Part I, Item 2 of this report should be read in conjunction with Part II, Item 7
of AAG's and American's Annual Report on Form 10-K for the year ended
December 31, 2021 (the 2021 Form 10-K). The information contained herein is not
a comprehensive discussion and analysis of the financial condition and results
of operations of AAG and American, but rather updates disclosures made in the
2021 Form 10-K.

Financial Overview

Impact of Coronavirus (COVID-19)



COVID-19 has been declared a global health pandemic by the World Health
Organization. COVID-19 has surfaced in nearly all regions of the world, which
has driven the implementation of significant, government-imposed measures to
prevent or reduce its spread. Ongoing global vaccination efforts and the
corresponding lifting of government restrictions in and between many markets
resulted in a significant and rapid recovery in demand for air travel. The
continued impact of the COVID-19 pandemic, including any increases in infection
rates, new variants and renewed governmental action to slow the spread of
COVID-19 cannot be estimated.

Our capacity (as measured by available seat miles) continues to be reduced compared to pre-COVID-19 pandemic levels, with total capacity in the second quarter of 2022 down 8.5% as compared to the second quarter of 2019. Domestic capacity in the second quarter of 2022 was down 6.6% while international capacity was down 12.1% as compared to the second quarter of 2019.



While demand for domestic and short-haul international markets has largely
recovered to 2019 levels, uncertainty remains regarding the timing of a full
recovery. We will continue to match our forward capacity with observed booking
trends for future travel and make further adjustments to our capacity as needed.

Liquidity



As of June 30, 2022, we had $15.6 billion in total available liquidity,
consisting of $12.5 billion in unrestricted cash and short-term investments,
$2.8 billion in undrawn capacity under revolving credit facilities and a total
of $220 million in undrawn short-term revolving and other facilities.

During the first six months of 2022, we completed the following financing transactions (see Note 5 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information):

•received approximately $574 million in proceeds from enhanced equipment trust certificates (EETCs); and

•repurchased $349 million of unsecured notes on the open market.



A significant portion of our debt financing agreements contain covenants
requiring us to maintain an aggregate of at least $2.0 billion of unrestricted
cash and cash equivalents and amounts available to be drawn under revolving
credit facilities and/or contain covenants requiring us to meet certain loan to
value, collateral coverage and/or peak debt service coverage ratios.

Given our current assumptions about the future impact of the COVID-19 pandemic
on travel demand, which could be materially different due to the inherent
uncertainties of the current operating environment, we expect to meet our cash
obligations as well as remain in compliance with the debt covenants in our
existing financing agreements for the next 12 months based on our current level
of unrestricted cash and short-term investments, our anticipated access to
liquidity (including via proceeds from financings) and projected cash flows from
operations.
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AAG's Second Quarter 2022 Results



The selected financial data presented below is derived from AAG's unaudited
condensed consolidated financial statements included in Part I, Item 1A of this
report and should be read in conjunction with those financial statements and the
related notes thereto.

                                                    Three Months Ended June 30,                                  Percent
                                                     2022                  2021             Increase           Increase (2)
                                                                  (In millions, except percentage changes)
Passenger revenue                              $       12,223          $    6,545          $  5,678                86.8
Cargo revenue                                             328                 326                 2                0.5
Other operating revenue                                   871                 607               264                43.5
Total operating revenues                               13,422               7,478             5,944                79.5
Aircraft fuel and related taxes                         4,020               1,611             2,409               nm (3)
Salaries, wages and benefits                            3,235               2,862               373                13.0
Total operating expenses                               12,405               7,037             5,368                76.3
Operating income                                        1,017                 441               576                 nm
Pre-tax income                                            603                   9               594                 nm
Income tax provision (benefit)                            127                 (10)              137                 nm
Net income                                                476                  19               457                 nm

Pre-tax income - GAAP                          $          603          $        9          $    594                 nm
Adjusted for: pre-tax net special items (1)                84              (1,418)            1,502                 nm
Pre-tax income (loss) excluding net special
items                                          $          687          $   (1,409)         $  2,096                 nm



(1)See below "Reconciliation of GAAP to Non-GAAP Financial Measures" and Note 2 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for details on the components of net special items.

(2)Fluctuations may not be meaningful due to the volatility caused by the COVID-19 pandemic.

(3)Not meaningful or greater than 100% change.

Pre-Tax Income and Net Income



Pre-tax income and net income were $603 million and $476 million, respectively,
in the second quarter of 2022. This compares to second quarter 2021 pre-tax
income and net income of $9 million and $19 million, respectively. The
quarter-over-quarter increase in our pre-tax income on a GAAP basis was due to
higher passenger revenue driven by a significant recovery in demand for air
travel, offset in part by increased aircraft fuel and related taxes, primarily
as a result of an increase in the average price per gallon of aircraft fuel and
a 21.3% increase in capacity as compared to the second quarter of 2021. The
second quarter of 2021 also includes the recognition of $1.4 billion of net
pre-tax special credits principally related to PSP Financial Assistance. See
Note 2 to AAG's Condensed Consolidated Financial Statement in Part I, Item 1A
for further information on net special items.

Excluding the effects of pre-tax net special items, pre-tax income was $687
million in the second quarter of 2022 and pre-tax loss was $1.4 billion in the
second quarter of 2021. The quarter-over-quarter improvement in our pre-tax
income excluding pre-tax net special items was primarily due to higher passenger
revenue driven by a significant recovery in demand for air travel, offset in
part by increased aircraft fuel and related taxes, as described above.
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Revenue



In the second quarter of 2022, we reported total operating revenues of $13.4
billion, an increase of $5.9 billion, or 79.5%, as compared to the second
quarter of 2021. Passenger revenue was $12.2 billion in the second quarter of
2022, an increase of $5.7 billion, or 86.8%, as compared to the second quarter
of 2021. The increase in passenger revenue in the second quarter of 2022 was due
to a 36.9% increase in revenue passenger miles (RPMs), driven by a significant
recovery in demand for air travel, resulting in an 86.9% load factor in the
second quarter of 2022, and a 36.4% increase in passenger yield.

Other operating revenue increased $264 million, or 43.5%, as compared to the
second quarter of 2021, driven primarily by higher revenue associated with our
loyalty program. During the three months ended June 30, 2022 and 2021, cash
payments from co-branded credit card and other partners were $1.0 billion and
$684 million, respectively.

Our total revenue per available seat mile (TRASM) was 20.29 cents in the second quarter of 2022, a 48.0% increase as compared to 13.71 cents in the second quarter of 2021.

Fuel



Aircraft fuel expense was $4.0 billion in the second quarter of 2022, which was
$2.4 billion higher as compared to the second quarter of 2021. This increase was
primarily driven by an increase in the average price per gallon of aircraft fuel
including related taxes to $4.03 in the second quarter of 2022 from $1.91 in the
second quarter of 2021 and an 18.1% increase in gallons of fuel consumed
principally due to increased capacity.

As of June 30, 2022, we did not have any fuel hedging contracts outstanding to
hedge our fuel consumption. Our current policy is not to enter into transactions
to hedge our fuel consumption, although we review that policy from time to time
based on market conditions and other factors. As such, and assuming we do not
enter into any future transactions to hedge our fuel consumption, we will
continue to be fully exposed to fluctuations in fuel prices.

Other Costs



We remain committed to actively managing our cost structure, which we believe is
necessary in an industry whose economic prospects are heavily dependent upon two
variables we cannot control: general economic conditions and the price of fuel.
In particular, the onset of the COVID-19 pandemic resulted in a very rapid
deterioration in general economic conditions, and the subsequent rapid economic
expansion resulted in significant inflationary pressures, including on the cost
of fuel.

