america airlines inc: modefinance credit report

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AMERICAN AIRLINES INCTuesday, 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 AMERICAN AIRLINES INC

Identification number US131502798

Country United States of America

ZIP code and city 76155 - FORT WORTH

Address 4333, Amon Carter Boulevard

+1 817 963 1234

www.aa.com

Legal form

Account Consolidated

Incorporation date 1930

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) 16,576,861 13,812,297 17,026,666

Rating CC CC C

Probability of default 42.00% 42.00% 57.00%

Confidence Level 100% 100% 100%

Solvency ratios

Leverage ratio -4.54 -4.91 -5.59

Total asset/Total liabilties 0.78 0.80 0.82

Liquidity ratios

Current Ratio 0.60 0.64 0.52

Quick Ratio 0.55 0.59 0.48

Profitability and economic equili-

brium ratios

Return on investement ROI (%) 0.54 -5.30 -8.86

Return on equity ROE (%) -7.40 -25.08 -51.60

Asset turnover 0.99 0.87 1.05

Interest paid weight 5.17 -0.44 -0.27

Gross Profit/Operating revenue 0.26 0.23 0.23

Interest Coverage ratios

EBIT interest coverage ratio 0.24 -2.15 -3.83

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 -4.54 0.56 2.40 4.74 -1.92

Total asset/Total liabilties 0.78 2.77 1.42 1.17 0.92

Liquidity ratios

Current Ratio 0.60 2.35 1.28 0.88 0.67

Quick Ratio 0.55 2.02 1.17 0.79 0.59

Profitability and economic equilibrium ratios

Return on investement ROI (%) 0.54 20.00 6.39 1.05 -19.55

Return on equity ROE (%) -7.40 23.37 10.40 -7.60 -108.80

Asset turnover 0.99 2.08 1.48 1.36 1.39

Interest paid weight 5.17 0.00 0.17 0.13 -0.10

Gross Profit/Operating revenue 0.26 0.21 0.20 0.12 0.06

Interest Coverage ratios

EBIT interest coverage ratio 0.24 331.80 4.60 0.03 -8.53

Cash Conversion Cycle (days)

Days Sales Of Inventory (DIO) 9 14 8 11 7

Days Sales Outstanding (DSO) 12 34 33 33 33

Days Payable Outstanding (DPO) 66 12 27 37 48

Cash Conversion Cycle (DIO + DSO - DPO) -45 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 16,780,424 15,940,576 16,180,219

Fixed assets 11,733,275 11,391,084 12,032,053

Intangible fixed assets 688,520 674,719 783,215

Tangible fixed assets 9,151,325 8,715,810 9,106,852

Other fixed assets 1,893,429 2,000,555 2,141,986

Current assets 5,047,149 4,549,492 4,148,166

Stocks 405,628 359,572 345,621

Debtors 538,093 516,451 572,681

Other current assets 4,103,428 3,673,468 3,229,864

Cash & cash equivalent 3,358,031 3,047,341 2,226,056

Shareholders funds -4,741,806 -4,080,243 -3,524,468

Capital 0 0 0

Other shareholders funds -4,741,806 -4,080,243 -3,524,468

Total liabilities 21,522,229 20,020,819 19,704,687

Non current liabilities 13,129,772 12,867,552 11,749,664

Long term debt 4,933,394 5,542,134 4,802,762

Other non-current liabilities 8,196,379 7,325,418 6,946,903

Current liabilities 8,392,457 7,153,268 7,955,023

Loans 1,178,716 611,551 1,014,587

Creditors 3,014,519 2,773,843 2,384,136

Other current liabilities 4,199,222 3,767,873 4,556,300

Total shareh. funds & liab. 16,780,424 15,940,576 16,180,219

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

Short term debts 1,178,716 611,551 1,014,587

Long term debt 4,933,394 5,542,134 4,802,762

Cash & cash equivalent 3,358,031 3,047,341 2,226,056

Net debt 2,754,079 3,106,344 3,591,293

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

Working capital -2,070,798 -1,897,820 -1,465,834

Net Current Assets -3,345,308 -2,603,775 -3,806,857

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

Days Sales Of Inventory (DIO) 9 10 7

Days Sales Outstanding (DSO) 12 14 12

Days Payable Outstanding (DPO) 66 73 51

Cash Conversion Cycle (DIO + DSO - DPO) -45 -49 -32


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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 capitalized1,789,403 1,576,426 1,510,384

Operating revenue / turnover 16,576,861 13,812,297 17,026,666

Total operating costs 16,463,854 14,619,599 18,502,560

Costs growth (%) 13 -21 -

Service costs - - -

Material costs - - -

Costs of employees - - -

EBITDA 812,753 -145,078 -741,539

Depreciation 699,746 662,224 734,354

EBIT 113,007 -807,302 -1,475,894

Financial P/L -490,196 -412,328 -342,746

Financial revenue 8,981 13,883 86,226

Financial expenses 499,177 426,211 428,972

Interest paid 467,744 375,538 385,141

P/L before tax -377,189 -1,219,630 -1,818,640

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 -196,446 0

P/L for period -350,995 -1,023,185 -1,818,640

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

Costs of Good Sold 12,240,684 10,653,197 13,184,601

Gross Profit 4,336,178 3,159,100 3,842,066

Other Operating Expenses 4,223,171 3,966,402 5,317,959

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

Cash flow 348,750 -360,961 -1,084,286

Added value - - -

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

Number of employees 65,525 66,500 70,900


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Evolutions and trends


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Qualitative information

Full overview It is an American airline company and a principal subsidiary of AMR Corporation, a commercial aviation business

and airline holding company. The company is the largest airline in the world in terms of total passengers - miles

transported and fleet size. It was founded in 1930 as American Airways. The US - based company has its corporate

headquarters located in Fort Worth, Texas. The company operates flights throughout the United States as well as

in Canada, Latin America, the Caribbean, Western Europe, Japan, China and India. Its hubs include: Dallas - Fort

