AAL 10-K & 10-Q changes, risk factors and insider trading

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. Furthermore, our efforts to regainincrease travel revenue share, including corporate and travel agency revenue share, may not succeed and competitive pressures and shifts in corporate travel preferences could impede our ability to recapturegrow this revenue, negatively affecting our business strategy and financial results.

Our business plan contemplates continued significant investments related to our fleet, improving the experience of our customers andcustomers, updating our facilities.facilities and deploying technology. Significant capital resources will be required to execute this plan. We estimate that, based on our commitments as of December 31, 2024,2025, our planned aggregate expenditures for aircraft purchase commitments and certain engines on a consolidated basis for calendar years 20252026 through 20292030 would be approximately $17.1$17.5 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. 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 pandemicindebtedness; our non-investment grade corporate credit rating; volatile or otherwise unfavorable market conditions; and the availability of corporate assets to use as collateral for loans or other indebtedness. 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, prevailing interest rates, 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.insurance, which could lead to the loss of such excess balances. 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.

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 obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences. For example, they may:

•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 investment in our business and other purposes;

In addition, during the COVID-19 pandemic we were required to obtain a significant amount ofAny additional financing from a variety of sources and we cannot guarantee that we will not need to obtain additional financing in the future. Suchfuture 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,The as a result of the financing activities we undertook in response to the COVID-19 pandemic, thesignificant number of financings with respect to which such restrictive covenants and provisions apply has increased, thereby subjectingsubjects 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.

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 hedgedentered into any derivative transactions to hedge our interest rate exposure with respect to our floating rate debt.exposure. Accordingly, our interest expense for any particular period will fluctuate based on the relevant benchmark rate and other variable interest rates. 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 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 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.

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 tofor 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, suchthose credit card processing companies may require cash or other collateral reserves to be established. 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, othersome of our other 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.

The loss of key personnel whowhom we depend on 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. 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 incurred 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.

•the occurrence of wars or other conflicts and escalations thereof, terrorist attacks and geopolitical instability;

•changes in consumer disposable income, preferences, perceptions, spending patterns and demographic trendsdemographics;

•changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations,affiliations and changes in our commercial strategy or that of our competitorscompetitors’ andcommercial other factorsstrategies;

•delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulatorsus or by us,regulators, or other loss of anticipated fleet capacity, and failure of new aircraft or aircraft-related equipment 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), including due to a government shutdown;

•increases in costs related to meeting our stated climate goals or obligations, including in respect of the costs to be incurred to migrate to increasedincrease use of SAF in lieu of conventional aviation fuel;

A potential resurgence of COVID-19, or anAn outbreak of anotherany contagious disease, such as has occurred in the past with COVID-19, 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 becomebecomes associated with air travel or persistpersists for an extended period, could materially affect the airline industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior. Governments could implement travel restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, or cancellation of public events or take or mandate other actions whichthat could resultsignificantly in significant declines indecrease demand for both domestic and international business and leisure travel. 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. 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.changes.

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 onlyeffect on our revenues, but on overalland 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),losses, 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,consolidation and are expected to continue to have an impact onaffect 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. Low-cost carriers may also implement, and in some cases have implemented, changes to their strategies or business models that could, and in some cases have, put them in more direct competition with network carriers. Moreover, we may have to compete with other carriers emerging from bankruptcy with lower cost structures. 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 particularcontinue with the planned introduction of long-range narrowbody aircraft in coming years.aircraft. 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 operatingoperate scheduled service with a business model that relies on the 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 121121, and which provides those airlines certain competitive advantages that Part 121 airlines cannot replicate. We have objected to the DOT and the 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. While both the DOT and the TSA are actively reviewing these operations, if they ultimately allow scheduled passenger service in any form under Part 135 and the actions of existing or future carriers using that business model, including those described above, it could adversely impact our business, financial condition and results of operations.