Our 2022 second quarter total operating cost per available seat mile (CASM) was
18.75 cents, an increase of 45.3%, from 12.90 cents in the second quarter of
2021. This increase in CASM was primarily driven by higher aircraft fuel and
related taxes in the second quarter of 2022, as described above, and the
recognition of $1.5 billion of net special credits in the second quarter of 2021
related to PSP Financial Assistance.

Our 2022 second quarter CASM excluding net special items and fuel was 12.68 cents, an increase of 0.5%, from 12.61 cents in the second quarter of 2021.

For a reconciliation of CASM to CASM excluding net special items and fuel, see below "Reconciliation of GAAP to Non-GAAP Financial Measures."


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Reconciliation of GAAP to Non-GAAP Financial Measures



We sometimes use financial measures that are derived from the condensed
consolidated financial statements but that are not presented in accordance with
accounting principles generally accepted in the U.S. (GAAP) to understand and
evaluate our current operating performance and to allow for period-to-period
comparisons. We believe these non-GAAP financial measures may also provide
useful information to investors and others. These non-GAAP measures may not be
comparable to similarly titled non-GAAP measures of other companies, and should
be considered in addition to, and not as a substitute for or superior to, any
measure of performance, cash flow or liquidity prepared in accordance with GAAP.
We are providing a reconciliation of reported non-GAAP financial measures to
their comparable financial measures on a GAAP basis.

The following table presents the reconciliation of pre-tax income (loss) (GAAP
measure) to pre-tax income (loss) excluding net special items (non-GAAP
measure). Management uses this non-GAAP financial measure to evaluate our
current operating performance and to allow for period-to-period comparisons. As
net special items may vary from period-to-period in nature and amount, the
adjustment to exclude net special items allows management an additional tool to
understand our core operating performance.

                                                              Three Months Ended                     Six Months Ended
                                                                   June 30,                              June 30,
                                                            2022                2021              2022              2021
                                                                                  (In millions)
Reconciliation of Pre-Tax Income (Loss) Excluding Net
Special Items:
Pre-tax income (loss) - GAAP                          $     603              $      9          $ (1,483)         $ (1,564)
Pre-tax net special items (1):
Operating special items, net                                 (5)               (1,455)              152            (3,377)
Nonoperating special items, net                              89                    37                92                13
Total pre-tax net special items                              84                (1,418)              244            (3,364)
Pre-tax income (loss) excluding net special items     $     687              $ (1,409)         $ (1,239)         $ (4,928)

(1)See Note 2 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.


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Additionally, the table below presents the reconciliation of total operating
costs (GAAP measure) to total operating costs excluding net special items and
fuel (non-GAAP measure) and CASM to CASM excluding net special items and fuel.
Management uses total operating costs excluding net special items and fuel and
CASM excluding net special items and fuel to evaluate our current operating
performance and for period-to-period comparisons. The price of fuel, over which
we have no control, impacts the comparability of period-to-period financial
performance. The adjustment to exclude fuel and net special items allows
management an additional tool to understand and analyze our non-fuel costs and
core operating performance. Amounts may not recalculate due to rounding.

                                                             Three Months Ended                    Six Months Ended
                                                                  June 30,                             June 30,
                                                           2022               2021              2022              2021
Reconciliation of CASM Excluding Net Special Items
and Fuel:
(In millions)
Total operating expenses - GAAP                       $    12,405          $  7,037          $ 23,027          $ 12,360
Operating net special items (1):
Mainline operating special items, net                           5             1,288              (152)            2,996
Regional operating special items, net                           -               167                 -               381
Aircraft fuel and related taxes                            (4,020)           (1,611)           (6,522)           (2,644)

Total operating expenses, excluding net special items and fuel

$     8,390

$ 6,881 $ 16,353 $ 13,093



Total Available Seat Miles (ASM)                           66,163            54,555           125,697            92,319
(In cents)
CASM                                                        18.75             12.90             18.32             13.39
Operating net special items per ASM (1):
Mainline operating special items, net                        0.01              2.36             (0.12)             3.25
Regional operating special items, net                           -              0.31                 -              0.41
Aircraft fuel and related taxes per ASM                     (6.08)            (2.95)            (5.19)            (2.86)
CASM, excluding net special items and fuel                  12.68             12.61             13.01             14.18



(1)See Note 2 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.


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AAG's Results of Operations

Operating Statistics

The table below sets forth selected operating data for the three and six months ended June 30, 2022 and 2021. Amounts may not recalculate due to rounding.



                                                    Three Months Ended                                             Six Months Ended
                                                         June 30,                                                      June 30,
                                                2022                   2021             Increase               2022                  2021             Increase
Revenue passenger miles (millions) (a)         57,516                42,022               36.9%              101,806                64,486              

57.9%


Available seat miles (millions) (b)            66,163                54,555               21.3%              125,697                92,319              

36.2%


Passenger load factor (percent) (c)              86.9                  77.0              9.9pts                 81.0                  69.9             11.1pts
Yield (cents) (d)                               21.25                 15.57               36.4%                19.69                 15.08              30.5%
Passenger revenue per available seat mile
(cents) (e)                                     18.47                 12.00               54.0%                15.94                 10.53              

51.4%


Total revenue per available seat mile
(cents) (f)                                     20.29                 13.71               48.0%                17.76                 12.44              

42.7%


Fuel consumption (gallons in millions)            997                   844               18.1%                1,891                 1,452              

30.2%


Average aircraft fuel price including
related taxes (dollars per gallon)               4.03                  1.91                 nm                  3.45                  1.82              

89.4%


Total operating cost per available seat
mile (cents) (g)                                18.75                 12.90               45.3%                18.32                 13.39              

36.8%


Aircraft at end of period (h)                   1,471                 1,413               4.1%                 1,471                 1,413              

4.1%


Full-time equivalent employees at end of
period                                        129,200               117,400               10.1%              129,200               117,400              10.1%



(a)Revenue passenger mile (RPM) - A basic measure of sales volume. One RPM represents one passenger flown one mile.

(b)Available seat mile (ASM) - A basic measure of production. One ASM represents one seat flown one mile.

(c)Passenger load factor - The percentage of available seats that are filled with revenue passengers.

(d)Yield - A measure of airline revenue derived by dividing passenger revenue by RPMs.

(e)Passenger revenue per available seat mile (PRASM) - Passenger revenue divided by ASMs.

(f)Total revenue per available seat mile (TRASM) - Total revenues divided by ASMs.

(g)Total operating cost per available seat mile (CASM) - Total operating expenses divided by ASMs.



(h)Includes aircraft owned and leased by American as well as aircraft operated
by third-party regional carriers under capacity purchase agreements. Excludes 20
mainline aircraft and 19 regional aircraft that are in temporary storage at
June 30, 2022 as follows: 20 Boeing 737-800, 15 Embraer 145 and four Embraer
170.
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Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Operating Revenues

                                   Three Months Ended
                                        June 30,                                 Percent
                                   2022               2021        Increase      Increase
                                      (In millions, except percentage changes)
Passenger                  $       12,223           $ 6,545      $  5,678         86.8
Cargo                                 328               326             2          0.5
Other                                 871               607           264         43.5
Total operating revenues   $       13,422           $ 7,478      $  5,944         79.5

This table presents our passenger revenue and the quarter-over-quarter change in certain operating statistics:



                                                                                                      Increase
                                                                                        vs. Three Months Ended June 30, 2021
                                       Three Months
                                          Ended                                                          Load                Passenger
                                      June 30, 2022            RPMs                 ASMs                Factor                 Yield             PRASM
                                      (In millions)
Passenger revenue                    $      12,223             36.9%                21.3%               9.9pts                 36.4%             54.0%


Passenger revenue increased $5.7 billion, or 86.8%, in the second quarter of
2022 from the second quarter of 2021 primarily due to a 36.9% increase in RPMs,
driven by a significant recovery in demand for air travel, resulting in an 86.9%
load factor in the second quarter of 2022, and a 36.4% increase in passenger
yield.

