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Fair Value Measurements and Other Investments
 12 Months Ended
Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements and Other Investments Fair Value Measurements and Other Investments
Assets Measured at Fair Value on a Recurring Basis
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e. an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels:
•Level 1 – Observable inputs such as quoted prices in active markets;
•Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
When available, we use quoted market prices to determine the fair value of our financial assets. If quoted market prices are not available, we measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates.
We utilize the market approach to measure the fair value of our financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Our short-term investments, restricted cash and restricted short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2021.
Assets measured at fair value on a recurring basis are summarized below (in millions):
 Fair Value Measurements as of December 31, 2021
 Total    Level 1    Level 2    Level 3    
Short-term investments (1), (2):
Money market funds$108 $108 $— $— 
Corporate obligations8,665 — 8,665 — 
Bank notes/certificates of deposit/time deposits2,195 — 2,195 — 
Repurchase agreements1,190 — 1,190 — 
12,158 108 12,050 — 
Restricted cash and short-term investments (1), (3)
990 654 336 — 
Long-term investments (4)
239 239 — — 
Total$13,387 $1,001 $12,386 $— 
 Fair Value Measurements as of December 31, 2020
 Total    Level 1    Level 2    Level 3    
Short-term investments (1):
Money market funds$247 $247 $— $— 
Corporate obligations3,449 — 3,449 — 
Bank notes/certificates of deposit/time deposits2,168 — 2,168 — 
Repurchase agreements755 — 755 — 
6,619 247 6,372 — 
Restricted cash and short-term investments (1), (3)
609 448 161 — 
Long-term investments (4)
161 161 — — 
Total$7,389 $856 $6,533 $— 
(1)All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.
(2)Our short-term investments as of December 31, 2021 mature in one year or less.
(3)Restricted cash and short-term investments primarily include collateral held to support workers' compensation obligations and money market funds to be used to finance a substantial portion of the cost of the renovation and expansion of the Terminal at JFK, and as of December 31, 2021, also include collateral associated with the payment of interest for the AAdvantage Financing.
(4)Long-term investments primarily include our equity investment in China Southern Airlines and as of December 31, 2021, our long-term investments also include Vertical. These investments are reflected in other assets on our consolidated balance sheets. See “Other Investments” below for further information on our equity investments.
Fair Value of Debt
The fair value of our long-term debt was estimated using quoted market prices or discounted cash flow analyses based on our current estimated incremental borrowing rates for similar types of borrowing arrangements. If our long-term debt was measured at fair value, it would have been classified as Level 2 except for $3.7 billion and $2.3 billion as of December 31, 2021 and December 31, 2020, respectively, which would have been classified as Level 3 in the fair value hierarchy. The fair value of the Convertible Notes, which would have been classified as Level 2, was $1.4 billion and $1.2 billion as of December 31, 2021 and December 31, 2020, respectively.
The carrying value and estimated fair value of our long-term debt, including current maturities, were as follows (in millions):
 December 31, 2021December 31, 2020
 Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Long-term debt, including current maturities$37,323 $38,567 $32,021 $30,454 
Other Investments
An important part of our strategy to expand our network has been to initiate or expand our commercial relationships with other airlines, such as by entering into global alliance, joint business and codeshare relationships, and, in certain instances, by making an equity investment in another airline or other companies.
Republic Holdings
We have an approximate 25% ownership interest in Republic Holdings, which we received in 2017 in consideration for our unsecured claim in the Republic Holdings bankruptcy case. This ownership interest is accounted for under the equity method and our portion of Republic Holdings’ financial results is recognized within nonoperating other income, net on the consolidated statements of operations and the investment is reflected within other assets on our consolidated balance sheets.
China Southern
In the third quarter of 2017, we acquired 2.7% of the outstanding shares of China Southern for $203 million. At December 31, 2021, we owned a 1.8% equity interest in China Southern. This ownership interest is accounted for at fair value based on China Southern’s stock price and mark-to-market adjustments are recorded to nonoperating other income, net on the consolidated statement of operations.
Vertical
In the fourth quarter of 2021, we invested $25 million to acquire 5.4%, or 11.25 million, of the outstanding shares of Vertical with an initial aggregate value of $113 million, of which $88 million was non-cash. In connection with this investment, we entered into a memorandum of understanding (MOU) with Vertical to pre-order (subject to certain conditions and future agreed upon milestones) up to 250 electric vertical take-off and landing (eVTOL) aircraft, with an option to order an additional 100 eVTOL aircraft. Pursuant to the MOU, we received warrants to purchase 1.75 million shares of Vertical common stock at $0.0001 per share, each time we place a legally binding commitment for 50 eVTOL aircraft, up to a maximum aggregate amount of 8.75 million shares. Our investment in Vertical is reflected within other assets on our consolidated balance sheet. The $88 million non-cash portion of the fair value of equity securities received from Vertical is included as a deferred credit within other liabilities on the consolidated balance sheet and will be recognized as a reduction to the cost of eVTOL aircraft received in future periods or, if no legally binding commitment for eVTOL aircraft is entered into, will be recognized into income. Our investment in Vertical is accounted for at fair value based on Vertical’s stock price and mark-to-market adjustments are recorded to nonoperating other income, net on the consolidated statement of operations.
