On Aug. 4, 2003, Standard&Poor's Ratings Services assigned its 'CCC' rating to AMR Corp.'s (B-/Negative/--) proposed $250 million senior unsecured convertible notes, a Rule 144a offering with registration rights. The notes are rated two notches below the corporate credit rating because the substantial proportion of priority debt obligations (mostly secured debt and leases of American Airlines Inc., AMR's principal operating subsidiary) places unsecured creditors of AMR in an effectively subordinated position. American Airlines (B-/Negative/--) will guarantee the proposed AMR senior unsecured convertible notes. AMR and American were upgraded to current levels June 20, 2003, based on expected earnings and cash flow improvement as a result of the April 2003 cost-saving agreements with labor groups. AMR remains highly leveraged