Other operating revenue increased $264 million, or 43.5%, as compared to the
second quarter of 2021, driven primarily by higher revenue associated with our
loyalty program.

Total operating revenues in the second quarter of 2022 increased $5.9 billion,
or 79.5%, from the second quarter of 2021 driven principally by the increase in
passenger revenue as described above. Our TRASM increased 48.0% to 20.29 cents
in the second quarter of 2022 from 13.71 cents in the second quarter of 2021.

Operating Expenses


                                            Three Months Ended                            Percent
                                                 June 30,               Increase          Increase
                                            2022           2021        (Decrease)        (Decrease)
                                                  (In millions, except percentage changes)
Aircraft fuel and related taxes         $     4,020      $ 1,611      $     2,409            nm
Salaries, wages and benefits                  3,235        2,862              373           13.0
Regional expenses                             1,072          635              437           68.5
Maintenance, materials and repairs              647          459              188           40.9
Other rent and landing fees                     694          686                8           1.2
Aircraft rent                                   345          356              (11)         (2.9)
Selling expenses                                504          277              227           82.2
Depreciation and amortization                   504          481               23           4.8
Mainline operating special items, net            (5)      (1,288)           1,283          (99.6)
Other                                         1,389          958              431           45.0
Total operating expenses                $    12,405      $ 7,037      $     5,368           76.3


Total operating expenses increased $5.4 billion, or 76.3%, in the second quarter
of 2022 from the second quarter of 2021 driven by higher aircraft fuel and
related taxes and other expenses, primarily as a result of an increase in the
average price per gallon of aircraft fuel and increased capacity, as well as an
increase in net operating special items related to the $1.5 billion of PSP
Financial Assistance recognized as a net special credit in the second quarter of
2021. See further discussion of operating special items, net below.
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Aircraft fuel and related taxes increased $2.4 billion in the second quarter of
2022 from the second quarter of 2021 primarily due to an increase in the average
price per gallon of aircraft fuel including related taxes to $4.03 in the second
quarter of 2022 from $1.91 in the second quarter of 2021 and an 18.1% increase
in gallons of fuel consumed principally due to increased capacity.

Salaries, wages and benefits increased $373 million, or 13.0%, in the second
quarter of 2022 from the second quarter of 2021 primarily due to a 12.1%
increase in mainline full-time equivalent employees subsequent to the second
quarter of 2021.

Regional expenses increased $437 million, or 68.5%, in the second quarter of
2022 from the second quarter of 2021 primarily due to pay rate increases and
retention bonuses offered at our wholly-owned regional carriers as well as
contractual rate increases with our third-party regional carriers. The second
quarter of 2021 also includes the recognition of $167 million of PSP Financial
Assistance as a regional operating special credit.

Maintenance, materials and repairs increased $188 million, or 40.9%, in the
second quarter of 2022 from the second quarter of 2021 primarily due to
increased capacity and an increase in the volume of engine overhauls performed
under time and material contracts where expense is incurred and recognized as
maintenance is performed.

Selling expenses increased $227 million, or 82.2%, in the second quarter of 2022 from the second quarter of 2021 due to higher credit card fees, commission expense and booking fees driven by the overall increase in revenues.



Other operating expenses increased $431 million, or 45.0%, in the second quarter
of 2022 from the second quarter of 2021 primarily as a result of increased
capacity and expenses associated with improving our product offerings, customer
experience and operational reliability.

Operating Special Items, Net

                                               Three Months Ended June 30,
                                                   2022                   2021
                                                      (In millions)

PSP Financial Assistance (1)            $        -                     $ (1,288)

Other operating special items, net              (5)                         

-


Mainline operating special items, net           (5)                      (1,288)

PSP Financial Assistance (1)                     -                         (167)

Regional operating special items, net            -                         (167)
Operating special items, net            $       (5)                    $ (1,455)




(1)The PSP Financial Assistance represents recognition of a portion of the
financial assistance received from the U.S. Department of Treasury (Treasury)
pursuant to the payroll support program established under the PSP Extension Law
(PSP2) and the American Rescue Plan Act of 2021 (ARP) (PSP3).

Nonoperating Results


                                        Three Months Ended                              Percent
                                             June 30,                 Increase          Increase
                                         2022             2021       (Decrease)        (Decrease)
                                              (In millions, except percentage changes)
Interest income                   $       29            $    5      $        24            nm
Interest expense, net                   (468)             (486)              18          (3.7)
Other income, net                         25                49              (24)         (50.4)
Total nonoperating expense, net   $     (414)           $ (432)     $       

18 (4.0)

Interest income increased in the second quarter of 2022 compared to the second quarter of 2021 primarily as a result of higher returns on our short-term investments.


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In the second quarter of 2022, other nonoperating income, net primarily included
$106 million of non-service related pension and other postretirement benefit
plan income, offset in part by $89 million of net special charges principally
for mark-to-market net unrealized losses associated with our equity investments
in Vertical Aerospace Ltd. (Vertical), GOL Linhas Aéreas Inteligentes S.A. (GOL)
and China Southern Airlines Company Limited (China Southern Airlines).

In the second quarter of 2021, other nonoperating income, net included $85
million of non-service related pension and other postretirement benefit plan
income, offset in part by $37 million of net special charges principally for
mark-to-market net unrealized losses associated with our equity investment in
China Southern Airlines.

Income Taxes

In the second quarter of 2022, we recorded an income tax provision of $127 million. Substantially all of our income or loss before income taxes is attributable to the United States.

See Note 6 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021



Operating Revenues

                                    Six Months Ended
                                        June 30,                                 Percent
                                   2022               2021        Increase      Increase
                                      (In millions, except percentage changes)
Passenger                  $    20,041             $  9,724      $ 10,317           nm
Cargo                              692                  641            51          7.8
Other                            1,588                1,121           467         41.7
Total operating revenues   $    22,321             $ 11,486      $ 10,835         94.3

This table presents our passenger revenue and the period-over-period change in certain operating statistics:



                                                                                                         Increase
                                                                                            vs. Six Months Ended June 30, 2021
                                      Six Months Ended                                                       Load               Passenger
                                        June 30, 2022             RPMs                 ASMs                 Factor                Yield             PRASM
                                        (In millions)
Passenger revenue                    $         20,041             57.9%                36.2%               11.1pts                30.5%             51.4%


Passenger revenue increased $10.3 billion in the first six months of 2022 from
the first six months of 2021 primarily due to a 57.9% increase in RPMs, driven
by a significant recovery in demand for air travel, resulting in an 81.0% load
factor in the first six months of 2022, and a 30.5% increase in passenger yield.

Cargo revenue increased $51 million, or 7.8%, in the first six months of 2022
from the first six months of 2021 primarily due to a 13.1% increase in cargo
yield, offset in part by a 4.7% decrease in cargo ton miles driven by the
reduced operation of cargo-only flights.

Other operating revenue increased $467 million, or 41.7%, in the first six months of 2022 from the first six months of 2021, driven primarily by higher revenue associated with our loyalty program.



