13. Special items, net

Includes special items consisting principally of merger integration expenses

3Q16 Financial RecapToday, American reported a third quarter 2016 pretax profit of $1.5 billion and a net profit of $933 million, excluding special charges.* In accordance with the company’s profit sharing program, which will pay out if we are profitable for the full year 2016, we accrued an additional $86 million in the third quarter. This brings the total profit sharing accrued year to date to $257 million, which includes employer taxes and retirement contributions. * We exclude special charges and credits so that our financial results are more indicative of our ongoing performance and more comparable to measures reported by other major airlines.

1. Mainline revenue

Passenger revenue collected from mainline flights is our largest revenue source

2. Regional revenue

Passenger revenue from our wholly owned and contract regional carrier flights is also an important source of revenue

3. Cargo revenue

Revenue from transporting mail and freight

4. Other revenue

Other operating revenue from sources like our AAdvantage® affinity card program and baggage fees

Money collected from the services we provide is known as operating revenues.

$10,594

$9,163

$7,419 $1,731 $171 $1,273

A. Total Operating Revenues (the sum of items 1–4)

Operating Revenues

5. Fuel and related taxes

The cost of jet fuel consumed by our mainline aircraft, including associated taxes

6. Salaries, wages and benefits

Includes pay and benefits for all mainline employees and our 2016 profit sharing plan

7. Regional expenses

Includes the cost of our wholly owned subsidiaries, regional contract carriers and $5 million of special items principally due to merger integration expenses

10. Aircraft rent

We lease some of the airplanes we fly and these are the associated rental charges

8. Maintenance expenses

The cost to maintain and repair our fleet

9. Other rent and landing fees

Includes rent for airport facilities, landing fees, etc.

11. Selling expenses

Includes costs such as credit card fees, the fees we pay to the global distribution systems and advertising expenses

12. Depreciation and amortization

The cost for using aircraft, spare parts, ground equipment and other assets that is expensed over the life of the asset

14. Other expenses

Includes expenses such as crew hotels, catering and passenger inconvenience costs

From our operating revenue, the following costs, known as operating expenses, must be subtracted.

-$1,393

-$347

-$2,772 -$1,538

-$289-$299 -$399

-$481

-$1,182

-$463

B. Total Operating Expenses (the sum of items 5–14)

Operating Expenses

+

+

+

+

+

+

+

+ +

++

=

=

C. Total Operating Profit (A-B) $1,431

Note: All results are in millions.

The Earnings Illustrated below provides details of the company’s 3Q16 income statement. This statement is prepared in accordance with Generally Accepted Accounting Principles (GAAP), which requires use of the accrual basis of accounting, meaning we record revenues when earned and expenses when incurred, not when cash is received or paid. It is important to note that our reported net income does not equal the change in our cash balance for the year. There are many activities that impact our cash balance that are not reflected in our income statement, including payments on our debt, and purchases of assets such as aircraft and spare parts.

E. Special Charges, Net We exclude special charges and credits so that our financial results are more indicative of our ongoing performance and more comparable to measures reported by other major airlines. For the quarter, net special items were made up of $289 million of mainline special items (No. 13) and $5 million of regional special items (No. 7).

F. Pretax Income, Excluding Special Items (C+D+E) 15. Income Tax Provision As a result of the reversal of the valuation allowance on our deferred tax assets at Dec. 31, 2015, we recorded a provision for income taxes, which was substantially noncash, as we utilized net operating losses carried forward from previous years.

G. Net Income, Excluding Special Items (F+15)

H. GAAP Net Income (G-E+$98 million income tax effect of special charges)

D. Total Nonoperating Expenses, Net Includes items such as interest expense, interest income and foreign currency gains and losses.

-$242

$737

$1,483

$933

Approximately

80,000 employees

debuted their new uniforms for the first time.

(or $1.76 per diluted share)

-$550

+$294

American invested

$1.2 billion in new aircraft during the third quarter, including 12 new mainline aircraft and 9 new regional aircraft.

The main event command center at the Integrated Operations Center (IOC) operated 24/7 during the SFP cutover. As of Oct. 1, pilots and aircraft operate within a single flight operating system.

Through employee volunteers and the Fuel Smart program, American

transported 180 World War II, Korean and Vietnam War veterans from

Asheville, N.C. to Washington D.C., on the airline’s 500th Honor Flight.American launched a new safety video, featuring eight American employees and a whole new look. The video was uploaded to aircraft Oct. 1.

TWU-IAM Association reached a tentative

agreement on a new joint collective

bargaining agreement for American’s flight

simulator engineers.

The 2016 Earl Graves recipients, Victor Escalante, Priyanka Arora, Raythe Clark and

Todd Rice, were honored for their dedication to inclusion and diversity at American.

Fast Facts