We provide air travel internationally,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 travel to specific regions as a result of health emergencies (such as during the COVID-19 pandemic),emergencies, 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 serviceservices 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 inincrease our costs, disruptions todisrupt our operations, limits onlimit our operating flexibility, reductions inreduce the demand for air travel, and create 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.Qantas Airways. 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. Legal challenges to our joint businesses and strategic alliances could negatively impact our operations and equity value, disrupt our strategic plans and affect our ability to offer competitive services in key markets. 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.LGW. The commitments accepted by the EC were binding for 10 years. In anticipation of both the exit of the UK from the EU, commonly referred to as Brexit, and the expiryexpiration 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. TheIn August 2025, the CMA restartedaccepted itsbinding investigationcommitments inand September 2023 after a pause related toclosed the COVID-19case. pandemicThe andcommitments planswill to completereplace the investigation before the scheduled expiration of theprior interim measuresmeasures. in March 2026. We continue to cooperate fully with the CMA. The foregoingThese arrangements are important aspects of our international networknetwork, 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 Northeast Alliance arrangement (NEA). In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers have substantially completed wind-down activities. American appealed the District Court’s decision to the U.S. Court of Appeals for the First Circuit; the First Circuit affirmed the District Court’s decision on November 8, 2024. Any petition for writ of certiorari to the U.S. Supreme Court would be due February 27, 2025. 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.Northeast Alliance arrangement. 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. We believe these complaints are without merit and are defending against them vigorously.

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,us, 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 revenues. Such combination or collaboration is not limited to the U.S.,U.S. but could include further transactions among international carriers in Europe and elsewhere that result in broader networks offered by rival airlines.

We may also be impacted by regulations affecting certain of our major commercial partners, including our co-branded credit card partnerspartner, or our loyalty program. 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 material reduction of the fees levied on credit card transactions. Additionally, the executive branch recently proposed a temporary 10% cap on credit card interest rates and called on Congress to pass legislation establishing a cap. If thiseither of these proposals were enacted through legislation or anyregulation, similar legislation or regulation were enacted, itthey could fundamentally alter the profitability of our agreementsagreement with our co-branded credit card partnerspartner and the benefits we provide to our consumers through the co-branded credit cards issued by theseour partners. Additionally, the DOT recently launched an inquiry into certain airline loyalty programs, including AAdvantage, to investigate potential competition or consumer protection issues in airlines’ administration of these programs, and draft legislation introduced in Congress called the Protect Your Points Act similarly aims to regulate the management of these programs.partner. The Consumer Financial Protection Bureau has recently cautioned companies in December 2024 against what it views as illegal or unlawful credit card practices, including purported devaluation of earned points, hidden conditions and failure to deliver on promised benefits. If regulatory or legislative efforts to impose restrictions on airline loyalty programs and regulations against credit card point devaluations were successful, they could materially reduce the revenues we derive from the AAdvantage program and adversely impact our results of operations.

Personnel shortages, and general wage inflation have impacted and are expected to continue to impact our labor costs. We recently reachedhave agreements with the unions representing mainline pilots, flight attendants, passenger service team members, and mechanic and fleet service workgroups. These agreements include significant increases in pay and benefits,benefits compared to the prior agreements, in many cases in line with agreements recently concluded by our large network competitors with their 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 increases in salaries and other benefits, which will increase our labor expense.

A significant portion of our regional operations are conducted by third-party operators on our behalf and are principally 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, labor difficulties, 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 restored capacity in line with increased demand for air travel following the height of the COVID-19 pandemic, these third-party operators 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,operations temporarily or permanently, 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 have faced challenges retaining and recruiting people with the appropriate skills to meet our requirements. 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. The COVID-19 pandemic also caused significant disruption in global supply chains and staffing shortages, which affected and, if there is a resurgence, or similar event in the future, may 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. 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.