Total operating revenues in the first six months of 2022 increased $10.8
billion, or 94.3%, from the first six months of 2021 driven principally by the
increase in passenger revenue as described above. Our TRASM increased 42.7% to
17.76 cents in the first six months of 2022 from 12.44 cents in the first six
months of 2021.
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Operating Expenses


                                            Six Months Ended                             Percent
                                                June 30,               Increase          Increase
                                           2022           2021        (Decrease)        (Decrease)
                                                  (In millions, except percentage changes)
Aircraft fuel and related taxes         $   6,522      $  2,644      $     3,878            nm
Salaries, wages and benefits                6,389         5,593              796           14.2
Regional expenses                           2,124         1,261              863           68.4
Maintenance, materials and repairs          1,264           835              429           51.3
Other rent and landing fees                 1,372         1,256              116           9.2
Aircraft rent                                 698           706               (8)         (1.1)
Selling expenses                              836           427              409           95.8
Depreciation and amortization                 995           959               36           3.8
Mainline operating special items, net         152        (2,996)           3,148            nm
Other                                       2,675         1,675            1,000           59.8
Total operating expenses                $  23,027      $ 12,360      $    10,667           86.3


Total operating expenses increased $10.7 billion, or 86.3%, in the first six
months of 2022 from the first six months of 2021 driven by higher aircraft fuel
and related taxes and other expenses, primarily as a result of an increase in
the average price per gallon of aircraft fuel and increased capacity, as well as
an increase in net operating special items principally related to the
$3.6 billion of PSP Financial Assistance recognized as a net special credit in
the first six months of 2021. See further discussion of operating special items,
net below.

Aircraft fuel and related taxes increased $3.9 billion in the first six months
of 2022 from the first six months of 2021 primarily due to an 89.4% increase in
the average price per gallon of aircraft fuel including related taxes to $3.45
in the first six months of 2022 from $1.82 in the first six months of 2021 and a
30.2% increase in gallons of fuel consumed principally due to increased
capacity.

Salaries, wages and benefits increased $796 million, or 14.2%, in the first six
months of 2022 from the first six months of 2021 primarily due to a 12.1%
increase in mainline full-time equivalent employees subsequent to the second
quarter of 2021.

Regional expenses increased $863 million, or 68.4%, in the first six months of
2022 from the first six months of 2021 primarily due to increased capacity, pay
rate increases and retention bonuses offered at our wholly-owned regional
carriers, as well as contractual rate increases with our third-party regional
carriers. The first six months of 2021 also includes the recognition of
$410 million of PSP Financial Assistance as a regional operating special credit.

Maintenance, materials and repairs increased $429 million, or 51.3%, in the
first six months of 2022 from the first six months of 2021 primarily due to
increased capacity and an increase in the volume of engine overhauls performed
under time and material contracts where expense is incurred and recognized as
maintenance is performed.

Other rent and landing fees increased $116 million, or 9.2%, in the first six
months of 2022 from the first six months of 2021 primarily due to an increase in
landing fees as a result of increased departures.

Selling expenses increased $409 million, or 95.8%, in the first six months of 2022 from the first six months of 2021 due to higher credit card fees, commission expense and booking fees driven by the overall increase in revenues.

Other operating expenses increased $1.0 billion, or 59.8%, in the first six months of 2022 from the first six months of 2021 primarily as a result of increased capacity and expenses associated with improving our product offerings, customer experience and operational reliability.


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Operating Special Items, Net



                                                                         Six Months Ended June 30,
                                                                         2022                  2021
                                                                               (In millions)
Fleet impairment (1)                                                $        149          $         -
PSP Financial Assistance (2)                                                   -               (3,170)
Severance expenses (3)                                                         -                  168
Mark-to-market adjustments on bankruptcy obligations, net                      -                    6

Other operating special items, net                                             3                    -
Mainline operating special items, net                                        152               (2,996)

PSP Financial Assistance (2)                                                   -                 (410)

Fleet impairment (1)                                                           -                   27
Severance expenses (3)                                                         -                    2

Regional operating special items, net                                          -                 (381)
Operating special items, net                                        $        152          $    (3,377)




(1)Fleet impairment for the six months ended June 30, 2022 included a non-cash
impairment charge to write down the carrying value of our retired Airbus A330
fleet to the estimated fair value due to current market conditions for certain
used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the
decline in demand for air travel due to the COVID-19 pandemic.

Fleet impairment for the six months ended June 30, 2021 included a non-cash impairment charge to write down regional aircraft resulting from the retirement of the remaining Embraer 140 fleet earlier than planned.

(2)The PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the payroll support program established under PSP2 and PSP3.



(3)Severance expenses include salary and medical costs primarily associated with
certain team members who opted into voluntary early retirement programs offered
as a result of reductions to our operation due to the COVID-19 pandemic. Cash
payments related to our voluntary early retirement programs for the six months
ended June 30, 2022 and 2021 were approximately $140 million and $290 million,
respectively.

Nonoperating Results


                                       Six Months Ended                             Percent
                                           June 30,                Increase         Increase
                                       2022            2021       (Decrease)       (Decrease)
                                            (In millions, except percentage changes)
Interest income                   $      37          $    8      $       29            nm
Interest expense, net                  (932)           (856)            (76)          8.8
Other income, net                       118             158            

(40) (25.7) Total nonoperating expense, net $ (777) $ (690) $ (87) 12.6




Interest income increased in the first six months of 2022 compared to the first
six months of 2021 primarily as a result of higher returns on our short-term
investments.

Interest expense, net increased in the first six months of 2022 compared to the
first six months of 2021 primarily due to the impact of the AAdvantage Financing
issued at the end of the first quarter of 2021, which improved our liquidity
position in response to the COVID-19 pandemic.
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In the first six months of 2022, other nonoperating income, net primarily
included $211 million of non-service related pension and other postretirement
benefit plan income, offset in part by $92 million of net special charges
principally for mark-to-market net unrealized losses associated with our equity
investments in GOL, Vertical and China Southern Airlines.

In the first six months of 2021, other nonoperating income, net included $172
million of non-service related pension and other postretirement benefit plan
income and $13 million of net special charges principally for non-cash charges
associated with debt refinancings and extinguishments, offset in part by
mark-to-market net unrealized gains associated with our equity investment in
China Southern Airlines and other instruments.

Income Taxes

In the first six months of 2022, we recorded an income tax benefit of $324 million. Substantially all of our income or loss before income taxes is attributable to the United States.

See Note 6 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.

American's Results of Operations



Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Operating Revenues

                                   Three Months Ended
                                        June 30,                                 Percent
                                   2022               2021        Increase      Increase
                                      (In millions, except percentage changes)
Passenger                  $       12,223           $ 6,545      $  5,678         86.8
Cargo                                 328               326             2          0.5
Other                                 870               607           263         43.4
Total operating revenues   $       13,421           $ 7,478      $  5,943         79.5

Passenger revenue increased $5.7 billion, or 86.8%, in the second quarter of 2022 from the second quarter of 2021 primarily due to an increase in RPMs, driven by a significant recovery in demand for air travel, resulting in an increased load factor in the second quarter of 2022, and an increase in passenger yield.

Other operating revenue increased $263 million, or 43.4%, as compared to the second quarter of 2021, driven primarily by higher revenue associated with American's loyalty program.



