Annual Report of American Airlines Group Inc\. for year 2019

|                               |                                                                                |
| ----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Exhibit**

**Number** | **Description**                                                                                |
| 4\.67                         | [Amended and Restated Guarantee, dated as of March 31, 2014, from American Airlines Group Inc\. (as successor in interest to US Airways Group, Inc\.) relating to obligations of US Airways under the equipment notes relating to its Series 2011\-1 Pass Through Certificates (incorporated by reference to Exhibit 10\.2 to AAG’s Quarterly Report on Form 10\-Q for the quarter ended March 31, 2014 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000000620114000011/d715288dex102.htm)                                                                                |
| 4\.68                         | [Form of Participation Agreement (Participation Agreement between American Airlines, Inc\. (as successor in interest to US Airways, Inc\.), as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit 4\.18 to US Airways Group’s Current Report on Form 8\-K filed on May 16, 2012 (Commission File No\. 1\-08444))\.](http://www.sec.gov/Archives/edgar/data/701345/000119312512236751/d354045dex418.htm)                                                                                |
| 4\.69                         | [Form of Indenture (Trust Indenture and Security Agreement between American Airlines, Inc\. (as successor in interest to US Airways, Inc\.), as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4\.19 to US Airways Group’s Current Report on Form 8\-K filed on May 16, 2012 (Commission File No\. 1\-08444))\.](http://www.sec.gov/Archives/edgar/data/701345/000119312512236751/d354045dex419.htm)                                                                                |
| 4\.70                         | [Amended and Restated Guarantee, dated as of March 31, 2014, from American Airlines Group Inc\. (as successor in interest to US Airways Group, Inc\.) relating to obligations of US Airways under the equipment notes relating to its Series 2012\-1 Pass Through Certificates (incorporated by reference to Exhibit 10\.3 to AAG’s Quarterly Report on Form 10\-Q for the quarter ended March 31, 2014 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000000620114000011/d715288dex103.htm)                                                                                |
| 4\.71                         | [Form of Participation Agreement (Participation Agreement between American Airlines, Inc\. (as successor in interest to US Airways, Inc\.), as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit B to Exhibit 4\.12 to US Airways Group’s Current Report on Form 8\-K filed on December 13, 2012 (Commission File No\. 1\-08444))\.](http://www.sec.gov/Archives/edgar/data/701345/000119312512501957/d452985dex412.htm)                                                                                |
| 4\.72                         | [Form of Indenture (Trust Indenture and Security Agreement between American Airlines, Inc\. (as successor in interest to US Airways, Inc\.), as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit C to Exhibit 4\.12 to US Airways Group’s Current Report on Form 8\-K filed on December 13, 2012 (Commission File No\. 1\-08444))\.](http://www.sec.gov/Archives/edgar/data/701345/000119312512501957/d452985dex412.htm)                                                                                |
| 4\.73                         | [Amended and Restated Guarantee, dated as of March 31, 2014, from American Airlines Group Inc\. (as successor in interest to US Airways Group, Inc\.) relating to obligations of US Airways under the equipment notes relating to its Series 2012\-2 Pass Through Certificates (incorporated by reference to Exhibit 10\.4 to AAG’s Quarterly Report on Form 10\-Q for the quarter ended March 31, 2014 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000000620114000011/d715288dex104.htm)                                                                                |
| 4\.74                         | [Form of Assumption Agreement, dated as of December 30, 2015, by American Airlines, Inc\. for the benefit of Wilmington Trust Company, as Indenture Trustee, to (i) each Participation Agreement between, among others, American Airlines, Inc\. (as successor in interest to US Airways, Inc\.) and Wilmington Trust Company, as Indenture Trustee, entered into pursuant to the 2010\-1, 2011\-1, 2012\-1, 2012\-2 and 2013\-1 EETC note purchase agreements and (ii) each Trust Indenture and Security Agreement, between, among others, American Airlines, Inc\. (as successor in interest to US Airways, Inc\.), and Wilmington Trust Company, as Indenture Trustee entered into pursuant to the 2010\-1, 2011\-1, 2012\-1, 2012\-2 and 2013\-1 EETC note purchase agreements (incorporated by reference to Exhibit 10\.3 to AAG’s Current Report on Form 8\-K filed on December 31, 2015 (Commission File No\. 1\-8400))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312515418305/d110614dex103.htm) |
| 4\.75                         | [Trust Supplement No\. 2016\-1AA, dated as of January 19, 2016, between American Airlines, Inc\. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4\.2 to American’s Current Report on Form 8\-K filed on January 21, 2016 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312516433815/d126794dex42.htm)                                                                                |
| 4\.76                         | [Trust Supplement No\. 2016\-1A, dated as of January 19, 2016, between American Airlines, Inc\. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4\.3 to American’s Current Report on Form 8\-K filed on January 21, 2016 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312516433815/d126794dex43.htm)                                                                                |
| 4\.77                         | [Trust Supplement No\. 2016\-1B, dated as of January 19, 2016, between American Airlines, Inc\. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4\.4 to American’s Current Report on Form 8\-K filed on January 21, 2016 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312516433815/d126794dex44.htm)                                                                                |
| 4\.78                         | [Intercreditor Agreement (2016\-1), dated as of January 19, 2016, among Wilmington Trust Company, as Trustee of the American Airlines Pass Through Trust 2016\-1AA, as Trustee of the American Airlines Pass Through Trust 2016\-1A and as Trustee of the American Airlines Pass Through Trust 2016\-1B, KfW IPEX\-Bank GmbH, as Class AA Liquidity Provider, Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to exhibit 4\.5 to American’s Current Report on Form 8\-K filed on January 21, 2016 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312516433815/d126794dex45.htm)                                                                                |
| 4\.79                         | [Note Purchase Agreement, dated as of January 19, 2016, among American Airlines, Inc\., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4\.6 to American’s Current Report on Form 8\-K filed on January 21, 2016 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312516433815/d126794dex46.htm)                                                                                |

169


Annual Report of DELTA AIR LINES, INC\.  for year 2017

[Table of Contents](http://ir.delta.com/.#s38B278257A885660AB93394F5F0EFBED)

10\.15(a) [Delta Air Lines, Inc\. 2016 Long Term Incentive Program (Filed as Exhibit 10\.16 to Delta's Annual Report on Form 10\- K for the year ended December 31, 2015)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000002790416000018/dal12312015ex1016.htm)

10\.15(b) [First Amendment to the Delta Air Lines, Inc\. 2016 Long Term Incentive Program\.](http://ir.delta.com/dal12312017ex1015b.htm)

10\.15(c) [Model Award Agreement for the Delta Air Lines, Inc\. 2016 Long Term Incentive Program (Filed as Exhibit 10\.1 to Delta's Quarterly Report on Form 10\-Q for the quarter ended March 31, 2016)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000002790416000022/dal3312016ex101.htm)

|           |                                                                                |
| --------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| 10\.16(a) | [Delta Air Lines, Inc\. 2017 Long\-Term Incentive Program (Filed as Exhibit 10\.15 to Delta's Annual Report on Form 10\- K for the year ended December 31, 2016)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000002790417000004/dal12312016ex1015.htm) |

|           |                                                                                |
| --------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 10\.16(b) | [First Amendment to the Delta Air Lines, Inc\. 2017 Long\-Term Incentive Program (Filed as Exhibit 10\.3 to Delta’s Quarterly Report on Form 10\-Q for the quarter ended June 30, 2017)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000002790417000013/dal6302017ex103.htm) |