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, customer concerns in the nature of “greenwashing” allegations that may surround any of our advertising campaigns, marketing programs or commercial offerings related to our sustainability 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 futurefuture, 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. We have experienced an increase in the incidenceincidences of aggressive customer behavior and physical confrontation on our flights in the past, certain of which resulted in injuries to our personnel, and we may experience such behavior in the future. 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 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,On January 29, 2025, American Eagle flight 5342 was involved in a fatal accident in Washington, D.C. The Bombardier CRJ700 aircraft operated by PSA was en route to Washington, D.C. from Wichita, Kansas, when it was involved in a midair collision near Ronald Reagan Washington National Airport. We estimate that the accident reduced first quarter 2025 total operating revenues by approximately $200 million, and the families of multiple passengers have filed lawsuits against the U.S. Government, PSA and American seeking unspecified damages. If other aircraft in our fleet or aircraft operated under our brand, were to be involved in an accident, or if our personnel, one of our aircraft, a type of aircraft in our fleet, or the personnel of, or an aircraft that is operated under our brand by,of one of our regional operators or an airline with which we have a marketing alliance, joint business or codeshare relationship,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 future incident, accident, catastrophe or action involving our personnel, one of our aircraft (or personnel and aircraft of our regional operatorsoperators, marketing alliance, joint business 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 operatorsoperators, marketing alliance, joint business or codeshare partners, and adversely impact our business, results of operations and financial condition. Also, please see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2024 Financial Overview – Recent Developments.”

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. In addition, during the second quarter of 2024 we concluded that certain changes to our distribution strategy contributed to softness in customer bookings relative to our expectations and we reversed many of these measures late in the quarter.quarter, and in 2026, we stopped charging for Wi-Fi on most aircraft for AAdvantage members. 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, or changes to the operation of or benefits offered by our loyalty program, 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 changes. Such changes could result in adverse brand perceptions, reputational harm or regulatory scrutiny. For example, the DOT recently launched an inquiry into certain airline loyalty programs, including our AAdvantage program, to investigate potential competition or consumer protection issues in airlines’ administration of these programs, and draft legislation introduced in Congress called the Protect Your Points Act similarly aims to regulate the management of these programs. If regulatory or legislative efforts to impose restrictions on airline loyalty programs were successful, they could materially reduce the revenues we derive from the AAdvantage program and adversely impact our results of operations.

In addition, we have useduse certain of our branding and AAdvantage program intellectual property as collateral for various financings, including the AAdvantage Financing, 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 are subject to taxation at the federal, state and local levels in the United States, as well as taxation in a number of international jurisdictions in which we operate. New taxes, rates and charges may be imposed from time to time that significantly increase our costs, reduce revenues or otherwise negatively impact our results of operations. The U.S. governmentGovernment may enact significant changes to the taxation of business entities. For example, on AugustJuly 16,4, 2022,2025, the Inflation“One, ReductionBig, Beautiful Bill Act” (OBBBA), was signed into law, introducing,permanently amongextending other changes, a corporate minimum tax on certain corporations and an excise tax on certain stock repurchases by certain corporations. With numerous provisionsmany of the business tax provisions originally introduced in the 2017 Tax Cuts and Jobs ActAct. set to expireIf, in 2025, we expect that consideration of legislation related to tax laws is likely in coming quarters, but the likelihood offuture, 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. Ifadditional changes to tax laws are implemented,implemented or new regulations and other IRS guidance are issued impacting existing tax laws, such changes or new regulations may give rise to new costs or other issues that we did not foresee. We are currently unable to predict the ultimate impact of any such changes or new regulations may have on our business and therefore there can be no assurance our business will not be adversely affected.

In recent years, numerous legislative, judicial and administrative changes have been made to international tax laws applicable to us and similar companies. The Organization for Economic Co-operation and Development (OECD) ishas continuingissued discussionsnumerous announcements regarding fundamental changes in allocation of profits among tax jurisdictions in which companies do business, as well as the implementation of a global minimum tax, referred to as the “Pillar One” and “Pillar Two” proposals. Many countries in which we operate have enacted or are in the process of enacting laws based on the Pillar Two proposal. OurOn June 28, 2025, the G7 nations issued a statement indicating the G7’s commitment to a side-by-side system that would fully exclude U.S. parented groups from certain aspects of the Pillar Two framework in respect of both their domestic and foreign profits. On January 5, 2026, more than 145 countries in the OECD/G20 Inclusive Framework agreed to have U.S.-headquartered companies remain subject to only U.S. global minimum taxes while exempting them from Pillar Two. This side-by-side agreement recognizes the tax sovereignty of the United States over the worldwide operations of U.S. companies and the tax sovereignty of other countries over business activity within their own borders. However, the precise contours of this side-by-side agreement as well as the details about its implementation by specific jurisdictions are uncertain. Therefore, even with this agreement, our effective tax rate and cash tax payments could increase in future years becausefrom ofefforts theserelated changes.to a global minimum tax.