American Airlines, Inc.  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements and Other Investments Fair Value Measurements and Other Investments
Assets Measured at Fair Value on a Recurring Basis
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e. an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels:
•Level 1 – Observable inputs such as quoted prices in active markets;
•Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
When available, American uses quoted market prices to determine the fair value of its financial assets. If quoted market prices are not available, American measures fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates.
American utilizes the market approach to measure the fair value of its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. American’s short-term investments, restricted cash and restricted short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2021.
Assets measured at fair value on a recurring basis are summarized below (in millions):
 Fair Value Measurements as of December 31, 2021
 TotalLevel 1Level 2Level 3
Short-term investments (1), (2):
Money market funds$106 $106 $— $— 
Corporate obligations8,665 — 8,665 — 
Bank notes/certificates of deposit/time deposits2,194 — 2,194 — 
Repurchase agreements1,190 — 1,190 — 
12,155 106 12,049 — 
Restricted cash and short-term investments (1), (3)
990 654 336 — 
Long-term investments (4)
239 239 — — 
Total$13,384 $999 $12,385 $— 
 Fair Value Measurements as of December 31, 2020
 TotalLevel 1Level 2Level 3
Short-term investments (1):
Money market funds$245 $245 $— $— 
Corporate obligations3,449 — 3,449 — 
Bank notes/certificates of deposit/time deposits2,168 — 2,168 — 
Repurchase agreements755 — 755 — 
6,617 245 6,372 — 
Restricted cash and short-term investments (1), (3)
609 448 161 — 
Long-term investments (4)
161 161 — — 
Total$7,387 $854 $6,533 $— 
(1)All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.
(2)American’s short-term investments as of December 31, 2021 mature in one year or less.
(3)Restricted cash and short-term investments primarily include collateral held to support workers' compensation obligations and money market funds to be used to finance a substantial portion of the cost of the renovation and expansion of the Terminal at JFK, and as of December 31, 2021, also include collateral associated with the payment of interest for the AAdvantage Financing.
(4)Long-term investments primarily include American's equity investment in China Southern Airlines and as of December 31, 2021, American’s long-term investments also include Vertical. These investments are reflected in other assets on American’s consolidated balance sheets. See “Other Investments” below for further information on American’s equity investments.
Fair Value of Debt
The fair value of American’s long-term debt was estimated using quoted market prices or discounted cash flow analyses based on American’s current estimated incremental borrowing rates for similar types of borrowing arrangements. If American’s long-term debt was measured at fair value, it would have been classified as Level 2 except for $550 million as of December 31, 2020, which would have been classified as Level 3 in the fair value hierarchy.
The carrying value and estimated fair value of American’s long-term debt, including current maturities, were as follows (in millions):
 December 31, 2021December 31, 2020
 Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Long-term debt, including current maturities$31,357 $32,999 $28,410 $27,193 
Other Investments
An important part of American’s strategy to expand its network has been to initiate or expand its commercial relationships with other airlines, such as by entering into global alliance, joint business and codeshare relationships, and, in certain instances, by making an equity investment in another airline or other companies.
Republic Holdings
American has an approximate 25% ownership interest in Republic Holdings, which it received in 2017 in consideration for its unsecured claim in the Republic Holdings bankruptcy case. This ownership interest is accounted for under the equity method and American’s portion of Republic Holdings’ financial results is recognized within nonoperating other income, net on the consolidated statements of operations and the investment is reflected within other assets on its consolidated balance sheets.
China Southern
In the third quarter of 2017, American acquired 2.7% of the outstanding shares of China Southern for $203 million. At December 31, 2021, American owned a 1.8% equity interest in China Southern. This ownership interest is accounted for at fair value based on China Southern’s stock price and mark-to-market adjustments are recorded to nonoperating other income, net on the consolidated statement of operations.
Vertical
In the fourth quarter of 2021, American invested $25 million to acquire 5.4%, or 11.25 million, of the outstanding shares of Vertical with an initial aggregate value of $113 million, of which $88 million was non-cash. In connection with this investment, American entered into a memorandum of understanding (MOU) with Vertical to pre-order (subject to certain conditions and future agreed upon milestones) up to 250 electric vertical take-off and landing (eVTOL) aircraft, with an option to order an additional 100 eVTOL aircraft. Pursuant to the MOU, American received warrants to purchase 1.75 million shares of Vertical common stock at $0.0001 per share each time American places a legally binding commitment for 50 eVTOL aircraft, up to a maximum aggregate amount of 8.75 million shares. American’s investment in Vertical is reflected within other assets on its consolidated balance sheet. The $88 million non-cash portion of the fair value of equity securities received from Vertical is included as a deferred credit within other liabilities on the consolidated balance sheet and will be recognized as a reduction to the cost of eVTOL aircraft received in future periods or, if no legally binding commitment for eVTOL aircraft is entered into, will be recognized into income. American’s investment in Vertical is accounted for at fair value based on Vertical’s stock price and mark-to-market adjustments are recorded to nonoperating other income, net on the consolidated statement of operations.