Satisfactory liquidity, with $4.7 billion of unrestricted cash and short-term investments, and some remaining assets available for collateral (in contrast to other large U.S. airlines); and Improving earnings and cash flow generation. Participation in the price-competitive, cyclical, and high operating leverage U.S. passenger airline industry; Substantial losses incurred over 2001 to 2005, eroding financial strength; A heavy debt, lease, and unfunded retiree liability burden; and Pressure to reduce costs further, as peer airlines cut expenses in bankruptcy and low-cost airlines continue to have a wide cost advantage. Ratings on Fort Worth, Texas-based AMR Corp. and subsidiary American Airlines Inc. reflect participation in the competitive, cyclical, and capital-intensive airline industry; erosion of financial strength by substantial losses during 2001-2005; and a