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 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; for example, 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.

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 makingagreeing to make 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, volatility in demand for air travel, such as occurred during the COVID-19 pandemic, 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. For example, in JanuaryAugust 2024, GOL commenced bankruptcy proceedings in2025, the U.S. Federal Bankruptcy Court for the Southern District of New York andapproved submitted aGOL’s plan of reorganizationreorganization, that,and ifas approved,a mayresult, increasewe thehave risklost substantially all of impairment to our commercial agreement with GOL in addition to negatively impacting the value of our equity investment in GOL. If any other 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. These events could have a material adverse effect on our business, results of operations and financial condition.

Pre-tax income on a GAAP basis increased slightlydecreased in 20242025 as compared to 2023.2024. This decrease was driven primarily by increases in passenger revenue, lower costs for aircraft fuel and related taxes and decreases in pre-tax net special items, offset in part by increases in certain operating expenses including salaries, wages and benefits, maintenance,regional materialsexpenses and repairs and certain other operating expenses.expenses, offset in part by lower costs for aircraft fuel and related taxes, a decrease in pre-tax net special items and higher revenues.

Excluding the effects of pre-tax net special items, pre-tax income was $1.8$352 billionmillion and $2.5$1.8 billion in 20242025 and 2023,2024, respectively. The year-over-year decrease in our pre-tax income excluding pre-tax net special items was principally driven by certain operating expenses as mentioned above, offset in part by increases in passenger revenue and lower costs for aircraft fuel and related taxes.taxes and higher revenues.

Other operating revenue increased $357$330 million, or 10.3%,8.7%, in 20242025 as compared to 2023,2024, driven primarily by higher revenue associated with our loyalty program. During 20242025 and 2023,2024, cash payments from co-branded credit card and other partners were $6.1$6.2 billion and $5.2$6.1 billion, respectively, an increase of 17% year-over-year.respectively. Cash remuneration in 2024 included a one-time cash payment related to the new co-branded credit card agreement announced in December 2024. This one-time cash payment will be amortized over the life of the new agreement beginning in 2026.

In 2024,2025, aircraft fuel expense totaled $11.4$10.7 billion, a decrease of $839$700 million, or 6.8%,6.1%, as compared to 2023.2024. This decrease was primarily driven by aan 12.2%8.2% decrease in the average price per gallon of aircraft fuel including related taxes to $2.39 in 2025 from $2.60 in 2024 from $2.96 in 2023,2024, offset in part by a 6.1%2.2% increase in gallons of fuel consumed due to increased capacity.

We remain committed to actively managing our cost structure, which we believe is necessary in an industry in whichwhose economic prospects are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel. In 2024,Additionally, we continuedcontinue to focus on initiatives to reengineer our reengineering the business initiatives through the use of digital solutions, process enhancements and procurement transformation.transformation Weand willwe intend to continue to invest in reengineering our business inthrough 20252026 and beyond to build an even more efficient airline and continue to manage costs while delivering a better experience for our customers and team.

Our 20242025 CASM was 17.6117.76 cents, aan decreaseincrease of 1.7%,0.8%, from 17.9217.61 cents in 2023.2024. This decreaseincrease in CASM was primarily driven by higher costs for salaries, wages and benefits, regional expenses and other operating expenses, offset in part by lower aircraft fuel costs as well as a decrease in mainline operating special items, net, offset in part by higher costs for salaries, wages and benefits and maintenance, materials and repairs.net.

Our 20242025 CASM excluding net special items and fuel was 13.5014.12 cents, an increase of 2.6%,4.6%, from 13.1513.50 cents in 2023,2024, which was primarily driven by higher costs for salaries, wages and benefitsbenefits, regional expenses and maintenance,other materialsoperating and repairs.expenses.