Total operating revenues in the second quarter of 2022 increased $5.9 billion,
or 79.5%, from the second quarter of 2021 driven principally by the increase in
passenger revenue as described above.
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Operating Expenses


                                            Three Months Ended                            Percent
                                                 June 30,               Increase          Increase
                                            2022           2021        (Decrease)        (Decrease)
                                                  (In millions, except percentage changes)
Aircraft fuel and related taxes         $     4,020      $ 1,611      $     2,409            nm
Salaries, wages and benefits                  3,233        2,860              373           13.0
Regional expenses                             1,058          639              419           65.3
Maintenance, materials and repairs              647          459              188           40.9
Other rent and landing fees                     694          686                8           1.2
Aircraft rent                                   345          356              (11)         (2.9)
Selling expenses                                504          277              227           82.2
Depreciation and amortization                   501          481               20           4.3
Mainline operating special items, net            (5)      (1,288)           1,283          (99.6)
Other                                         1,390          958              432           45.0
Total operating expenses                $    12,387      $ 7,039      $     5,348           76.0


Total operating expenses increased $5.3 billion, or 76.0%, in the second quarter
of 2022 from the second quarter of 2021 driven by higher aircraft fuel and
related taxes and other expenses, primarily as a result of an increase in the
average price per gallon of aircraft fuel and increased capacity, as well as an
increase in net operating special items related to the $1.5 billion of PSP
Financial Assistance recognized as a net special credit in the second quarter of
2021. See further discussion of operating special items, net below.

Aircraft fuel and related taxes increased $2.4 billion in the second quarter of
2022 from the second quarter of 2021 primarily due to an increase in the average
price per gallon of aircraft fuel including related taxes to $4.03 in the second
quarter of 2022 from $1.91 in the second quarter of 2021 and an 18.1% increase
in gallons of fuel consumed principally due to increased capacity.

Salaries, wages and benefits increased $373 million, or 13.0%, in the second
quarter of 2022 from the second quarter of 2021 primarily due to a 12.1%
increase in mainline full-time equivalent employees subsequent to the second
quarter of 2021.

Regional expenses increased $419 million, or 65.3%, in the second quarter of
2022 from the second quarter of 2021 primarily due to contractual rate increases
with American's third-party regional carriers. The second quarter of 2021 also
includes the recognition of $167 million of PSP Financial Assistance as a
regional operating special credit.

Maintenance, materials and repairs increased $188 million, or 40.9%, in the
second quarter of 2022 from the second quarter of 2021 primarily due to
increased capacity and an increase in the volume of engine overhauls performed
under time and material contracts where expense is incurred and recognized as
maintenance is performed.

Selling expenses increased $227 million, or 82.2%, in the second quarter of 2022 from the second quarter of 2021 due to higher credit card fees, commission expense and booking fees driven by the overall increase in revenues.



Other operating expenses increased $432 million, or 45.0%, in the second quarter
of 2022 from the second quarter of 2021 primarily as a result of increased
capacity and expenses associated with improving American's product offerings,
customer experience and operational reliability.
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Operating Special Items, Net

                                               Three Months Ended June 30,
                                                   2022                   2021
                                                      (In millions)

PSP Financial Assistance (1)            $        -                     $ (1,288)

Other operating special items, net              (5)                         

-


Mainline operating special items, net           (5)                      (1,288)

PSP Financial Assistance (1)                     -                         (167)

Regional operating special items, net            -                         (167)
Operating special items, net            $       (5)                    $ (1,455)

(1)The PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the payroll support program established under PSP2 and PSP3.



Nonoperating Results


                                        Three Months Ended                              Percent
                                             June 30,                 Increase          Increase
                                         2022             2021       (Decrease)        (Decrease)
                                              (In millions, except percentage changes)
Interest income                   $       41            $    9      $        32            nm
Interest expense, net                   (437)             (447)              10          (2.2)
Other income, net                         23                49              (26)         (51.5)
Total nonoperating expense, net   $     (373)           $ (389)     $       

16 (4.2)




Interest income increased in the second quarter of 2022 compared to the second
quarter of 2021 primarily as a result of higher returns on American's short-term
investments.

In the second quarter of 2022, other nonoperating income, net primarily included
$105 million of non-service related pension and other postretirement benefit
plan income, offset in part by $89 million of net special charges principally
for mark-to-market net unrealized losses associated with American's equity
investments in Vertical, GOL and China Southern Airlines.

In the second quarter of 2021, other nonoperating income, net included $85
million of non-service related pension and other postretirement benefit plan
income, offset in part by $37 million of net special charges principally for
mark-to-market net unrealized losses associated with American's equity
investment in China Southern Airlines.

Income Taxes

American is a member of AAG's consolidated federal and certain state income tax returns.



In the second quarter of 2022, American recorded an income tax provision of $140
million. Substantially all of American's income or loss before income taxes is
attributable to the United States.

See Note 5 to American's Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.


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Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021



Operating Revenues

                                    Six Months Ended
                                        June 30,                                 Percent
                                   2022               2021        Increase      Increase
                                      (In millions, except percentage changes)
Passenger                  $    20,041             $  9,724      $ 10,317          nm
Cargo                              692                  641            51          7.8
Other                            1,584                1,120           464         41.4
Total operating revenues   $    22,317             $ 11,485      $ 10,832         94.3


Passenger revenue increased $10.3 billion in the first six months of 2022 from
the first six months of 2021 primarily due to an increase in RPMs, driven by a
significant recovery in demand for air travel, resulting in an increased load
factor in the first six months of 2022, and an increase in passenger yield.

Cargo revenue increased $51 million, or 7.8%, in the first six months of 2022
from the first six months of 2021 primarily due to an increase in cargo yield,
offset in part by a decrease in cargo ton miles driven by the reduced operation
of cargo-only flights.

Other operating revenue increased $464 million, or 41.4%, in the first six months of 2022 from the first six months of 2021, driven primarily by higher revenue associated with American's loyalty program.

Total operating revenues in the first six months of 2022 increased $10.8 billion, or 94.3%, from the first six months of 2021 driven principally by the increase in passenger revenue as described above.



Operating Expenses


                                            Six Months Ended                             Percent
                                                June 30,               Increase          Increase
                                           2022           2021        (Decrease)        (Decrease)
                                                  (In millions, except percentage changes)
Aircraft fuel and related taxes         $   6,522      $  2,644      $     3,878            nm
Salaries, wages and benefits                6,385         5,590              795           14.2
Regional expenses                           2,081         1,264              817           64.6
Maintenance, materials and repairs          1,264           835              429           51.3
Other rent and landing fees                 1,372         1,256              116           9.2
Aircraft rent                                 698           706               (8)         (1.1)
Selling expenses                              836           427              409           95.8
Depreciation and amortization                 992           959               33           3.5
Mainline operating special items, net         152        (2,996)           3,148            nm
Other                                       2,676         1,676            1,000           59.7
Total operating expenses                $  22,978      $ 12,361      $    10,617           85.9


Total operating expenses increased $10.6 billion, or 85.9%, in the first six
months of 2022 from the first six months of 2021, driven by higher aircraft fuel
and related taxes and other expenses, primarily as a result of an increase in
the average price per gallon of aircraft fuel and increased capacity, as well as
an increase in net operating special items principally related to the
$3.6 billion of PSP Financial Assistance recognized as a net special credit in
the first six months of 2021. See further discussion of operating special items,
net below.

Aircraft fuel and related taxes increased $3.9 billion in the first six months
of 2022 from the first six months of 2021 primarily due to an 89.4% increase in
the average price per gallon of aircraft fuel including related taxes to $3.45
in the first six months of 2022 from $1.82 in the first six months of 2021 and a
30.2% increase in gallons of fuel consumed principally due to increased
capacity.
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Salaries, wages and benefits increased $795 million, or 14.2%, in the first six
months of 2022 from the first six months of 2021 primarily due to a 12.1%
increase in mainline full-time equivalent employees subsequent to the second
quarter of 2021.