10\.16(c) [Second Amendment to the Delta Air Lines, Inc\. 2017 Long\-Term Incentive Program\.](http://ir.delta.com/dal12312017ex1016c.htm)

|           |                                                                                |
| --------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 10\.16(d) | [Model Award Agreement for the Delta Air Lines, Inc\. 2017 Long\-Term Incentive Program (Filed as Exhibit 10\.3 to Delta's Quarterly Report on Form 10\-Q for the quarter ended March 31, 2017)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000002790417000008/dal3312017ex103.htm) |

|        |                                                                                |
| ------ | ------------------------------------------------------------------------------------------------------- |
| 10\.17 | [Delta Air Lines, Inc\. 2018 Long\-Term Incentive Program\.](http://ir.delta.com/dal12312017ex1017.htm) |

|           |                                                                                |
| --------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 10\.18(a) | [Delta Air Lines, Inc\. 2017 Management Incentive Plan (Filed as Exhibit 10\.17 to Delta's Annual Report on Form 10\-K for the year ended December 31, 2016)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000002790417000004/dal12312016ex1017.htm) |

10\.18(b) [First Amendment to the Delta Air Lines, Inc\. 2017 Management Incentive Plan\.](http://ir.delta.com/dal12312017ex1018b.htm)

|        |                                                                                |
| ------ | ----------------------------------------------------------------------------------------------------- |
| 10\.19 | [Delta Air Lines, Inc\. 2018 Management Incentive Plan\.](http://ir.delta.com/dal12312017ex1019.htm)  |

|        |                                                                                |
| ------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 10\.20 | [Letter Agreement dated as of June 11, 2008 between counsel for and on behalf of Mickey P\. Foret and Aviation Consultants, LLC, and counsel for and on behalf of Northwest Airlines, Inc\. (Filed as Exhibit 10\.22 to Delta's Annual Report on Form 10\-K for the year ended December 31, 2008)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000119312509042726/dex1022.htm) |

|        |                                                                                |
| ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 10\.21 | [Delta Air Lines, Inc\. Restoration Long Term Disability Plan (Filed as Exhibit 10\.24 to Delta's Annual Report on Form 10\-K for the year ended December 31, 2011)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000144530512000272/dal12312011ex1024.htm) |

|        |                                                                                |
| ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 10\.22 | [Terms of 2016 Restricted Stock Awards for Non\-Employee Directors (Filed as Exhibit 10\.4 to Delta’s Quarterly Report on Form 10\-Q for the quarter ended June 30, 2016)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000002790416000026/dal6302016ex104.htm) |

|        |                                                                                |
| ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 10\.23 | [Terms of 2017 Restricted Stock Awards for Non\-Employee Directors (Filed as Exhibit 10\.4 to Delta’s Quarterly Report on Form 10\-Q for the quarter ended June 30, 2017)\.\*](http://www.sec.gov/Archives/edgar/data/27904/000002790417000013/dal6302017ex104.htm) |

|       |                                                                                |
| ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 12\.1 | [Statement regarding computation of ratio of earnings to fixed charges for each fiscal year in the five\-year period ended December 31, 2017\.](http://ir.delta.com/dal12312017ex121.htm) |

|       |                                                                              |
| ----- | ---------------------------------------------------------------------------- |
| 21\.1 | [Subsidiaries of the Registrant\.](http://ir.delta.com/dal12312017ex211.htm) |

|       |                                                                            |
| ----- | -------------------------------------------------------------------------- |
| 23\.1 | [Consent of Ernst & Young LLP\.](http://ir.delta.com/dal12312017ex231.htm) |

|       |                                                                                |
| ----- | ----------------------------------------------------------------------------------------------------------------- |
| 31\.1 | [Rule 13a\-14(a)/15d\-14(a) Certification of Chief Executive Officer\.](http://ir.delta.com/dal12312017ex311.htm) |

|       |                                                                                |
| ----- | ----------------------------------------------------------------------------------------------------------------- |
| 31\.2 | [Rule 13a\-14(a)/15d\-14(a) Certification of Chief Financial Officer\.](http://ir.delta.com/dal12312017ex312.htm) |

|    |                                                                                |
| -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 32 | [Certification pursuant to 18 U\.S\.C\. Section 1350, as adopted pursuant to Section 906 of the Sarbanes\-Oxley Act 2002\.](http://ir.delta.com/dal12312017ex32.htm) |

 95


Annual Report of ALASKA AIR GROUP, INC\. for year 2017

|                                                                                |
| --------------------------------------------------------------------------------------- |
| **ITEM 13\. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE** |

The information required by this item is incorporated herein by reference from our 2018 Proxy Statement\.

|                                                      |
| ---------------------------------------------------- |
| **ITEM 14\. PRINCIPAL ACCOUNTANT FEES AND SERVICES** |

The information required by this item is incorporated herein by reference from our 2018 Proxy Statement\.

**PART IV**

|                        |
| ---------------------- |
| **ITEM 15\. EXHIBITS** |

The following documents are filed as part of this report:

|     |                                  |
| --- | -------------------------------- |
| 1\. | *Exhibits:*  See Exhibit Index\. |

 98


Annual Report of DELTA AIR LINES, INC\.  for year 2018

Employee Benefit Obligations\.  Represents primarily (1) our estimated minimum required funding for our qualified defined benefit pension plans based on actuarially determined estimates and (2) projected future benefit payments from our unfunded postretirement and postemployment plans\. For additional information about our defined benefit pension plan obligations, see "Critical Accounting Policies and Estimates\."

Other Obligations\.  Represents estimated purchase obligations under which we are required to make minimum payments for goods and services, including, but not limited to, aviation\-related, maintenance, professional security, insurance, marketing, technology, sponsorships and other third\-party services and products\.

 42


Annual Report of ALASKA AIR GROUP, INC\. for year 2018

**CONSOLIDATED BALANCE SHEETS**

|                                                               |             |          |
| ------------------------------------------------------------- | ----------- | -------- |
| **As of December 31**  ***(in millions)***                    | **2018**    | **2017** |
| **ASSETS**                                                    |             |          |
| **Current Assets**                                            |             |          |
| Cash and cash equivalents                                     | **$105**    | $194     |
| Marketable securities                                         | **1,131**   | 1,427    |
| Total cash and marketable securities                          | **1,236**   | 1,621    |
| Receivables—less allowance for doubtful accounts of $1 and $1 | **366**     | 341      |
| Inventories and supplies—net                                  | **60**      | 57       |
| Prepaid expenses and other current assets                     | **125**     | 133      |
| **Total Current Assets**                                      | **1,787**   | 2,152    |
| **Property and Equipment**                                    |             |          |
| Aircraft and other flight equipment                           | **8,221**   | 7,559    |
| Other property and equipment                                  | **1,363**   | 1,222    |
| Deposits for future flight equipment                          | **439**     | 494      |
|                                                               | **10,023**  | 9,275    |
| Less accumulated depreciation and amortization                | **3,242**   | 2,991    |
| **Total Property and Equipment—Net**                          | **6,781**   | 6,284    |
| **Other Assets**                                              |             |          |
| Goodwill                                                      | **1,943**   | 1,943    |
| Intangible assets—net                                         | **127**     | 133      |
| Other noncurrent assets                                       | **274**     | 234      |
| **Total Other Assets**                                        | **2,344**   | 2,310    |
| **Total Assets**                                              | **$10,912** | $10,746  |

Certain historical information has been adjusted to reflect the adoption of new accounting standards\. See accompanying notes to consolidated financial statements\.