As of December 31, 2024,2025, we had $10.3$9.2 billion in total available liquidity, consisting of $7.0$5.8 billion in unrestricted cash and short-term investments and $3.3$3.4 billion in total undrawn capacity under revolving credit and other short-term facilities.

During 2024,2025, we completed the following financing transactions (see NoteNotes 1, 4 and 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information):

•amended the 2013AAdvantage term loan credit and 2023guaranty Term Loan Facilitiesagreement to reduce the applicable interest rate marginsmargin and to reduce the scheduled quarterly principal amortization amount;

•prepaid in full $487 million of the outstanding principal amountamounts of thecertain 3.75% seniorequipment notes dueissued 2025under enhanced equipment trust certificates (3.75% Senior NotesEETCs);

•prepaid $263in full $937 million toward portions of the outstanding principal amounts of the 10.75% senior secured IP notes (the IP Notes) and the 10.75% senior secured LGA/DCA notes (LGA/DCA Notes and together with the IP Notes, the 10.75% Senior Secured Notes);

•issued $990$1.2 millionbillion of equipment loans and other notes payable in connection with the financing of certain aircraft.

On January 29, 2025, American Eagle flight 5342 was involved in a fatal accident in Washington, D.C. The Bombardier CRJ 700CRJ700 aircraft operated by PSA was en route to Washington, D.C. from Wichita, Kansas when it was involved in a midair collision near Ronald Reagan Washington National Airport. We estimate that the accident reduced first quarter 2025 total operating revenues by approximately $200 million, of which the impacted revenue is not covered by insurance. Beginning on September 24, 2025, multiple wrongful death and survival actions have been filed against the U.S. Government, PSA and American seeking unspecified damages, and we expect that additional lawsuits will be filed. While we cannot predict the outcome of these lawsuits, American has industry standard insurance coverage for this incident,incident and iswe continuingbelieve itsthese assessmentlawsuits ofare thewithout impactmerit onand itsare businessdefending resultingagainst fromthem the accident.vigorously.

(h)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 seven regional aircraft in temporary storage as of December 31, 20242025 asare follows:three fiveAirbus EmbraerA321XLR 145mainline aircraft and twofour Bombardier CRJCRJ900 900.regional aircraft held in temporary storage.

Other operating revenue increased $357$330 million, or 10.3%,8.7%, in 20242025 from 20232024 driven primarily by higher revenue associated with our loyalty program. During 20242025 and 2023,2024, cash payments from co-branded credit card and other partners were $6.1$6.2 billion and $5.2$6.1 billion, respectively, an increase of 17% year-over-year.respectively. Cash remuneration in 2024 included a one-time cash payment related to the new co-branded credit card agreement announced in December 2024. This one-time cash payment will be amortized over the life of the new agreement beginning in 2026.

Aircraft fuel and related taxes decreased $839$700 million, or 6.8%,6.1%, in 20242025 from 20232024 primarily due to aan 12.2%8.2% decrease in the average price per gallon of aircraft fuel including related taxes to $2.39 in 2025 from $2.60 in 2024 from $2.96 in 2023,2024, offset in part by a 6.1%2.2% increase in gallons of fuel consumed due to increased capacity.

Salaries, wages and benefits increased $1.4$1.5 billion, or 9.9%,9.6%, in 20242025 from 20232024 primarily drivendue byto highercontractual wage ratesrate increases and higher costs for benefit-related items associated with thenewly ratificationratified ofand newextended CBAslabor withagreements reached in 2024, as well as annual contractual wage rate increases in our mainlineother pilotslabor in August 2023 and with our mainline flight attendants in September 2024.agreements.

Regional expenses increased $399$406 million, or 8.6%,8.1%, in 20242025 from 20232024 primarily due to an increase in regional flight operations at our wholly-owned regional carriers, as regional capacitycapacity, as measured by ASMsASMs, increased 12.4%10.3% year over year,year. and also due to higherHigher maintenance, materials and repair costs driven by an increase in the volume of engine overhauls and airframe heavy checks.checks and cost of materials also contributed to the increase in regional expenses.