Regional expenses increased $817 million, or 64.6%, in the first six months of
2022 from the first six months of 2021 primarily due to increased capacity and
contractual rate increases with American's third-party regional carriers. The
first six months of 2021 also includes the recognition of $410 million of PSP
Financial Assistance as a regional operating special credit.

Maintenance, materials and repairs increased $429 million, or 51.3%, in the
first six months of 2022 from the first six months of 2021 primarily due to
increased capacity and an increase in the volume of engine overhauls performed
under time and material contracts where expense is incurred and recognized as
maintenance is performed.

Other rent and landing fees increased $116 million, or 9.2%, in the first six
months of 2022 from the first six months of 2021 primarily due to an increase in
landing fees as a result of increased departures.

Selling expenses increased $409 million, or 95.8%, in the first six months of 2022 from the first six months of 2021 due to higher credit card fees, commission expense and booking fees driven by the overall increase in revenues.

Other operating expenses increased $1.0 billion, or 59.7%, in the first six months of 2022 from the first six months of 2021 primarily as a result of increased capacity and expenses associated with improving American's product offerings, customer experience and operational reliability.

Operating Special Items, Net



                                                                         Six Months Ended June 30,
                                                                         2022                  2021
                                                                               (In millions)
Fleet impairment (1)                                                $        149          $         -
PSP Financial Assistance (2)                                                   -               (3,170)
Severance expenses (3)                                                         -                  168
Mark-to-market adjustments on bankruptcy obligations, net                      -                    6

Other operating special items, net                                             3                    -
Mainline operating special items, net                                        152               (2,996)

PSP Financial Assistance (2)                                                   -                 (410)
Fleet impairment (1)                                                           -                   27
Regional operating special items, net                                          -                 (383)
Operating special items, net                                        $        152          $    (3,379)




(1)Fleet impairment for the six months ended June 30, 2022 included a non-cash
impairment charge to write down the carrying value of American's retired Airbus
A330 fleet to the estimated fair value due to current market conditions for
certain used aircraft. American retired its Airbus A330 fleet in 2020 as a
result of the decline in demand for air travel due to the COVID-19 pandemic.

Fleet impairment for the six months ended June 30, 2021 included a non-cash impairment charge to write down regional aircraft resulting from the retirement of the remaining Embraer 140 fleet earlier than planned.

(2)The PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the payroll support program established under PSP2 and PSP3.



(3)Severance expenses include salary and medical costs primarily associated with
certain team members who opted into voluntary early retirement programs offered
as a result of reductions to American's operation due to the COVID-19 pandemic.
Cash payments related to American's voluntary early retirement programs for the
six months ended June 30, 2022 and 2021 were approximately $140 million and $290
million, respectively.
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Nonoperating Results


                                       Six Months Ended                             Percent
                                           June 30,                Increase         Increase
                                       2022            2021       (Decrease)       (Decrease)
                                            (In millions, except percentage changes)
Interest income                   $      52          $   18      $       34            nm
Interest expense, net                  (861)           (780)            (81)          10.4
Other income, net                       117             158            

(41) (25.0) Total nonoperating expense, net $ (692) $ (604) $ (88) 14.3

Interest income increased in the first six months of 2022 compared to the first six months of 2021 primarily as a result of higher returns on American's short-term investments.



Interest expense, net increased in the first six months of 2022 compared to the
first six months of 2021 primarily due to the impact of the AAdvantage Financing
issued at the end of the first quarter of 2021, which improved American's
liquidity position in response to the COVID-19 pandemic.

In the first six months of 2022, other nonoperating income, net primarily
included $211 million of non-service related pension and other postretirement
benefit plan income, offset in part by $90 million of net special charges
principally for mark-to-market net unrealized losses associated with American's
equity investments in GOL, Vertical and China Southern Airlines.

In the first six months of 2021, other nonoperating income, net included $171
million of non-service related pension and other postretirement benefit plan
income and $13 million of net special charges principally for non-cash charges
associated with debt refinancings and extinguishments, offset in part by
mark-to-market net unrealized gains associated with American's equity investment
in China Southern Airlines and other instruments.

Income Taxes

American is a member of AAG's consolidated federal and certain state income tax returns.



In the first six months of 2022, American recorded an income tax benefit of $296
million. Substantially all of American's income or loss before income taxes is
attributable to the United States.

See Note 5 to American's Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.

Liquidity and Capital Resources

Liquidity



At June 30, 2022, AAG had $15.6 billion in total available liquidity and $997
million in restricted cash and short-term investments. Additional detail
regarding our available liquidity is provided in the table below (in millions):

                                                             AAG                                              American
                                          June 30, 2022           December 31, 2021           June 30, 2022           December 31, 2021
Cash                                    $          401          $              273          $          373          $              265
Short-term investments                          12,121                      12,158                  12,118                      12,155
Undrawn facilities                               3,063                       3,411                   3,063                       3,411
Total available liquidity               $       15,585          $           15,842          $       15,554          $           15,831


Given the actions we have taken in response to the COVID-19 pandemic and our
assumptions about its future impact on travel demand, which could be materially
different due to the inherent uncertainties of the current operating
environment, we expect to meet our cash obligations as well as remain in
compliance with the debt covenants in our existing financing agreements for the
next 12 months based on our current level of unrestricted cash and short-term
investments, our anticipated access to liquidity (including via proceeds from
financings) and projected cash flows from operations.
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In the ordinary course of our business, we or our affiliates may, at any time
and from time to time, seek to prepay, retire or repurchase our outstanding debt
through cash purchases and/or exchanges for equity or debt, in open-market
purchases, privately negotiated transactions or otherwise. Such repurchases,
prepayments, retirements or exchanges, if any, will be conducted on such terms
and at such prices as we may determine, and will depend on prevailing market
conditions, our liquidity requirements, contractual restrictions and other
factors. The amounts involved may be material. For further information regarding
our debt repurchases during the first six months of 2022, see Note 5 to AAG's
Condensed Consolidated Financial Statements in Part I, Item 1A.

Certain Covenants



Certain of our debt financing agreements (including our secured notes, term
loans, revolving credit facilities and spare engine EETCs) contain loan to value
(LTV), collateral coverage or peak debt service coverage ratio covenants and
certain agreements require us to appraise the related collateral annually or
semiannually. Pursuant to such agreements, if the applicable LTV, collateral
coverage or peak debt service coverage ratio exceeds or falls below a specified
threshold, as the case may be, we will be required, as applicable, to pledge
additional qualifying collateral (which in some cases may include cash or
investment securities), withhold additional cash in certain accounts, or pay
down such financing, in whole or in part, or the interest rate for the relevant
financing will be increased. As of the most recent applicable measurement dates,
we were in compliance with each of the foregoing LTV, collateral coverage and
peak debt service coverage tests. Additionally, a significant portion of our
debt financing agreements contain covenants requiring us to maintain an
aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and
amounts available to be drawn under revolving credit facilities, and our
AAdvantage Financing contains a peak debt service coverage ratio, pursuant to
which failure to comply with a certain threshold may result in early repayment,
in whole or in part, of the AAdvantage Financing. For further information
regarding our debt covenants, see Note 5 to AAG's Condensed Consolidated
Financial Statements in Part I, Item 1A and Note 4 to American's Condensed
Consolidated Financial Statements in Part I, Item 1B.

