AMR Corp Reports Upbeat Results

AMR Corporation, the parent company of American Airlines, Inc., today
reported a net loss of $111 million for the fourth quarter, or $.70 per
share. This compares with last year`s fourth quarter net loss of $529
million, or $3.39 per share.

Building on the added momentum of this financial improvement, American
announced today a major restructuring of its hub operations at Miami that
will make the hub—American`s principal gateway to Latin America—more
efficient, increase its on-time dependability, and give customers added
convenience and a wider choice of flights.

The airline also announced that it will enter into a robust new
codesharing partnership with Mexicana, the premier airline of Mexico.

AMR`s fourth quarter results include a handful of special items—both
gains and losses—resulting from the company`s continuing restructuring
efforts, a federal income tax settlement during the quarter, and gains on
the sale of investments. In addition, in keeping with the provisions of
SFAS 109, AMR`s fourth quarter 2003 results do not reflect a provision for
federal and state income taxes. Conversely, AMR`s fourth quarter 2002
results reflected a tax benefit. To provide a better comparison between
the two periods, after adjusting for these special items and taxes, the
company recorded a loss (pre- tax and excluding special items) of $95
million this quarter, or $.59 per share, versus a loss (pre-tax) of $828
million, or $5.31 per share, in the fourth quarter of last year. For the
fourth quarter of 2003, AMR had operating income of $103 million,
excluding special items. In the fourth quarter of 2002, AMR posted a net
operating loss of $679 million. (A reconciliation of all non-GAAP measures
included in this earnings release is provided in the attachments.)

For the full year 2003, AMR reported a net loss of $1.2 billion, or $7.76
per share, compared to a full year net loss of $3.5 billion, or $22.57 per
share, in 2002. When adjusted for special items and the year-over- year
tax differences mentioned above, AMR posted a 53 percent improvement in
financial results, registering a full year loss of $1.5 billion in 2003
compared to a full year loss of $3.2 billion in 2002.

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“The improvement in our year-over-year results is a direct result of our
ongoing efforts to restructure our business and the willingness of every
one of us to sacrifice and accept change as an inevitable fact of life in
the airline industry,” said Gerard Arpey, AMR`s president and CEO. “While
the work required to make our company consistently profitable has just
begun, the momentum we have created together is powerful. Perhaps the best
illustration of this is the fact that we have now achieved an operating
profit, excluding special items, two quarters in a row. And unlike a year
ago, when we were burning through millions of dollars of cash every day,
our operation is now generating positive cash flow.”

The Miami hub restructuring and the new relationship with Mexicana will
strengthen American`s network and add to the company`s financial progress,
Arpey said.
With a combined total of more than 130 years of service between the U.S.
and Mexico, American and Mexicana will forge a relationship that will give
customers enhanced service to the most important markets in the United
States and Mexico, as well as connections across their global networks.
For American, it will mean new flight availability to 21 additional cities
in Mexico and the ability to offer service in 27 new, nonstop transborder
markets. The relationship also includes a reciprocal frequent-flyer
agreement that will allow passengers to accrue and redeem miles in
American`s AAdvantage(R) program or Mexicana`s Frecuenta(R) program on
more than 500 U.S.-Mexico flights per week.

American and Mexicana will launch the partnership in April, pending
governmental approval.

In Miami, the airline`s principal gateway to Latin America, American will
spread its operations more evenly by increasing the number of daily flight
banks to 13 from seven, effective May 1. In doing so, the airline will be
able to operate more flights in and out of Miami using fewer aircraft,
thereby greatly increasing the hub`s efficiency and assisting in the
company`s overall objective to lower costs.

At the same time, the restructured Miami hub will significantly enhance
customer service, allowing American to offer passengers more flight
choices, giving customers more time to make their flight connections, and
spreading out the flow of international passengers in ways that will make
it easier to clear customs and immigration processing.

Longer term, the new hub design will give American and American Eagle room
to grow at Miami within the framework of the new terminal facility that is
now under construction. “Miami is one of the linchpins of our global
network,” Arpey said. “And this initiative will enable us to operate more
flights in and out of that hub—using fewer aircraft—reduce costs,
and relieve some of the pressure that hub has been under from the ongoing
terminal construction project.”

At the heart of AMR`s financial progress in 2003, Arpey said, were the
strides it made toward achieving the company`s critical goal of $4 billion
in annual capacity-independent cost savings. These efforts were given a
huge boost when employees agreed to a restructuring that added $1.8
billion a year in labor-cost savings to savings of $2 billion a year from
strategic initiatives and another $200 million from vendors, suppliers and
creditors.

“Lower costs go hand in hand with our ability to protect and build on our
leading share in the marketplace,” Arpey said. “Today, thanks to the
sacrifices, hard work and ingenuity of American`s people, our costs—
while still not as low as our low-cost competitors—are continuing to
improve to help us compete vigorously for every customer.”

Although unquestionably pleased by its progress, Arpey said AMR is not yet
satisfied with its financial results and recognizes that it still has lots
of work in front of it.
“We`ve made great progress,” Arpey said, “but we also realize the many
challenges that lie ahead.”

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