Maintenance, materials and repairs increased $529$50 million, or 16.2%,1.3%, in 20242025 from 20232024 primarily due to increased costs for engineairframe overhauls,heavy checks and component part repairs and airframe heavy checks driven by higher volume, offset in part by a decrease in the volume and cost of materials.engine overhauls.

Other rent and landing fees increased $375$173 million, or 12.8%,5.2%, in 20242025 from 20232024 primarily drivendue byto rate increases at certain airportsairports, asoffset in part by a result of extensive airport redevelopment projects and an 8.1% increasedecrease in theleased number of departures.engines.

Selling expenses increased $13$185 million, or 0.7%,10.2%, in 20242025 from 20232024 primarily due to higheran creditincrease cardin feescommissions expense, driven by thehigher overallcosts increaseresulting infrom passengerrenegotiated revenues,agency contracts, as well as an increase in advertising expenseexpenses. andHigher bookingcredit fees,card offsetfees driven by higher rates also contributed to the increase in partselling by a decrease in commissions expense.expenses.

Other operating expenses increased $423$419 million, or 7.0%,6.5%, in 20242025 from 20232024 primarily driven by the increase in flight operations, including increased costs for crew travel, onboard food and catering, crew travel, ground and cargo handling, passenger accommodation and airport lounge operations, as well as certain general and administrative expenses.

(1)Labor contract expenses for 2024 related toincluded one-time charges resulting from the ratificationratifications of new CBAs with our mainline flight attendants and passenger service team members, including one-time payments and adjustments to vacation accruals resulting from pay rate increases.

(3)Regional operating special items, net for 2024 included a $33 million non-cash write down of regional aircraft resulting from the decision to permanently park 43 Embraer 145ERJ145 aircraft.

Interest income decreased $123$111 million, or 20.8%,23.7%, in 20242025 compared to 20232024 primarily due to lower interest rates and a decrease in the average balance of our short-term investments.investments, resulting in reduced returns. Interest expense, net decreased $211$218 million, or 9.9%,11.2%, in 20242025 compared to 20232024 primarily due to lower interest rates on our variable-rate debt instruments and lower outstanding debt in 2024,2025, as we continue our efforts to strengthen the balance sheet.

Part I, Item 2 of this report should be read in conjunction with Part II, Item 7 of AAG’s and American’s Annual Report on Form 10-K for the year ended December 31, 2025 (the 2025 Form 10-K). The information contained herein is not a comprehensive discussion and analysis of the financial condition and results of operations of AAG and American, but rather updates disclosures made in the 2025 Form 10-K.

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 overduring the first quartersix months of 2026 and prices continue to be highly volatile, with market spot prices ranging from a low of approximately $1.86 per gallon to a high of approximately $4.75$4.78 per gallon during the first quartersix months of 2026.

AAG’s FirstSecond Quarter 2026 Results

Pre-Tax LossIncome and Net LossIncome

Pre-tax lossincome and net lossincome were $476$107 million and $382$71 million, respectively, in the firstsecond quarter of 2026. This compares to firstsecond quarter of 2025 pre-tax lossincome and net lossincome of $648$838 million and $473$599 million, respectively. Excluding the effects of pre-tax net special items, pre-tax lossincome was $327$144 million and $530$869 million in the firstsecond quarters of 2026 and 2025, respectively.

The period-over-period decrease in pre-tax lossincome on both a GAAP basis and excluding pre-tax net special items was principally driven by an increase in passenger revenue, offset in part by increases in certain operating expenses including salaries, wages, and benefits, aircraft fuel and related taxestaxes, salaries, wages and benefits and other operating expenses.expenses, offset in part by an increase in passenger revenue.

In the firstsecond quarter of 2026, we reported total operating revenues of $13.9$16.7 billion, an increase of $1.4$2.3 billion, or 10.8%,16.3%, from the firstsecond quarter of 2025. Passenger revenue was $12.5$15.2 billion in the firstsecond quarter of 2026, an increase of $1.1$2.1 billion, or 9.7%,15.9%, from the firstsecond quarter of 2025. Passenger revenue performance improved in the firstsecond quarter of 2026, primarily due to higherstrong domestic and international demand for air traveltravel. with passengerPassenger revenue per available seat mile (PRASM) increasingincreased 6.5%10.0% compared to the firstsecond quarter of 2025. This increase was2025, primarily driven by a 5.6% increase inhigher passenger yield, while load factorwhich increased 0.7pts11.9% comparedyear toover the first quarter of 2025.year.

