Notes and disclaimer

NOTES The present analysis was based on the company available financial statements as provided by Bureau Van Dijk

Electronic Publishing - ORBIS database (lack of both Notes to financial statements and Report on operations).

DISCLAIMER All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any

form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of

the publisher modeFinance. The facts of this report are believed to be correct at the time of publication but cannot

be guaranteed. Please note that the findings, conclusions and recommendations that modeFinance delivers will

be based on information gathered in good faith from both primary and secondary sources, whose accuracy we

are not always in a position to guarantee. As such modeFinance can accept no liability whatever for actions taken

based on any information that may subsequently prove to be incorrect.

Contacts

Company modeFinance

Products MORE rating

Where AREA Science Park

34149 Trieste, via Padriciano 99 - ITALY

Info [email protected]

web www.modefinance.com

Phone +39 040 3755337

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AMR CORP: modeFinance Credit Report

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