Sources and Uses of Cash

AAG

Operating Activities

Our net cash provided by operating activities was $2.9 billion and $3.6 billion
for the first six months of 2022 and 2021, respectively, a $720 million
period-over-period decrease. In the first six months of 2021, we received cash
proceeds of approximately $4.7 billion associated with the PSP Financial
Assistance. Excluding the PSP Financial Assistance, our operating cash flows
increased $4.0 billion compared to the first six months of 2021 primarily due to
higher profitability. In addition, during the first six months of 2022, we had
approximately $140 million in cash payments associated with our voluntary early
retirement programs. Excluding the enhanced healthcare benefits provided to
eligible team members, we estimate cash payments under these programs to be
approximately $50 million in the remainder of 2022 and approximately $20 million
in 2023.

Investing Activities

Our net cash used in investing activities was $1.7 billion and $11.0 billion for the first six months of 2022 and 2021, respectively.



Our principal investing activities in the first six months of 2022 included $1.4
billion of capital expenditures, which principally related to the purchase of 14
Airbus A321neo aircraft and 10 spare engines. We also made a $200 million equity
investment in GOL. Additionally, we incurred $156 million related to airport
construction projects, net of reimbursements, principally in connection with the
renovation and expansion of Terminal 8 at John F. Kennedy International Airport
(JFK) and the modernization of Terminals 4 and 5 at Los Angeles International
Airport (LAX). These cash outflows were offset in part by $52 million in net
sales of short-term investments.

Our principal investing activities in the first six months of 2021 included
$11.0 billion in net purchases of short-term investments as well as a $404
million increase in restricted short-term investments primarily related to
collateral for the AAdvantage Financing. Additionally, we incurred $77 million
related to airport construction projects, net of reimbursements, principally in
connection with the renovation and expansion of Terminal 8 at JFK and the
modernization of Terminals 4 and 5 at LAX. These cash outflows were offset in
part by $163 million of proceeds primarily from aircraft sale-leaseback
transactions and $161 million of proceeds from the sale of property and
equipment. Additionally, aircraft purchase deposit returns of $772 million
exceeded our capital expenditures for the first six months of 2021, which
expenditures were principally related to the harmonization of interior
configurations across our mainline fleet and the purchase of two Airbus A321neo
aircraft.
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Financing Activities



Our net cash used in financing activities was $1.1 billion for the first six
months of 2022 as compared to net cash provided by financing activities of $7.5
billion for the first six months of 2021.

Our principal financing activities in the first six months of 2022 included $1.7
billion in repayments of debt and finance lease obligations, consisting of
$1.3 billion of scheduled debt repayments including the repayment of $401
million in connection with the maturity of our 5.000% unsecured notes, and the
repurchase of $349 million of unsecured notes on the open market. These cash
outflows were offset in part by $574 million of long-term debt proceeds from the
issuance of equipment notes related to the 2021-1 Aircraft EETCs.

Our principal financing activities in the first six months of 2021 included
$12.1 billion in proceeds from the issuance of debt, including approximately
$10.0 billion associated with the AAdvantage Financing, $1.0 billion in
aggregate principal amount under the PSP2 Promissory Note, $946 million in
aggregate principal amount under the PSP3 Promissory Note and the $150 million
issuance of special facility revenue bonds related to JFK. We also had $460
million in net proceeds from the issuance of equity pursuant to an at-the-market
offering. These cash inflows were offset in part by $5.0 billion in debt
repayments, including prepayments totaling $2.8 billion for our revolving credit
facilities and $550 million of outstanding loans under the Treasury Loan
Agreement, and $1.6 billion in scheduled debt repayments. In addition, we had
$166 million of deferred financing cost cash outflows.

American

Operating Activities



American's net cash provided by operating activities was $2.1 billion and $6.1
billion for the first six months of 2022 and 2021, respectively, a $4.0 billion
period-over-period decrease. American had a $2.9 billion net decrease in
intercompany cash receipts principally from AAG's financing transactions.
Additionally, in the first six months of 2021, American received cash proceeds
of approximately $4.2 billion associated with PSP Financial Assistance.
Excluding the PSP Financial Assistance and decrease in AAG's financing
transactions, American's operating cash flows increased $3.1 billion compared to
the first six months of 2021 primarily due to higher profitability. Also, during
the first six months of 2022, American had approximately $140 million in cash
payments associated with its voluntary early retirement programs. Excluding the
enhanced healthcare benefits provided to eligible team members, American
estimates cash payments under these programs to be approximately $50 million in
the remainder of 2022 and approximately $20 million in 2023.

Investing Activities

American's net cash used in investing activities was $1.7 billion and $11.0 billion for the first six months of 2022 and 2021, respectively.



American's principal investing activities in the first six months of 2022
included $1.4 billion of capital expenditures, which principally related to the
purchase of 14 Airbus A321neo aircraft and 10 spare engines. American also made
a $200 million equity investment in GOL. Additionally, American incurred $156
million related to airport construction projects, net of reimbursements,
principally in connection with the renovation and expansion of Terminal 8 at JFK
and the modernization of Terminals 4 and 5 at LAX. These cash outflows were
offset in part by $52 million in net sales of short-term investments.

American's principal investing activities in the first six months of 2021
included $11.0 billion in net purchases of short-term investments as well as a
$404 million increase in restricted short-term investments primarily related to
collateral for the AAdvantage Financing. Additionally, American incurred $77
million related to airport construction projects, net of reimbursements,
principally in connection with the renovation and expansion of Terminal 8 at JFK
and the modernization of Terminals 4 and 5 at LAX. These cash outflows were
offset in part by $163 million of proceeds primarily from aircraft
sale-leaseback transactions and $161 million of proceeds from the sale of
property and equipment. Additionally, aircraft purchase deposit returns of
$772 million exceeded American's capital expenditures for the first six months
of 2021, which expenditures were principally related to the harmonization of
interior configurations across its mainline fleet and the purchase of two Airbus
A321neo aircraft.

Financing Activities

American's net cash used in financing activities was $319 million for the first
six months of 2022 as compared to net cash provided by financing activities of
$4.9 billion for the first six months of 2021.
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American's principal financing activities in the first six months of 2022 included $901 million in repayments of debt and finance lease obligations, offset in part by $574 million of long-term debt proceeds from the issuance of equipment notes related to the 2021-1 Aircraft EETCs.



American's principal financing activities in the first six months of 2021
included $10.1 billion in proceeds from the issuance of debt, including
approximately $10.0 billion associated with the AAdvantage Financing and the
$150 million issuance of special facility revenue bonds related to JFK. These
cash inflows were offset in part by $5.0 billion in debt repayments, including
prepayments totaling $2.8 billion for American's revolving credit facilities and
$550 million of outstanding loans under the Treasury Loan Agreement, and
$1.6 billion in scheduled debt repayments. In addition, American had $165
million of deferred financing cost cash outflows.

Commitments

Significant Indebtedness



As of June 30, 2022, AAG had $36.8 billion in long-term debt, including current
maturities of $1.9 billion. As of June 30, 2022, American had $31.5 billion in
long-term debt, including current maturities of $1.9 billion. All material
changes in our significant indebtedness since our 2021 Form 10-K are discussed
in Note 5 to AAG's Condensed Consolidated Financial Statements in Part I,
Item 1A and Note 4 to American's Condensed Consolidated Financial Statements in
Part I, Item 1B.

Aircraft and Engine Purchase Commitments

As of June 30, 2022, we had definitive purchase agreements for the acquisition of the following aircraft (1):



                      Remainder
                       of 2022       2023      2024      2025      2026       2027 and Thereafter       Total
Airbus
A320neo Family           12            -        14        25        15                   -               66
Boeing
737 MAX Family (2)        -           27        21        20        20                   -               88
787 Family                9            4        12         9         4                   5               43
Embraer
175                       3            -         -         -         -                   -                3
Total                    24           31        47        54        39                   5              200




(1)Delivery schedule represents our best estimate as of the date of this report.
Actual delivery dates are subject to change, which could be material, based on
various potential factors including production delays by the manufacturer and
regulatory concerns, such as those that have recently prevented The Boeing
Company (Boeing) from timely delivering 787 Family aircraft.