Cargo revenue increased $25$62 million, or 12.9%,29.7%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, primarily due to a 9.0%22.5% increase in cargo ton miles and a 3.6%5.8% increase in cargo yield.

Other operating revenue increased $232$190 million, or 23.9%,17.9%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, driven primarily by higher revenue associated with our loyalty program. During the three months ended MarchJune 31,30, 2026 and 2025, cash payments from co-branded credit card and other partners were $2.9$1.8 billion and $1.8$1.4 billion, respectively. Cash remuneration for the first quarter of 2026 included a one-time cash payment associated with the extension of a partner agreement announced in 2025.

Our total revenue per available seat mile (TRASM) was 19.3220.45 cents in the firstsecond quarter of 2026, a 7.6%10.3% increase as compared to 17.9518.54 cents in the firstsecond quarter of 2025.

Aircraft fuel and related taxes was $2.9$4.9 billion in the firstsecond quarter of 2026, which was $341$2.2 million,billion, or 13.2%,83.3%, higher as compared to the firstsecond quarter of 2025. This was primarily due to a 10.7%77.1% increase in the average price per gallon of aircraft fuel including related taxes to $2.75$4.05 in the firstsecond quarter of 2026 fromcompared $2.48to $2.29 in the firstsecond quarter of 2025 and a 2.3%3.5% increase in gallons of fuel consumed due to increased capacity.

As of MarchJune 31,30, 2026, 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. 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” in our 2025 Form 10-K.

Our 2026 firstsecond quarter total operating cost per available seat mile (CASM) was 19.3819.90 cents, an increase of 5.6%16.5% fromcompared 18.34to 17.08 cents in the firstsecond quarter of 2025. The increase in CASM was primarily driven by higher costs for salaries,aircraft wagesfuel, maintenance, materials and benefits, aircraft fuelrepairs and other operating expenses, offset in part by a decrease in mainline operating special items, net.expenses.

Our 2026 firstsecond quarter CASM excluding net special items, fuel and profit sharing was 15.2913.93 cents, an increase of 5.2%2.9% fromcompared 14.54to 13.53 cents in the firstsecond quarter of 2025, which was primarily driven by higher costs for salaries,maintenance, wagesmaterials and benefitsrepairs and other operating expenses.

As of MarchJune 31,30, 2026, we had $10.8$11.3 billion in total available liquidity, consisting of $7.3$7.8 billion in unrestricted cash and short-term investments, and $3.5 billion in total undrawn capacity under revolving credit and other facilities.

During the first threesix months of 2026, we completed the following financing transactions (see Note 5 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information on 2026 financing activities):

•amended the terms of the 2025 AAdvantage Term Loan Facility to reduce the applicable interest rate margin;

•increased the aggregate revolving commitments under the 2013,2013 Revolving Facility, the 2014 Revolving Facility and the 2023 Revolving FacilitiesFacility from $3.0 billion to $3.1 billion and extended the maturity of each facility from June 4, 2029 to March 5, 2031;

•extended the maturity date of a revolving credit facility that provides for borrowing capacity of up to $350 million by an additional year to March 2028; and

The following table presents the reconciliation of pre-tax income (loss) (GAAP measure) to pre-tax income (loss) excluding net special items (non-GAAP measure). Management uses this non-GAAP financial measure 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 provides management with an additional tool to understand our core operating performance.

The table below sets forth selected operating data for the three and six months ended MarchJune 31,30, 2026 and 2025. Amounts may not recalculate due to rounding.

(h)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 as of March 31, 2026 are three Airbus A321XLR mainline aircraft and twofour Bombardier CRJ900 regional aircraft that are held in temporary storage.storage as of June 30, 2026.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Passenger revenue increased $1.1$2.1 billion, or 9.7%,15.9%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, primarily due to higherstrong domestic and international demand for air travel withtravel. PRASM increasingincreased 6.5%10.0% compared to the firstsecond quarter of 2025. This increase was2025, primarily driven by a 5.6% increase inhigher passenger yield, while load factorwhich increased 0.7pts11.9% comparedyear toover the first quarter of 2025.year.