 56


Annual Report of DELTA AIR LINES, INC\.  for year 2017

[Table of Contents](http://ir.delta.com/.#s38B278257A885660AB93394F5F0EFBED)

Part I

ITEM 1\. BUSINESS

General

We provide scheduled air transportation for passengers and cargo throughout the United States ("U\.S\.") and around the world\. Our global route network gives us a presence in every major domestic and international market\. Our route network is centered around a system of hub, international gateway and key airports that we operate in Amsterdam, Atlanta, Boston, Detroit, London\-Heathrow, Los Angeles, Minneapolis\-St\. Paul, New York\-LaGuardia, New York\-JFK, Paris\-Charles de Gaulle, Salt Lake City, Seattle and Tokyo\-Narita\. Each of these operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub or gateway to domestic and international cities and to other hubs or gateways\. Our network is supported by a fleet of aircraft that is varied in size and capabilities, giving us flexibility to adjust aircraft to the network\. Other important characteristics of our route network include our international joint ventures, our alliances with other foreign airlines, our membership in SkyTeam and agreements with multiple domestic regional carriers that operate as Delta Connection ^®^ \.

We are incorporated under the laws of the State of Delaware\. Our principal executive offices are located at Hartsfield\-Jackson Atlanta International Airport in Atlanta, Georgia\. Our telephone number is (404) 715\-2600 and our Internet address is www\.delta\.com\. Information contained on our website is not part of, and is not incorporated by reference in, this Form 10\-K\.

International Alliances

Our international alliance relationships with foreign carriers are an important part of our business as they improve our access to international markets and enable us to market globally integrated air transportation services\. The most significant of these arrangements are commercial joint ventures that include joint sales and marketing coordination, co\-location of airport facilities and other commercial cooperation arrangements\. Our alliance arrangements also include reciprocal codesharing and reciprocal frequent flyer program participation and airport lounge access arrangements\. These alliance relationships also may present opportunities in other areas, such as airport ground handling arrangements, aircraft maintenance insourcing and joint procurement\.

Joint Venture Agreements\.  We currently operate four joint ventures with foreign carriers and have entered into an agreement to form a fifth\. These arrangements, for which we have received antitrust immunity from the U\.S\. Department of Transportation ("DOT"), provide for joint commercial cooperation with our partners within the geographic scope of those arrangements, including the sharing of revenues and/or profits and losses generated by the parties on the joint venture routes, as well as joint marketing and sales, coordinated pricing and revenue management, network planning and scheduling and other coordinated activities with respect to the parties' operations on joint venture routes\. Our commercial joint ventures are:

|   |                                                                                |
| - | ---------------------------------------------------------------------------------------------------------------------------------- |
| • | A transatlantic joint venture with Air France and KLM, both of which are subsidiaries of the same holding company, and Alitalia\.  |

|   |                                                                                |
| - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | A joint venture with Virgin Atlantic Airways with respect to operations on non\-stop routes between the United Kingdom and North America\. In addition to the joint venture, we own a non\-controlling 49% equity stake in Virgin Atlantic Limited, the parent company of Virgin Atlantic Airways\.  |

|   |                                                                                |
| - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| • | A joint venture with Aeroméxico with respect to trans\-border operations on flights between the U\.S\. and Mexico\. In addition to the joint venture, we acquired a non\-controlling 49% equity stake in Grupo Aeroméxico, S\.A\.B\. de C\.V\., the parent company of Aeroméxico\.  In addition, we and Aeroméxico have established a joint venture relating to an airframe maintenance, repair and overhaul operation located in Queretaro, Mexico\. |

|   |                                                                                |
| - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| • | A joint venture with Virgin Australia Airlines and its affiliated carriers with respect to operations on transpacific routes between North America and Australia/New Zealand\. |

|   |                                                                                |
| - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| • | In 2017, we entered into a joint venture with Korean Air Lines with respect to operations on transpacific routes between the United States and certain countries in Asia\. We have not yet implemented this joint venture as it remains subject to receipt of required regulatory approvals in Korea\. |

 2


Annual Report of ALASKA AIR GROUP, INC\. for year 2019

• CASM excluding fuel and certain special items is a measure commonly used by industry analysts and we believe it is an important metric by which they compare our airlines to others in the industry\. The measure is also the subject of frequent questions from investors\.

• Disclosure of the individual impact of certain noted items provides investors the ability to measure and monitor performance both with and without these special items\. We believe that disclosing the impact of certain items, such as merger\-related costs and mark\-to\-market hedging adjustments, is important because it provides information on significant items that are not necessarily indicative of future performance\. Industry analysts and investors consistently measure our performance without these items for better comparability between periods and among other airlines\.

• Although we disclose our passenger unit revenues, we do not (nor are we able to) evaluate unit revenues excluding the impact that changes in fuel costs have had on ticket prices\. Fuel expense represents a large percentage of our total operating expenses\. Fluctuations in fuel prices often drive changes in unit revenues in the mid\-to\-long term\. Although we believe it is useful to evaluate non\-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business\.

Although we are presenting these non\-GAAP amounts for the reasons above, investors and other readers should not necessarily conclude that these amounts are non\-recurring, infrequent, or unusual in nature\.

2019 COMPARED WITH 2018

Our consolidated net income for 2019 was $769 million, or $6\.19 per diluted share, compared to net income of $437 million, or $3\.52 per diluted share, in 2018\.

