Leases

12 Months Ended

Dec. 31, 2018

Lessee, Lease, Description [Line Items]

We lease certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2018, we had 660 leased aircraft, with remaining terms ranging from less than one year to 12 years.

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

The components of lease expense were as follows (in millions):



	Year Ended December 31, 2018
Operating lease cost	$	1,907
Finance lease cost:
Amortization of assets	78
Interest on lease liabilities	48
Variable lease cost	2,353
Total net lease cost	$	4,386

Included in the table above is $226 million of operating lease cost under our capacity purchase agreement with Republic. We hold a 25% equity interest in Republic Holdings, the parent company of Republic.

Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate):



	December 31, 2018
Operating leases:
Operating lease ROU assets	$	9,151

Current operating lease liabilities	$	1,654
Noncurrent operating lease liabilities	7,902
Total operating lease liabilities	$	9,556

Finance leases:
Property and equipment, at cost	$	936
Accumulated amortization	(391		)
Property and equipment, net	$	545

Current obligations of finance leases	$	81
Finance leases, net of current obligations	613
Total finance lease liabilities	$	694

Weighted average remaining lease term (in years):
Operating leases	7.6
Finance leases	7.4

Weighted average discount rate:
Operating leases	4.6		%
Finance leases	6.5		%

Supplemental cash flow and other information related to leases was as follows (in millions):



	Year Ended December 31, 2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,931
Operating cash flows from finance leases	48
Financing cash flows from finance leases	78

ROU assets obtained in exchange for lease liabilities:
Operating leases	1,292

Gain on sale leaseback transactions, net	59

Maturities of lease liabilities were as follows (in millions):



	December 31, 2018
	Operating Leases			Finance Leases
2019	$	1,912		$	124
2020	1,838			120
2021	1,636			118
2022	1,438			122
2023	1,255			105
2024 and thereafter	3,620			282
Total lease payments	11,699			871
Less: Imputed interest	(2,143		)	(177		)
Total lease obligations	9,556			694
Less: Current obligations	(1,654		)	(81		)
Long-term lease obligations	$	7,902		$	613

As of December 31, 2018, we have additional operating lease commitments that have not yet commenced of approximately $1.9 billion for 22 787-8 aircraft to be delivered in 2020 and 2021 with lease terms of 10 years.

Disclosures related to periods prior to adoption of the New Lease Standard

Operating lease rent expense, excluding landing fees, was approximately $3.2 billion in each of 2017 and 2016, which includes the lease of certain aircraft under capacity purchase agreements. As of December 31, 2017, future minimum lease payment obligations under noncancellable operating leases, including payments for the lease of certain aircraft under capacity purchase agreements, as well as payments under capital lease obligations were as follows (in millions):



	December 31, 2017
	Operating Leases		Capital Leases
2018	$	2,572	$	126
2019	2,329		123
2020	2,104		120
2021	1,621		118
2022	1,398		122
2023 and thereafter	3,965		387
Total lease payments	$	13,989	996
Less: Imputed interest			(225		)
Total lease obligations			771
Less: Current obligations			(78		)
Long-term lease obligations			$	693

American Airlines, Inc. [Member]

Lessee, Lease, Description [Line Items]

Leases

American leases certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2018, American had 660 leased aircraft, with remaining terms ranging from less than one year to 12 years.

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

The components of lease expense were as follows (in millions):



	Year Ended December 31, 2018
Operating lease cost	$	1,889
Finance lease cost:
Amortization of assets	78
Interest on lease liabilities	48
Variable lease cost	2,353
Total net lease cost	$	4,368

Included in the table above is $226 million of operating lease cost under American’s capacity purchase agreement with Republic. American holds a 25% equity interest in Republic Holdings, the parent company of Republic.

Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate):



	December 31, 2018
Operating leases:
Operating lease ROU assets	$	9,094

Current operating lease liabilities	1,639
Noncurrent operating lease liabilities	7,857
Total operating lease liabilities	$	9,496

Finance leases:
Property and equipment, at cost	$	936
Accumulated amortization	(391		)
Property and equipment, net	$	545

Current obligations of finance leases	$	81
Finance leases, net of current obligations	613
Total finance lease liabilities	$	694

Weighted average remaining lease term (in years):
Operating leases	7.6
Finance leases	7.4

Weighted average discount rate:
Operating leases	4.6		%
Finance leases	6.5		%

Supplemental cash flow and other information related to leases was as follows (in millions):



	Year Ended December 31, 2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,914
Operating cash flows from finance leases	48
Financing cash flows from finance leases	78

ROU assets obtained in exchange for lease liabilities:
Operating leases	1,258

Gain on sale leaseback transactions, net	59

Maturities of lease liabilities were as follows (in millions):



	December 31, 2018
	Operating Leases			Finance Leases
2019	$	1,894		$	124
2020	1,824			120
2021	1,625			118
2022	1,428			122
2023	1,250			105
2024 and thereafter	3,611			282
Total lease payments	11,632			871
Less: Imputed interest	(2,136		)	(177		)
Total lease obligations	9,496			694
Less: Current obligations	(1,639		)	(81		)
Long-term lease obligations	$	7,857		$	613

As of December 31, 2018, American has additional operating lease commitments that have not yet commenced of approximately $1.9 billion for 22 787-8 aircraft to be delivered in 2020 and 2021 with lease terms of 10 years.

Disclosures related to periods prior to adoption of the New Lease Standard

Operating lease rent expense, excluding landing fees, was approximately $3.2 billion and $3.1 billion in 2017 and 2016, respectively, which includes the lease of certain aircraft under capacity purchase agreements. As of December 31, 2017, future minimum lease payment obligations under noncancellable operating leases, including payments for the lease of certain aircraft under capacity purchase agreements, as well as payments under capital lease obligations were as follows (in millions):



	December 31, 2017
	Operating Leases		Capital Leases
2018	$	2,555	$	126
2019	2,321		123
2020	2,096		120
2021	1,613		118
2022	1,394		122
2023 and thereafter	3,952		387
Total lease payments	$	13,931	996
Less: Imputed interest			(225		)
Total lease obligations			771
Less: Current obligations			(78		)
Long-term lease obligations			$	693