Cargo revenue increased $25$62 million, or 12.9%,29.7%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, primarily due to a 9.0%22.5% increase in cargo ton miles and a 3.6%5.8% increase in cargo yield.

Other operating revenue increased $232$190 million, or 23.9%,17.9%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, driven primarily by higher revenue associated with our loyalty program. During the three months ended MarchJune 31,30, 2026 and 2025, cash payments from co-branded credit card and other partners were $2.9$1.8 billion and $1.8$1.4 billion, respectively. Cash remuneration for the first quarter of 2026 included a one-time cash payment associated with the extension of a partner agreement announced in 2025.

Aircraft fuel and related taxes increased $341$2.2 million,billion, or 13.2%,83.3%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, primarily due to a 10.7%77.1% increase in the average price per gallon of aircraft fuel including related taxes to $2.75$4.05 in the firstsecond quarter of 2026 fromcompared $2.48to $2.29 in the firstsecond quarter of 2025 and a 2.3%3.5% increase in gallons of fuel consumed due to increased capacity.

Salaries, wages and benefits increased $452$257 million, or 10.7%,5.9%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, primarily due to annual contractual wage rate increases and a 3.9%3.4% increase in mainline full-time equivalent employees subsequent to the firstsecond quarter of 2025.

OtherRegional rent and landing feesexpenses increased $64$104 million, or 7.7%,7.8%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, primarily due to ratean increasesincrease atin certainregional airports.flight operations as regional capacity, as measured by ASMs, increased 9.0% in the second quarter of 2026 from the second quarter of 2025.

SellingMaintenance, expensesmaterials and repairs increased $57$100 million, or 12.8%,10.8%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, primarily due to higherincreased commissionscosts fromfor renegotiatedengine agency contracts, higher credit card feesoverhauls driven by thehigher overall increase in passenger revenue and increased advertising expenses.volume.

Other operatingrent expensesand landing fees increased $142$82 million, or 8.7%,9.2%, in the firstsecond quarter of 2026 from the firstsecond quarter of 2025, primarily drivendue byto increasedrate costsincreases for crew travel, onboard food and catering, Wi-Fi, ground and cargo handling, passenger accommodation andat certain general and administrative expenses.airports.

Interest income decreased $39$26 million, or 41.3%,25.8%, in the firstsecond quarter of 2026 from the first quarter of 2025, primarily due to a decrease in the average balance of our short-term investments and lower interest rates, resulting in reduced returns. Interest expense, net decreased $31 million, or 7.3%, in the first quarter of 2026 from the firstsecond quarter of 2025, primarily due to lower interest rates onand a lower average balance of our variable-rateshort-term debtinvestments, instrumentsresulting andin lowerreduced outstandingreturns. Interest expense, net decreased $24 million, or 5.5%, in the second quarter of 2026 from the second quarter of 2025, primarily due to repayments of higher interest debt, offset in part by the issuance of debt subsequent to the firstsecond quarter of 2025, as we continue our efforts to strengthen the balance sheet.2025.

In the firstsecond quarter of 2026, other nonoperating expense, netnet, included $135$30 million of net special itemscharges, primarily forrelated to mark-to-market net unrealized losses associated with certain equity investments and costs associated with debt refinancings and extinguishments, offset in part by $18 million of non-service-related pension and other postretirement benefit plan income.

In the firstsecond quarter of 2025, other nonoperating expense,income, netnet, primarily included $48$16 million of net special charges for mark-to-market net unrealized losses associated with certain equity investmentscredits and debt refinancings and extinguishments, as well as $11 million of foreign currency losses, offset in part by $11 million of non-service-related pension and other postretirement benefit plan income.

In the firstsecond quarter of 2026, we recorded an income tax benefitprovision of $94$36 million. Substantially all of our lossincome before income taxes is attributable to the United States.