Excluding the impact of merger\-related costs and mark\-to\-market fuel hedge adjustments, our adjusted consolidated net income for 2019 was $798 million, or $6\.42 per diluted share, compared to an adjusted consolidated net income of $554 million, or $4\.46 per share, in 2018\. The following table reconciles our adjusted net income and earnings per diluted share (EPS) during the full year 2019 and 2018 to amounts as reported in accordance with GAAP\.

|                                                               |                                                               |                                                               |                                  |                                  |                                  |                                  |                                  |                                  |                                  |                                  |                                  |                                  |                                  |                                  |                                  |      |      |      |      |      |      |  |  |  |  |  |  |  |  |  |  |  |  |
|:------------------------------------------------------------- |:------------------------------------------------------------- |:------------------------------------------------------------- | --------------------------------:|:--------------------------------:|:--------------------------------:|:--------------------------------:| --------------------------------:|:--------------------------------:|:--------------------------------:|:--------------------------------:| --------------------------------:|:--------------------------------:|:--------------------------------:|:--------------------------------:| --------------------------------:|:----:|:----:|:----:|:----:|:----:|:----:|:- |:- |:- |:- |:- |:- |:- |:- |:- |:- |:- |:- |
|                                                               |                                                               |                                                               | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, | Twelve Months Ended December 31, |      |      |      |      |      |      |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                               |                                                               |                                                               |                             2019 |               2019               |               2019               |               2019               |                             2019 |                                  |                                  |                                  |                                  |                                  |                                  |                                  |                             2018 | 2018 | 2018 | 2018 | 2018 | 2018 | 2018 |  |  |  |  |  |  |
| *(in millions, except per\-share amounts)*                    | *(in millions, except per\-share amounts)*                    | *(in millions, except per\-share amounts)*                    |                          Dollars |                                  |                                  |                                  |                     Diluted EPS  |                                  |                                  |                                  |                          Dollars |                                  |                                  |                                  |                      Diluted EPS |
| Reported GAAP net income and diluted EPS                      | Reported GAAP net income and diluted EPS                      | Reported GAAP net income and diluted EPS                      |                            $769  |                                  |                                  |                                  |                          $6\.19  |                                  |                                  |                                  |                            $437  |                                  |                                  |                                  |                          $3\.52  |
| Mark\-to\-market fuel hedge adjustments                       | Mark\-to\-market fuel hedge adjustments                       | Mark\-to\-market fuel hedge adjustments                       |                              (6) |                                  |                                  |                                  |                          (0\.05) |                                  |                                  |                                  |                              22  |                                  |                                  |                                  |                           0\.18  |
| Special items \- merger\-related costs                        | Special items \- merger\-related costs                        | Special items \- merger\-related costs                        |                              44  |                                  |                                  |                                  |                           0\.35  |                                  |                                  |                                  |                              87  |                                  |                                  |                                  |                           0\.70  |
| Special items \- other ^(a)^                                  | Special items \- other ^(a)^                                  | Special items \- other ^(a)^                                  |                               —  |                                  |                                  |                                  |                               —  |                                  |                                  |                                  |                              45  |                                  |                                  |                                  |                           0\.36  |
| Income tax effect on special items and fuel hedge adjustments | Income tax effect on special items and fuel hedge adjustments | Income tax effect on special items and fuel hedge adjustments |                              (9) |                                  |                                  |                                  |                          (0\.07) |                                  |                                  |                                  |                             (37) |                                  |                                  |                                  |                          (0\.30) |
| Non\-GAAP adjusted net income and diluted EPS                 | Non\-GAAP adjusted net income and diluted EPS                 | Non\-GAAP adjusted net income and diluted EPS                 |                            $798  |                                  |                                  |                                  |                          $6\.42  |                                  |                                  |                                  |                            $554  |                                  |                                  |                                  |                          $4\.46  |

(a) Special items \- other relates to the employee tax reform bonus awarded in January 2018 and a $20 million contract termination fee incurred in December 2018\.

34


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2019

[Table of Contents](https://www.example.com#s1B306C2BC5705F95B83EC9EC687675EF)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of United Airlines, Inc\. and in the capacities and on the date indicated\.

|                      |                                                                |
| -------------------- | -------------------------------------------------------------- |
| Signature            | Capacity                                                       |
| /s/ Oscar Munoz      | Chief Executive Officer, Director                              |
| Oscar Munoz          | (Principal Executive Officer)                                  |
| /s/ Gerald Laderman  | Executive Vice President and Chief Financial Officer, Director |
| Gerald Laderman      | (Principal Financial Officer)                                  |
| /s/ Chris Kenny      | Vice President and Controller                                  |
| Chris Kenny          | (Principal Accounting Officer)                                 |
| /s/ Gregory L\. Hart | Director                                                       |
| Gregory L\. Hart     |                                                                |
| /s/ J\. Scott Kirby  | Director                                                       |
| J\. Scott Kirby      |                                                                |

|       |                   |
| ----- | ----------------- |
| Date: | February 24, 2020 |

105


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2018

[Table of Contents](https://www.example.com#sCFFD9DA26B5659A3A528A4B51B718F87)

***Operating Expense***

The table below includes data related to the Company's operating expense for the years ended December 31 (in millions, except percentage changes):

|                                                    |          |          |                         |              |
| -------------------------------------------------- | -------- | -------- | ----------------------- | ------------ |
|                                                    | **2018** | **2017** | **Increase (Decrease)** | **% Change** |
| Salaries and related costs                         | $11,458  | $10,941  | $517                    | 4\.7         |
| Aircraft fuel                                      | 9,307    | 6,913    | 2,394                   | 34\.6        |
| Regional capacity purchase                         | 2,601    | 2,232    | 369                     | 16\.5        |
| Landing fees and other rent                        | 2,359    | 2,240    | 119                     | 5\.3         |
| Depreciation and amortization                      | 2,240    | 2,149    | 91                      | 4\.2         |
| Aircraft maintenance materials and outside repairs | 1,767    | 1,856    | (89)                    | (4\.8)       |
| Distribution expenses                              | 1,558    | 1,435    | 123                     | 8\.6         |
| Aircraft rent                                      | 433      | 621      | (188)                   | (30\.3)      |
| Special charges                                    | 487      | 176      | 311                     | NM           |
| Other operating expenses                           | 5,801    | 5,550    | 251                     | 4\.5         |
| Total operating expenses                           | $38,011  | $34,113  | $3,898                  | 11\.4        |

Salaries and related costs increased $517 million, or 4\.7%, in 2018 as compared to 2017, primarily due to higher pay rates, higher benefit expenses (primarily health and pension costs), and a 0\.7% increase in average full\-time employees\.

Aircraft fuel expense increased $2\.4 billion, or 34\.6%, in 2018 as compared to 2017, primarily due to increased fuel prices and a 4\.9% increase in capacity\. The table below presents the significant changes in aircraft fuel cost per gallon for the years ended December 31 (in millions, except percentage changes and per gallon data):

|                                  |          |          |                         |
| -------------------------------- | -------- | -------- | ----------------------- |
|                                  | **2018** | **2017** | **%**

**Change** |
| Fuel expense                     | $9,307   | $6,913   | 34\.6                   |
| Total fuel consumption (gallons) | 4,137    | 3,978    | 4\.0                    |
| Average price per gallon         | $2\.25   | $1\.74   | 29\.3                   |

Regional capacity purchase costs increased $369 million, or 16\.5%, in 2018 as compared to 2017, primarily due to increased flying related to the Company's initiative to improve connectivity at its domestic hubs, as well as rate increases under various capacity purchase agreements ("CPAs") with regional carriers\.

Landing fees and other rent increased $119 million, or 5\.3%, in 2018 as compared to 2017, primarily due to increased rates and our capacity growth\.

Depreciation and amortization increased $91 million, or 4\.2%, in 2018 as compared to 2017, primarily due to additions of new and used aircraft, aircraft improvements and increases in information technology infrastructure and application development projects\.

Aircraft maintenance materials and outside repairs decreased $89 million, or 4\.8%, in 2018 as compared to 2017, primarily due to optimization of fleet retirement schedules and related maintenance costs for those aircraft and timing of certain maintenance events\.

