Exhibit 10.7

                                                                December 8, 2004

Mr. John W. Bachmann
Edward Jones
12555 Manchester Road
St. Louis, MO 63131-3279

Dear John:

            This will confirm the following agreement relating to the deferral
of your director's fees in 2005.

            1. All director's fees and retainers ("Fees") payable to you in
connection with your service on the boards of directors (including committees of
such boards) of AMR Corporation and American Airlines, Inc. for the period
January 1, 2005 through December 31, 2005, will be deferred and paid to you in
accordance with this letter agreement.

            2. Fees will be converted to Stock Equivalent Units in accordance
with the Directors' Stock Equivalent Purchase Plan, a copy of which is attached
hereto as Exhibit A (the "Plan").

            3. Within 30 days of the date when you cease to be a Director of AMR
Corporation, the Stock Equivalent Units accrued in 2005 pursuant to the Plan
will be converted to cash and paid to you by multiplying the number of such
Stock Equivalent Units by the arithmetic mean of the high and the low of AMR
stock ("fair market value") during the month when you ceased to be a Director of
AMR Corporation.

            4. In the event of your death, the number of Stock Equivalent Units
as of your date of death will be multiplied by the fair market value of AMR
stock during the calendar month immediately preceding your death, and the amount
paid to Katharine Bachmann.



            If the foregoing is satisfactory to you, please indicate by signing
one of the originals (two are enclosed) and returning it to me.

                                                 Very truly yours,

                                                 Charles D. MarLett
                                                 Corporate Secretary

Accepted and agreed:

/s/ John W. Bachmann
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John W. Bachmann

12/23/04
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Date