Ratings on AMR Corp. and unit American Airlines Inc. are supported by the airline's solid competitive position, one of the industry's better balance sheets, and good financial flexibility. These positives are balanced by rising labor costs, substantial upcoming capital expenditures, and risks related to the April 2001 acquisition of the assets of Trans World Airlines Inc. (TWA). American, with the TWA acquisition, surpassed United Air Lines Inc. as the world's largest airline. It enjoys solid revenue generation from its extensive route network (the largest airline in the U.S. domestic market, by far the largest in Latin America, and one of the largest on routes to Europe) and sophisticated yield management. The TWA transaction is viewed as a mild credit negative.