Distribution expenses increased $123 million, or 8\.6%, in 2018 as compared to 2017, primarily due to higher credit card and travel agency booking fees as a result of the overall increase in passenger revenue\.

Aircraft rent decreased $188 million, or 30\.3%, in 2018 as compared to 2017, primarily due to the purchase of leased aircraft, conversion of certain operating leases to capital leases and lease term expirations\.

The table below presents special charges incurred by the Company during the years ended December 31 (in millions):

26


Annual Report of ALASKA AIR GROUP, INC\. for year 2017

***OPERATING REVENUES***

Total operating revenues increased$333 million, or 6%, during 2016 compared to the same period in 2015\. The changes are summarized in the following table:

|                          |                                      |                                      |                                      |
| ------------------------ | ------------------------------------ | ------------------------------------ | ------------------------------------ |
|                          | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** |
| ***(in millions)***      | **2016**                             | **2015**                             | **% Change**                         |
| Passenger                |                                      |                                      |                                      |
| Mainline                 | **$4,098**                           | $3,939                               | 4\.0%                                |
| Regional                 | **908**                              | 854                                  | 6\.3%                                |
| Total passenger revenue  | **$5,006**                           | $4,793                               | 4\.4%                                |
| Freight and mail         | **108**                              | 108                                  | —%                                   |
| Other—net                | **817**                              | 697                                  | 17\.2%                               |
| Total operating revenues | **$5,931**                           | $5,598                               | 5\.9%                                |

***Passenger Revenue—Mainline***

Mainline passenger revenue for 2016increased by 4% due to a 10% increase in capacity, partially offset by a 5% decrease in PRASM compared to 2015\. The increase in capacity was driven by new routes and growth in our operating fleet\. Virgin America capacity from the acquisition date through December 31, 2016 represented approximately 2 points of capacity increase from 2015\. The decrease in PRASM was driven by a 6% decrease in ticket yield due to competitive pressures and our own growth, offset by a slight increase in load factor\. Furthermore, the decline in fuel prices during 2016 contributed to lower ticket prices\.

***Passenger Revenue—Regional***

Regional passenger revenue increased by $54 million, or 6%, compared to 2015 due to a 17% increase in capacity, partially offset by a 9% decrease in PRASM compared to 2015\. The increase in capacity was due to an increase in departures from new E175 deliveries, an increase in average aircraft stage length and the annualization of new routes introduced over the past twelve months\. The decrease in PRASM was due to a 7% decrease in ticket yield, as well as a decrease in load factor of 1\.1 points\. The decrease in yield was due to an increase in competitive capacity in our regional markets and our own growth, as well as an increase in the average trip length of our regional flights\.

***Other—Net***

Other***—***net revenue increased$120 million, or 17%, from 2015, primarily due to increases in Mileage Plan™ revenue\. Mileage Plan™ revenue increased $100 million, or 30%, due to increased miles sold and improved compensation terms with our Mileage Plan™ affinity credit card partner as a result of a contract extension effective January 1, 2016\. Additionally, Mileage Plan™ revenue earned from our partner airlines increased as compared to the prior year\.

***OPERATING EXPENSES***

Total operating expenses increased$282 million, or 7%, compared to 2015, primarily as a result of higher wages and benefits and $117 million of merger\-related costs, partially offset by lower fuel costs\. We believe it is useful to summarize operating expenses as follows, which is consistent with the way expenses are reported internally and evaluated by management:

|                          |                                      |                                      |                                      |
| ------------------------ | ------------------------------------ | ------------------------------------ | ------------------------------------ |
|                          | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** |
| ***(in millions)***      | **2016**                             | **2015**                             | **% Change**                         |
| Fuel expense             | **$831**                             | $954                                 | (12\.9)%                             |
| Non\-fuel expenses       | **3,634**                            | 3,314                                | 9\.7 %                               |
| Special items            | **117**                              | 32                                   | 265\.6 %                             |
| Total Operating Expenses | **$4,582**                           | $4,300                               | 6\.6 %                               |

Significant operating expense variances from 2015 are more fully described below\.

 48


Annual Report of United Continental Holdings, Inc\. and United Airlines, Inc\. for year 2017

##### [Table of Contents](https://www.example.com#toc) #####

|           |                 |                                                                                |
| ---------:|:--------------- |:---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| \*†10\.62 | UAL             | [Form of Performance\-Based RSU Award Notice pursuant to the United Continental Holdings, Inc\. Performance\-Based RSU Program (Relative  Pre\-tax Margin awards) (filed as Exhibit 10\.9 to UAL’s Form  10\-Q for the quarter ended June 30, 2017, Commission file number  1\-6033, and incorporated herein by reference) ](http://www.sec.gov/Archives/edgar/data/100517/000119312517231250/d414345dex109.htm) |
|   †10\.63 | UAL             | [United Continental Holdings, Inc\. Annual Incentive Program (adopted pursuant to the United Continental Holdings, Inc\. 2017 Incentive Compensation Plan) ](https://www.example.com/d471340dex1063.htm)                                                                                |
|   †10\.64 | UAL             | [Form of Annual Incentive Plan Award Notice pursuant to the United Continental Holdings, Inc\. Annual Incentive Program (adopted pursuant to the United Continental Holdings, Inc\. 2017 Incentive Compensation Plan) ](https://www.example.com/d471340dex1064.htm)                                                                                |
| \*^10\.65 | UAL
United | [Airbus A350\-900XWB Purchase Agreement, dated March 5, 2010, by and among Airbus S\.A\.S and United Air Lines\. Inc\. (filed as Exhibit 10\.27 to UAL’s  Form 10\-Q for the quarter ended March 31, 2010, Commission file number  1\-6033, and incorporated herein by reference) ](http://www.sec.gov/Archives/edgar/data/100517/000119312510094960/dex1027.htm)                                                |
| \*^10\.66 | UAL
United | [Letter Agreement No\. 1 to the Airbus A350\-900XWB Purchase Agreement, dated March 5, 2010, by and among Airbus S\.A\.S and United Air Lines\. Inc\. (filed as Exhibit 10\.28 to UAL’s  Form 10\-Q for the quarter ended March 31, 2010, Commission file number  1\-6033, and incorporated herein by reference) ](http://www.sec.gov/Archives/edgar/data/100517/000119312510094960/dex1028.htm)                 |
| \*^10\.67 | UAL
United | [Letter Agreement No\. 2 to the Airbus A350\-900XWB Purchase Agreement, dated March 5, 2010, by and among Airbus S\.A\.S and United Air Lines\. Inc\. (filed as Exhibit 10\.29 to UAL’s  Form 10\-Q for the quarter ended March 31, 2010, Commission file number  1\-6033, and incorporated herein by reference) ](http://www.sec.gov/Archives/edgar/data/100517/000119312510094960/dex1029.htm)                 |
| \*^10\.68 | UAL
United | [Amended and Restated Letter Agreement No\. 2 to the Airbus A350\-900XWB Purchase Agreement, dated June 19, 2013 (filed as Exhibit 10\.9 to UAL’s Form  10\-Q for the quarter ended June 30, 2013, Commission file number  1\-6033, and incorporated herein by reference) ](http://www.sec.gov/Archives/edgar/data/100517/000119312513302696/d552832dex109.htm)                                                  |
| \*^10\.69 | UAL
United | [Letter Agreement No\. 3 to the Airbus A350\-900XWB Purchase Agreement, dated March 5, 2010, by and among Airbus S\.A\.S and United Air Lines\. Inc\. (filed as Exhibit 10\.30 to UAL’s  Form 10\-Q for the quarter ended March 31, 2010, Commission file number  1\-6033, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/100517/000119312510094960/dex1030.htm)                  |
| \*^10\.70 | UAL
United | [Amended and Restated Letter Agreement No\. 3 to the Airbus A350\-900XWB Purchase Agreement, dated June 19, 2013 (filed as Exhibit 10\.10 to UAL’s Form  10\-Q for the quarter ended June 30, 2013, Commission file number  1\-6033, and incorporated herein by reference) ](http://www.sec.gov/Archives/edgar/data/100517/000119312513302696/d552832dex1010.htm)                                                |
| \*^10\.71 | UAL
United | [Letter Agreement No\. 4 to the Airbus A350\-900XWB Purchase Agreement, dated March 5, 2010, by and among Airbus S\.A\.S and United Air Lines\. Inc\. (filed as Exhibit 10\.31 to UAL’s  Form 10\-Q for the quarter ended March 31, 2010, Commission file number  1\-6033, and incorporated herein by reference) ](http://www.sec.gov/Archives/edgar/data/100517/000119312510094960/dex1031.htm)                 |
| \*^10\.72 | UAL
United | [Amended and Restated Letter Agreement No\. 4 to the Airbus A350\-900XWB Purchase Agreement, dated June 19, 2013 (filed as Exhibit 10\.11 to UAL’s Form  10\-Q for the quarter ended June 30, 2013, Commission file number  1\-6033, and incorporated herein by reference) ](http://www.sec.gov/Archives/edgar/data/100517/000119312513302696/d552832dex1011.htm)                                                |
| \*^10\.73 | UAL
United | [Letter Agreement No\. 5 to the Airbus A350\-900XWB Purchase Agreement, dated March 5, 2010, by and among Airbus S\.A\.S and United Air Lines\. Inc\. (filed as Exhibit 10\.32 to UAL’s  Form 10\-Q for the quarter ended March 31, 2010, Commission file number  1\-6033, and incorporated herein by reference) ](http://www.sec.gov/Archives/edgar/data/100517/000119312510094960/dex1032.htm)                 |

