The June 20, 2003, upgrade of AMR Corp. and subsidiary American Airlines Inc. was based on expected earnings and cash flow improvement as a result of the April 2003 agreement with labor groups on $1.8 billion of annual concessions over the next five years. AMR remains highly leveraged and vulnerable to any further airline industry revenue deterioration, but near-term liquidity is adequate, with about $1.45 billion of unrestricted cash. The labor concessions and about $200 million of added concessions from suppliers and private lessors and creditors should materially improve American's operating cost structure, narrowing the airline's losses and restoring modestly positive operating cash flow over the next several quarters. Still, the airline continues to face a weak revenue environment and