International Airport; O’Hare International Airport; Miami International Airport; Lambert - St. Louis International

Airport; and Luis Moñuz Marin International Airport. Also in other major airports such as: Boston; Los Angeles;

Raleigh’Durham and New York’s Laguardia and John F. Kennedy International Airports. It is the founding member

of the Oneworld, a worldwide airline alliance. Its partner airline, American Eagle Airlines, is a regional airline based

in Texas and wholly owned by AMR Corporation. The company has established the AAdvantage frequent flyer

program to develop passenger’s loyalty by offering awards to travelers. It has built marketing relationships with

other airline and rail companies, such as Aer Lingus, Air Pacific, Air Sahara, Air Tahiti Nui, Alaska Airlines, British

Airways, Cathay Pacific, China Eastern Airlines, LAN Airlines, Mal v Hungarian Airlines, Mexicana, Qantas Airways,

Royal Jordanian, SN Brussels Airlines, SNCF French Rail, TAN, Turkish Airlines and Vietnam Airlines.

History Founded in 1930 as American Airways.

Primary business line Operates as an American airline company.

Secondary business line Not available.

Main activity Services.

Secondary activity Not available.

Main products and services Operates flights.

Size estimate Largest airline in the world in terms of total passengers - miles transported and fleet size.

Strategy, organization and policy Not available.

Strategic alliances American Eagle Airlines; Aer Lingus; Air Pacific; Air Sahara; Air Tahiti Nui; Alaska Airlines; British Airways; Cathay

Pacific; China Eastern Airlines; LAN Airlines; Mal v Hungarian Airlines; Mexicana; Qantas Airways; Royal Jordanian;

SN Brussels Airlines; SNCF French Rail; TAN; Turkish Airlines; Vietnam Airlines.

Membership of a network Oneworld.

Main brand names Not available.

Main domestic country United States of America.

Main foreign countries or regions Canada; Latin America; Caribbean; Western Europe; Japan; China; India.

Main production sites Not available.

Main distribution sites Not available.


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Main sales representation sites Not available.

Main customers Not available.

Auditor/Advisor/Bank

name type address

ERNST & YOUNG LLP Auditor -

Board

Not available.

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

AMR CORP Rating: B

Country ISO code US Operating revenue (MIL $) 22,170

NACE Rev. 2, Core code - Total Assets (MIL $) 25,088

Direct % 100.00 Number of Employees 78,250

Total % 100.00 Information date 2010/12

Address: Not available

Subsidiaries (the first twenty subsidiaries ordered by Direct %)

AA 2002 CLASS C CERTIFICATE CORPORATION Rating: -

Country ISO code US Operating revenue (MIL $) -

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

Direct % 100.00 Number of Employees -



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AA 2002 CLASS D CERTIFICATE CORPORATION Rating: -





AA 2003 - 1 CLASS C CERTIFICATE CORPORATION Rating: -





AA 2003 - 1 CLASS D CERTIFICATE CORPORATION Rating: -





AA 2004 - 1 CLASS B NOTE CORPORATION Rating: -





AA 2005 - 1 CLASS C CERTIFICATE CORPORATION Rating: -





AA REAL ESTATE HOLDING GP LLC Rating: -





AA REAL ESTATE HOLDING LP Rating: -





ADMIRALS CLUB INC Rating: -





AMERICAN AIRLINES IP LICENSING HOLDING LLC Rating: -






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AMERICAN AIRLINES MARKETING SERVICES LLC Rating: -





AMERICAN AIRLINES REALITY (NYC) HOLDINGS INC Rating: -





AMERICAN AIRLINES VACATIONS LLC Rating: -





AMERICAN AVIATION SUPPLY LLC Rating: -





AMERICAN AIR LINES DE MEXICO, S.A. DE C.V. Rating: -

Country ISO code MX Operating revenue (MIL $) -




AAV TOURS LLC Rating: -

Country ISO code US Operating revenue (MIL $) 6


Direct % MO Number of Employees 50

Total % - Information date 2011/08

AMERICAN AIRLINES AUSTRALIAN TOURS, INC. Rating: -





AMERICAN AIRLINES CREW Rating: -





AMERICAN AIRLINES FUEL CORPORATION Rating: -






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AMR VENTURES III, 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

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34149 Trieste, via Padriciano 99 - ITALY

Info [email protected]

web www.modefinance.com

Phone +39 040 3755337

america airlines inc: modefinance credit report

Documents

quick ratio

levelof credit risk

liquidity ratioscurrent

asset turnover

aa aaanotavailablenon

report type

investement roi

total assettotal liabilties