117


Annual Report of Southwest Airlines Co\. for year 2019

Southwest Airlines Co\.

Consolidated Statement of Stockholders' Equity

(in millions, except per share amounts)

|                                                                                |                                                  |                                                          |                                                  |                                                                                |                                                  |                                                  |
| -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | -------------------------------------------------------- | ------------------------------------------------ | ---------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------------------------------ |
|                                                                                | **Year ended December 31, 2019, 2018, and 2017** | **Year ended December 31, 2019, 2018, and 2017**         | **Year ended December 31, 2019, 2018, and 2017** | **Year ended December 31, 2019, 2018, and 2017**                                   | **Year ended December 31, 2019, 2018, and 2017** | **Year ended December 31, 2019, 2018, and 2017** |
|                                                                                | **Common**

**Stock**                      | **Capital in**

**excess of**

**par value** | **Retained**

**earnings**                 | **Accumulated**

**other**

**comprehensive**

**income (loss)** | **Treasury**

**stock**                    | **Total**                                        |
| Balance at December 31, 2016                                                                                | $808                                             | $1,410                                                   | $10,761                                          | $

(323

)                                                             | $

(4,872

)                         | $7,784                                           |
| Repurchase of common stock                                                                                | —                                                | —                                                        | —                                                | —                                                                                | (1,600

)                                  | (1,600

)                                  |
| Issuance of common and treasury stock pursuant to Employee stock plans                                                                                | —                                                | 4                                                        | —                                                | —                                                                                | 10                                               | 14                                               |
| Share\-based compensation                                                                                | —                                                | 37                                                       | —                                                | —                                                                                | —                                                | 37                                               |
| Cash dividends, $\.475 per share                                                                                | —                                                | —                                                        | (286

)                                    | —                                                                                | —                                                | (286

)                                    |
| Comprehensive income                                                                                | —                                                | —                                                        | 3,357                                            | 335                                                                                | —                                                | 3,692                                            |
| Balance at December 31, 2017 (as reported)                                                                                | $808                                             | $1,451                                                   | $13,832                                          | $12                                                                                | $

(6,462

)                         | $9,641                                           |
| Cumulative effect of adopting Accounting Standards Update No\. 2017\-12, Targeted Improvements to Accounting for Hedging Activities (See Note 2 to the Consolidated Financial Statements for additional information) | —                                                | —                                                        | 18                                               | (18

)                                                                       | —                                                | —                                                |
| Balance after adjustment for the new accounting standard                                                                                | $808                                             | $1,451                                                   | $13,850                                          | $

(6

)                                                               | $

(6,462

)                         | $9,641                                           |
| Repurchase of common stock                                                                                | —                                                | —                                                        | —                                                | —                                                                                | (2,000

)                                  | (2,000

)                                  |
| Issuance of common and treasury stock pursuant to Employee stock plans                                                                                | —                                                | 13                                                       | —                                                | —                                                                                | 10                                               | 23                                               |
| Share\-based compensation                                                                                | —                                                | 46                                                       | —                                                | —                                                                                | —                                                | 46                                               |
| Cash dividends, $\.605 per share                                                                                | —                                                | —                                                        | (348

)                                    | —                                                                                | —                                                | (348

)                                    |
| Comprehensive income                                                                                | —                                                | —                                                        | 2,465                                            | 26                                                                                | —                                                | 2,491                                            |
| Balance at December 31, 2018 (as reported)                                                                                | $808                                             | $1,510                                                   | $15,967                                          | $20                                                                                | $

(8,452

)                         | $9,853                                           |
| Cumulative effect of adopting Accounting Standards Update No\. 2016\-02, Leases, codified in Accounting Standards Codification 842 (See Note 2 to the Consolidated Financial Statements for additional information)  | —                                                | —                                                        | 55                                               | —                                                                                | —                                                | 55                                               |
| Balance after adjustment for the new accounting standard                                                                                | $808                                             | $1,510                                                   | $16,022                                          | $20                                                                                | $

(8,452

)                         | $9,908                                           |
| Repurchase of common stock                                                                                | —                                                | —                                                        | —                                                | —                                                                                | (2,000

)                                  | (2,000

)                                  |
| Issuance of common and treasury stock pursuant to Employee stock plans                                                                                | —                                                | 16                                                       | —                                                | —                                                                                | 11                                               | 27                                               |
| Share\-based compensation                                                                                | —                                                | 55                                                       | —                                                | —                                                                                | —                                                | 55                                               |
| Cash dividends, $\.700 per share                                                                                | —                                                | —                                                        | (377

)                                    | —                                                                                | —                                                | (377

)                                    |
| Comprehensive income                                                                                | —                                                | —                                                        | 2,300                                            | (81

)                                                                       | —                                                | 2,219                                            |
| Balance at December 31, 2019                                                                                | $808                                             | $1,581                                                   | $17,945                                          | $

(61

)                                                              | $

(10,441

)                        | $9,832                                           |

See accompanying notes\.

