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 heavy debt and pension burden. Satisfactory liquidity, with $5.1 billion of unrestricted cash and short-term investments at Sept. 30, 2006, and an improving earnings trend, are positives. American Airlines is the world's largest airline, measured by traffic, with solid market shares in the U.S. domestic, trans-Atlantic, and Latin American markets, but a minimal presence in the Pacific. American, like other large U.S. airlines, incurred heavy losses starting in late 2000 due to industrywide problems of terrorism, war, high fuel prices, and increasing price competition in the domestic
