Standard&Poor's Ratings Services' ratings on Fort Worth, Texas-based AMR Corp. and subsidiary American Airlines Inc. reflect participation in the competitive, cyclical, and capital-intensive airline industry; a heavy debt and pension burden; and substantial capital spending needs to modernize the airline's fleet. Satisfactory liquidity, with $4.5 billion of unrestricted cash and short-term investments at Dec. 31, 2007, and substantial market positions in the U.S. domestic, trans-Atlantic, and Latin American markets (though a minimal presence in the Pacific) are positives. American, like other large U.S. airlines, reported much improved earnings in 2006 and 2007, benefiting from cost-cutting and a more favorable balance of supply and demand, particularly on international routes. Fully-adjusted EBITDA interest coverage improved to 2.0x and funds flow