67


Annual Report of American Airlines Group Inc\. for year 2018

***Aircraft and Engine Purchase Commitments***

As of December 31, 2018, we had definitive purchase agreements with Airbus, Boeing, Embraer and Bombardier for the acquisition of the following mainline and regional aircraft:

|                |          |          |          |          |          |                         |           |
| -------------- | -------- | -------- | -------- | -------- | -------- | ----------------------- | --------- |
|                | **2019** | **2020** | **2021** | **2022** | **2023** | **2024 and Thereafter** | **Total** |
| **Airbus**     |          |          |          |          |          |                         |           |
| A320neo Family | 17       | 15       | 18       | 20       | 8        | 22                      | 100       |
| **Boeing**     |          |          |          |          |          |                         |           |
| 737 MAX Family | 20       | 10       | 10       | —        | —        | 40                      | 80        |
| 787 Family     | 2        | 12       | 10       | —        | 6        | 19                      | 49        |
| **Embraer**    |          |          |          |          |          |                         |           |
| E175           | 20       | 15       | —        | —        | —        | —                       | 35        |
| **Bombardier** |          |          |          |          |          |                         |           |
| CRJ900         | 11       | 4        | —        | —        | —        | —                       | 15        |
| Total          | 70       | 56       | 38       | 20       | 14       | 81                      | 279       |

We also have agreements for 35 spare engines to be delivered in 2019 and beyond\.

We have financing commitments for all aircraft currently on order and scheduled to be delivered through June 2019\. We do not have financing commitments for the following aircraft currently on order and scheduled to be delivered in the second half of 2019: seven Embraer E175 aircraft, five Airbus A320neo Family aircraft and three Boeing 737 MAX Family aircraft\. We do not have financing commitments in place for remaining aircraft currently on order and scheduled to be delivered in 2020 and beyond, with the exception of four Bombardier CRJ900 aircraft\. See Part I, Item 1A\. Risk Factors –*“We will need to obtain sufficient financing or other capital to operate successfully”* for additional discussion\.

See Note 12 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on aircraft and engine acquisition commitments\.

**Ground Properties**

At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of passenger, operations and baggage handling space as well as runways and taxiways\. These agreements, particularly in the U\.S\., often contain provisions for periodic adjustments to rates and charges applicable under such agreements\. These rates and charges also vary with our level of operations and the operations of the airport\. Additionally, at our hub locations and in certain other cities we serve, we lease administrative offices, catering, cargo, training, maintenance and other facilities\.

We own our corporate headquarters buildings in Fort Worth, Texas\. We lease or have built on leased property our training facilities in Fort Worth, Texas, our principal overhaul and maintenance base in Tulsa, Oklahoma, our regional reservation offices, and administrative offices throughout the U\.S\. and abroad\. Construction continues on a new, five\-building headquarters on the corporate campus in Fort Worth, Texas, which is scheduled for completion and move\-in in phases over the second half of 2019\.

38


Annual Report of American Airlines Group Inc\. for year 2017

*Operating Revenues*

|                          |                                              |                                              |                                              |                                                       |
| ------------------------ | -------------------------------------------- | -------------------------------------------- | -------------------------------------------- | ----------------------------------------------------- |
|                          | **Year Ended December 31,**                  | **Year Ended December 31,**                  | **Increase**

**(Decrease)**           | **Percent**

**Increase**

**(Decrease)** |
|                          | **2016**                                     | **2015**                                     | **Increase**

**(Decrease)**           | **Percent**

**Increase**

**(Decrease)** |
|                          | **(In millions, except percentage changes)** | **(In millions, except percentage changes)** | **(In millions, except percentage changes)** | **(In millions, except percentage changes)**          |
| Mainline passenger       | $27,909                                      | $29,037                                      | $(1,128)                                     | (3\.9)                                                |
| Regional passenger       | 6,670                                        | 6,475                                        | 195                                          | 3\.0                                                  |
| Cargo                    | 700                                          | 760                                          | (60)                                         | (7\.9)                                                |
| Other                    | 4,901                                        | 4,718                                        | 183                                          | 3\.9                                                  |
| Total operating revenues | $40,180                                      | $40,990                                      | $(810)                                       | (2\.0)                                                |

This table presents our total passenger revenues and the year\-over\-year change in certain operating statistics:

|                          |                                       |                                                                |                                                                |                                                                |                                                                |                                                                |                                                                |
| ------------------------ | ------------------------------------- | -------------------------------------------------------------- | -------------------------------------------------------------- | -------------------------------------------------------------- | -------------------------------------------------------------- | -------------------------------------------------------------- | -------------------------------------------------------------- |
|                          |                                       | **Increase (Decrease)
vs\. Year Ended December 31, 2015** | **Increase (Decrease)
vs\. Year Ended December 31, 2015** | **Increase (Decrease)
vs\. Year Ended December 31, 2015** | **Increase (Decrease)
vs\. Year Ended December 31, 2015** | **Increase (Decrease)
vs\. Year Ended December 31, 2015** | **Increase (Decrease)
vs\. Year Ended December 31, 2015** |
|                          | **Year Ended
December 31, 2016** | **Passenger
Revenue**                                     | **RPMs**                                                       | **ASMs**                                                       | **Load
Factor**                                           | **Passenger
Yield**                                       | **PRASM**                                                      |
|                          | **(In millions)**                     |                                                                |                                                                |                                                                |                                                                |                                                                |                                                                |
| Mainline passenger       | $27,909                               | (3\.9)%                                                        | (0\.2)%                                                        | 1\.0%                                                          | (1\.0)pts                                                      | (3\.7)%                                                        | (4\.8)%                                                        |
| Regional passenger       | 6,670                                 | 3\.0%                                                          | 3\.9%                                                          | 7\.9%                                                          | (3\.0)pts                                                      | (0\.9)%                                                        | (4\.5)%                                                        |
| Total passenger revenues | $34,579                               | (2\.6)%                                                        | 0\.2%                                                          | 1\.7%                                                          | (1\.3)pts                                                      | (2\.8)%                                                        | (4\.3)%                                                        |

Total passenger revenues declined $933 million, or 2\.6%, in 2016 from 2015 driven by a 2\.8% decrease in consolidated passenger yields due to competitive capacity growth, macroeconomic softness outside of the United States and foreign currency weakness\.

Cargo revenue decreased $60 million, or 7\.9%, in 2016 from 2015 driven primarily by a decrease in domestic and international freight yields\.

Other revenue primarily includes revenue associated with our loyalty program, baggage fees, ticketing change fees, airport clubs and inflight services\. Other revenue increased $183 million, or 3\.9%, in 2016 from 2015 driven by higher revenues associated with our loyalty program\. In 2016 and 2015, loyalty program revenue was $2\.1 billion and $1\.9 billion, respectively\. Of this, $1\.9 billion and $1\.7 billion related to the marketing component of mileage sales and other marketing related payments, respectively\.