(2)The table above and the "Contractual Obligations" table below reflect our
exercise of purchase options for four Airbus A320neo Family aircraft in July
2022 and assume our exercise of seven purchase options for 737 MAX Family
aircraft that we previously announced our intention to exercise over the course
of 2022.

We also have agreements for 56 spare engines to be delivered in 2022 and beyond.



We currently have financing commitments in place for all aircraft on order and
scheduled to be delivered in 2022 except for five Airbus A320neo Family aircraft
and three Embraer 175 aircraft. Our ability to draw on the financing commitments
we have in place is subject to (1) the satisfaction of various terms and
conditions, including in some cases, on our acquisition of the aircraft by a
certain date and (2) the performance by the counterparty providing such
financing commitments of its obligations thereunder. We do not have financing
commitments in place for any of the aircraft scheduled to be delivered in 2023
and beyond, except for four Boeing 787 Family aircraft scheduled to be delivered
in 2023 and five Boeing 787 Family aircraft scheduled to be delivered in 2024.
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Off-Balance Sheet Arrangements



An off-balance sheet arrangement is any transaction, agreement or other
contractual arrangement involving an unconsolidated entity under which a company
has (1) made guarantees, (2) a retained or a contingent interest in transferred
assets, (3) an obligation under derivative instruments classified as equity or
(4) any obligation arising out of a material variable interest in an
unconsolidated entity that provides financing, liquidity, market risk or credit
risk support to us, or that engages in leasing, hedging or research and
development arrangements with us.

There have been no material changes in our off-balance sheet arrangements as discussed in our 2021 Form 10-K.

Contractual Obligations



The following table provides details of our material cash requirements from
known contractual obligations as of June 30, 2022 (in millions). Except to the
extent set forth in the applicable accompanying footnotes, the table does not
include commitments that are contingent on events or other factors that are
uncertain or unknown at this time.

                                                                                             Payments Due by Period
                                            Remainder                                                                                    2027 and
                                             of 2022             2023              2024              2025              2026             Thereafter             Total
American
Long-term debt:
Principal amount (a), (c)                 $      807          $  4,202          $  3,502          $  7,784          $  4,447          $     10,786          $ 31,528
Interest obligations (b), (c)                    854             1,822             1,501             1,249               673                   867      

6,966


Finance lease obligations                        127               186               181               118                93                   105      

810


Aircraft and engine purchase commitments
(d)                                              859             1,935             3,203             3,728             2,270                   702      

12,697


Operating lease commitments                      993             1,957             1,646             1,294             1,024                 5,083      

11,997


Regional capacity purchase agreements (e)        801             1,831             1,867             1,710             1,093                 2,159      

9,461


Minimum pension obligations (f)                    -                31                23                 -                 -                     -      

54


Retiree medical and other postretirement
benefits                                          47                89                84                81                78                   312      

691


Other purchase obligations (g)                 3,545             3,083             2,332             1,133               604                   933      

11,630


Total American Contractual Obligations         8,033            15,136            14,339            17,097            10,282                20,947     

85,834



AAG Parent and Other AAG Subsidiaries
Long-term debt:
Principal amount (a)                               -                 -                 -             1,500                 -                 3,746             5,246
Interest obligations (b)                          61               122               121               138               139                   699             1,280
Finance lease obligations                          3                10                10                 -                 -                     -                23
Operating lease commitments                       11                19                14                10                 8                    34      

96


Minimum pension obligations (f)                    -                 1                 -                 -                 -                     1                 2

Total AAG Contractual Obligations $ 8,108 $ 15,288

    $ 14,484          $ 18,745          $ 10,429          $     25,427          $ 92,481




(a)Amounts represent contractual amounts due. Excludes $396 million and $25
million of unamortized debt discount, premium and issuance costs as of June 30,
2022 for American and AAG Parent, respectively. For additional information, see
Note 5 and Note 4 to AAG's and American's Condensed Consolidated Financial
Statements in Part I, Items 1A and 1B, respectively.

(b)For variable-rate debt, future interest obligations are estimated using the current forward rates at June 30, 2022.



(c)Includes $9.4 billion of future principal payments and $1.5 billion of future
interest payments as of June 30, 2022, related to EETCs associated with mortgage
financings of certain aircraft and spare engines.

(d)See "Aircraft and Engine Purchase Commitments" in Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information about the firm commitment aircraft delivery schedule, in particular the footnotes to the table thereunder as to potential changes to such delivery schedule. Due to


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uncertainty surrounding the timing of delivery of certain aircraft, the amounts
in the table represent our most current estimate; however, the actual delivery
schedule may differ from the table above, potentially materially. Additionally,
the amounts in the table exclude nine and four Boeing 787-8 aircraft to be
delivered in 2022 and 2023, respectively, as well as five Boeing 787-9 aircraft
to be delivered in 2024, in each case, for which we have obtained committed
lease financing. This financing is reflected in the operating lease commitments
line above.

(e)Represents minimum payments under capacity purchase agreements with
third-party regional carriers. These commitments are estimates of costs based on
assumed minimum levels of flying under the capacity purchase agreements and our
actual payments could differ materially. Rental payments under operating leases
for certain aircraft flown under these capacity purchase agreements are
reflected in the operating lease commitments line above.

(f)Represents minimum pension contributions based on actuarially determined estimates as of December 31, 2021 and is based on estimated payments through 2031.

(g)Includes purchase commitments for aircraft fuel, flight equipment maintenance, construction projects and information technology support.

Capital Raising Activity and Other Possible Actions



In light of our significant cash needs, in particular during periods in which we
incur operating losses (such as during the COVID-19 pandemic), as well as our
significant financial commitments related to, among other things, the servicing
and amortization of existing debt and equipment leasing arrangements and new
flight equipment, we and our subsidiaries will regularly consider, and enter
into negotiations related to, capital raising and liability management activity,
which may include the entry into leasing transactions and future issuances of,
and transactions designed to manage the timing and amount of, secured or
unsecured debt obligations or additional equity securities in public or private
offerings or otherwise. The cash available from operations (if any) and these
sources, however, may not be sufficient to cover our cash obligations because
economic factors may reduce the amount of cash generated by operations or
increase costs. For instance, an economic downturn or general global instability
caused by military actions, terrorism, disease outbreaks (in particular the
ongoing impact of the COVID-19 pandemic), natural disasters or other causes
could reduce the demand for air travel, which would reduce the amount of cash
generated by operations. An increase in costs, either due to an increase in
borrowing costs caused by a reduction in credit ratings or a general increase in
interest rates, or due to an increase in the cost of fuel, maintenance,
aircraft, aircraft engines or parts, could decrease the amount of cash available
to cover cash contractual obligations. Moreover, certain of our financing
arrangements contain significant minimum cash balance or similar liquidity
requirements. As a result, we cannot use all of our available cash to fund
operations, capital expenditures and cash obligations without violating these
requirements. See Note 5 and Note 4 to AAG's and American's Condensed
Consolidated Financial Statements in Part I, Items 1A and 1B, respectively.

In the past, we have from time to time refinanced, redeemed or repurchased our
debt and taken other steps to reduce or otherwise manage the aggregate amount
and cost of our debt, lease and other obligations or otherwise improve our
balance sheet. Going forward, depending on market conditions, our cash position
and other considerations, we may continue to take such actions.

Critical Accounting Policies and Estimates

For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our 2021 Form 10-K.

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