AAL American Airlines Group, Inc.

Risks

• The airline industry is intensely competitive and dynamic.
• Our business has been and will continue to be affected by many changing economic and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be volatile and fluctuate due to seasonality.
• Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional financing, may limit our flexibility in responding to competitive developments and cause our business to be vulnerable to adverse economic and industry conditions.
• We will need to obtain sufficient financing or other capital to operate successfully.
• The loss of key personnel upon whom we depend to operate our business or the inability to attract additional qualified personnel could adversely affect our business.
• Union disputes, employee strikes and other labor-related disruptions, or our inability to otherwise maintain labor costs at competitive levels may adversely affect our operations and financial performance.
• We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of operations and financial condition.
• Any damage to our reputation or brand image could adversely affect our business or financial results.
• We are at risk of losses and adverse publicity stemming from any public incident involving our company, our people or our brand, including any accident or other public incident involving our personnel or aircraft, or the personnel or aircraft of our regional, codeshare or joint business operators.
• Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages.
• We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control.
• We may be adversely affected by conflicts overseas or terrorist attacks; the travel industry continues to face ongoing security concerns.
• We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result.
• We depend on a limited number of suppliers for aircraft, aircraft engines and parts.
• Delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity, and failure of new aircraft to perform as expected, may adversely impact our business, results of operations and financial condition.
• We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems could harm our business, results of operations and financial condition.
• We face challenges in integrating our computer, communications and other technology systems.
• Evolving data security and privacy requirements could increase our costs, and any significant data security incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations and financial condition.
• If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be adversely affected by a resulting decline in revenue or negative public perception about our services.
• We rely on third-party distribution channels and must manage effectively the costs, rights and functionality of these channels.
• If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may have a material adverse impact on our operations.
• Interruptions or disruptions in service at one of our key facilities could have a material adverse impact on our operations.
• Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties or decreased demand.
• Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect our business and financial results.
• We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity.
• A higher than normal number of pilot retirements, more stringent duty time regulations, increased flight hour requirement for commercial airline pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other factors have caused a shortage of pilots that could materially adversely affect our business.
• Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results.
• The airline industry is heavily taxed.
• Our ability to utilize our NOL Carryforwards may be limited.
• The commercial relationships that we have with other airlines, including any related equity investment, may not produce the returns or results we expect.
• If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect our liquidity.
• We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the full value of our intangible assets or long-lived assets, causing us to record material impairment charges.
• The price of AAG common stock has been and may in the future be volatile.
• We cannot guarantee that we will continue to repurchase our common stock or pay dividends on our common stock or that our capital deployment program will enhance long-term stockholder value. Our capital deployment program could increase the volatility of the price of our common stock and diminish our cash reserves.
• AAG’s Certificate of Incorporation and Bylaws include provisions that limit voting and acquisition and disposition of our equity interests.
• Certain provisions of AAG’s Certificate of Incorporation and Bylaws make it difficult for stockholders to change the composition of our Board of Directors and may discourage takeover attempts that some of our stockholders might consider beneficial.