Total operating revenues in 2016decreased $810 million, or 2\.0%, from 2015 driven by lower passenger revenues offset in part by higher other revenue as described above\. Our TRASM was 14\.70 cents in 2016, a 3\.7% decrease as compared to 15\.25 cents in 2015\.

55


Annual Report of American Airlines Group Inc\. for year 2018

|                               |                                                                                |
| ----------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Exhibit**

**Number** | **Description**                                                                                |
| 4\.150                        | [Form of Pass Through Trust Certificate, Series 2017\-2AA (incorporated by reference to Exhibit A to Exhibit 4\.2 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex42.htm)                                                                                |
| 4\.151                        | [Form of Pass Through Trust Certificate, Series 2017\-2A (incorporated by reference to Exhibit A to Exhibit 4\.3 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex43.htm)                                                                                |
| 4\.152                        | [Revolving Credit Agreement (2017\-2AA), dated as of August 14, 2017, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017\-2AA, as Borrower, and National Australia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4\.14 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex414.htm)                                                                                |
| 4\.153                        | [Revolving Credit Agreement (2017\-2A), dated as of August 14, 2017, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2017\-2A, as Borrower, and National Australia Bank Limited, as Liquidity Provider (incorporated by reference to Exhibit 4\.15 to American’s Current Report on Form 8\-K filed on August 14, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517257245/d376721dex415.htm)                                                                                |
| 4\.154                        | [Trust Supplement No\. 2016\-3B, dated as of October 4, 2017, between American Airlines, Inc\. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4\.2 to American’s Current Report on Form 8\-K filed on October 5, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517304687/d466899dex42.htm)                                                                                |
| 4\.155                        | [Amended and Restated Note Purchase Agreement, dated as of October 4, 2017, amending the Note Purchase Agreement, dated as of October 3, 2016, among American Airlines, Inc\., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4\.4 to American’s Current Report on Form 8\-K filed on October 5, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517304687/d466899dex44.htm)                                                                                |
| 4\.156                        | [Form of First Amendment to Participation Agreement (First Amendment to Participation Agreement among American Airlines, Inc\., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein) (incorporated by reference to Exhibit A to Exhibit 4\.4 to American’s Current Report on Form 8\-K filed on October 5, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517304687/d466899dex44.htm)                                                                                |
| 4\.157                        | [Form of First Amendment to Indenture and Security Agreement (First Amendment to Indenture and Security Agreement between American Airlines, Inc\., and Wilmington Trust Company, as Loan Trustee) (incorporated by reference to Exhibit E to Exhibit 4\.6 to American’s Current Report on Form 8\-K filed on October 6, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517305920/d463889dex46.htm#toc463889_35)                                                                                |
| 4\.158                        | [Form of First Amendment to Indenture and Security Agreement (First Amendment to Indenture and Security Agreement between American Airlines, Inc\., and Wilmington Trust Company, as Loan Trustee) (incorporated by reference to Exhibit B to Exhibit 4\.4 to American’s Current Report on Form 8\-K filed on October 5, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517304687/d466899dex44.htm)                                                                                |
| 4\.159                        | [Form of Pass Through Trust Certificate, Series 2016\-3B (incorporated by reference to Exhibit A to Exhibit 4\.2 to American’s Current Report on Form 8\-K filed on October 5, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517304687/d466899dex42.htm)                                                                                |
| 4\.160                        | [Revolving Credit Agreement (2016\-3B), dated as of October 4, 2017, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2016\-3B, as Borrower, and KfW IPEX\-Bank GmbH, as Liquidity Provider 3B (incorporated by reference to Exhibit 4\.8 to American’s Current Report on Form 8\-K filed on October 5, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517304687/d466899dex48.htm)                                                                                |
| 4\.161                        | [Trust Supplement No\. 2017\-2B, dated as of October 5, 2017, between American Airlines, Inc\. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4\.2 to American’s Current Report on Form 8\-K filed on October 6, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517305920/d463889dex42.htm)                                                                                |
| 4\.162                        | [Amended and Restated Intercreditor Agreement (2017\-2), dated as of October 5, 2017, among Wilmington Trust Company, as Trustee of the American Airlines Pass Through Trust 2017\-2AA, as Trustee of the American Airlines Pass Through Trust 2017\-2A and as Trustee of the American Airlines Pass Through Trust 2017\-2B, National Australia Bank Limited, as Class AA Liquidity Provider, Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4\.3 to American’s Current Report on Form 8\-K filed on October 6, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517305920/d463889dex43.htm) |
| 4\.163                        | [Amended and Restated Note Purchase Agreement, dated as of October 5, 2017, among American Airlines, Inc\., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4\.6 to American’s Current Report on Form 8\-K filed on October 6, 2017 (Commission File No\. 1\-2691))\.](http://www.sec.gov/Archives/edgar/data/4515/000119312517305920/d463889dex46.htm)                                                                                |

191


Annual Report of American Airlines Group Inc\. for year 2019

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| ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| \#   | Pursuant to Item 601(b)(2) of Regulation S\-K promulgated by the Securities and Exchange Commission, certain exhibits and schedules to this agreement have been omitted\. Such exhibits and schedules are described in the referenced agreement\. AAG and American hereby agree to furnish to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibits or schedules\. | Pursuant to Item 601(b)(2) of Regulation S\-K promulgated by the Securities and Exchange Commission, certain exhibits and schedules to this agreement have been omitted\. Such exhibits and schedules are described in the referenced agreement\. AAG and American hereby agree to furnish to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibits or schedules\. | Pursuant to Item 601(b)(2) of Regulation S\-K promulgated by the Securities and Exchange Commission, certain exhibits and schedules to this agreement have been omitted\. Such exhibits and schedules are described in the referenced agreement\. AAG and American hereby agree to furnish to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibits or schedules\. | Pursuant to Item 601(b)(2) of Regulation S\-K promulgated by the Securities and Exchange Commission, certain exhibits and schedules to this agreement have been omitted\. Such exhibits and schedules are described in the referenced agreement\. AAG and American hereby agree to furnish to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibits or schedules\. |
| \*   | Confidential treatment has been granted with respect to certain portions of this agreement\.                                                                                | Confidential treatment has been granted with respect to certain portions of this agreement\.                                                                                | Confidential treatment has been granted with respect to certain portions of this agreement\.                                                                                | Confidential treatment has been granted with respect to certain portions of this agreement\.                                                                                |
| \*\* | Certain confidential information contained in this agreement has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed\.                                                                                | Certain confidential information contained in this agreement has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed\.                                                                                | Certain confidential information contained in this agreement has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed\.                                                                                | Certain confidential information contained in this agreement has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed\.                                                                                |
| †    | Management contract or compensatory plan or arrangement\.                                                                                | Management contract or compensatory plan or arrangement\.                                                                                | Management contract or compensatory plan or arrangement\.                                                                                | Management contract or compensatory plan or arrangement\.                                                                                |

183