Good afternoon and welcome to the AMR first quarter 2009 earnings conference call. (Operator Instructions) We are very pleased to have on the call with us today AMR’s Chairman and Chief Executive Officer, Gerard Arpey, and Executive Vice President of Finance and Planning and Chief Financial Officer, Tom Horton. And here, with our opening remarks is AMR’s Managing Director of Investor Relations, Eric Briggle.

Good afternoon everyone. Thank you for joining us on today’s earnings call. During the call Gerard Arpey will provide an overview of our performance and outlook and then Tom Horton will provide the details regarding our earnings for the first quarter, along with some perspective on the remainder of 2009. After that we will be happy to take your questions. In the interest of time, please limit your questions to one, with a follow-up. Our earnings release earlier today contains highlights of our financial results for the quarter. This release continues to provide additional information regarding entity performance and cost guidance which should assist you in having accurate information about our performance and outlook. In addition, the earnings release contains reconciliations of any non-GAAP financial measurements that we may discuss. This release, along with the webcast of today’s call, is available on the Investor Relations section of aa.com. Finally, let me not that many of our comments today regarding our outlook for revenue and costs, as well as forecasts of capacity, traffic, load factor, fuel costs, fleet plans, and other matters will constitute forward-looking statements. These matters are subject to a number of factors that could cause actual results to differ from our expectations. These factors include changes in economic, business, and financial conditions, high fuel prices and other factors referred to in our SEC filings, including our 2008 annual report on Form 10-K. And with that, I will turn the call over to Gerard.

Good afternoon everyone. As all of you have already seen in our press release, we had a net loss of $375.0 million for the quarter and that compares to a net loss of $341.0 million in the first quarter of 2008 and is obviously a disappointing result and I think it highlights the challenging period we, and the rest of corporate America, find ourselves in. Last year we faced, as all of you know, a crisis in the form of fuel prices. At their peak oil prices reached nearly $150 per barrel, which translated into over $170 per barrel for jet fuel. Fortunately for us and our industry oil prices and the crack spread have pulled back and the decline in fuel prices has been significant, although, as I will address in a moment, so too has been the decline in demand. During the quarter we paid about $550.0 million less for fuel than we would have paid at last year’s first quarter prices, and as you may recall first quarter of 2008 fuel prices were I think reasonably tame by last year’s standard. Combined with our capacity reduction, total fuel expenses for the quarter declined by $750.0 million year-over-year. Unfortunately, that dramatic decline was outpaced by the decline in revenues with unit revenues for the quarter down over 8.5% versus last year and our total revenue was down over $850.0 million. We would have to go back to a very difficult second quarter of 2002 to see revenue declines of this magnitude. So in effect we’ve swapped the oil prices of 2008 for the travel demand crisis of 2009. We are also facing disruptions in the capital markets and like the recession and resulting decline in travel demand, the tightening of the credit markets is a challenge, not only…

As Gerard said, we lost $375.0 million in the quarter versus a loss of $341.0 million in the first quarter of last year, a change of $34.0 million. As we previously announced, we expect to retire our A300 fleet this year and will recognize special charges representing the net present value of the future lease payment on certain A300 aircraft. In total we expect these charges to be about $95.0 million for the full year and accordingly, $13.0 million of that is related to two A300 aircraft that we retired during the first quarter. So for the remainder of the call I will exclude the impact of special items to more accurately reflect our performance on an ongoing basis. The fall in the price of oil from last year’s levels has been remarkable, but just as extraordinary was the deterioration of the revenue environment during the quarter. In the first quarter we paid about $750.0 million than we paid last year with $560.0 million of that attributed to lower prices. Conversely, the recession induced decrease in travel in demand, resulted in substantial declines, driving total consolidated revenue down by about $860.0 million. There remains a lot of uncertainty on many fronts but through our efforts over the past several years we have better positioned ourselves to face difficult times and we continue to take action. After several years of demonstrated capacity discipline, we were aggressive in pulling down capacity over the last year and this has helped to dampen the effects of the economic downturn we face today. We will continue to monitor the revenue environment to see if more must be done. We are making investments to improve our operational dependability and those investments continue to pay off through big improvements in completion factor, on-time performance, and baggage performance.…

(Operator Instructions) Your first question comes from Hunter Keay - Stifel Nicolaus & Company, Inc. Hunter Keay - Stifel Nicolaus & Company, Inc.: A comment you made on the close end bookings that were pretty strong in the last couple weeks of March. Any reason to believe this may have been a slight incremental uptick in corporate travel or do you think this potentially just kind of a shift in leisure buying patterns, or is it kind of just tough to tell at all?

I guess I would say it this way. Our loss was lower than what we expected back in March and that was largely because revenue was a bit stronger. And as I mentioned that as a little bit better closed end traffic build at slighter higher yields than we had forecast. But I think at this point it’s too early to tell whether that portends a positive trend. What it does do though, is it underscores how unpredictable the revenue environment is right now. I think at 30,000 feet it’s important to point out that our first quarter consolidated passenger revenue was still down 17% and second quarter both load factor is down 2 points with more sale activity putting some pressure on yield. So I think the way I would characterize it is for the moment, we are not seeing evidence of either improvement or further deterioration in the business. Hunter Keay - Stifel Nicolaus & Company, Inc.: On the March/April outlook as it pertained to Easter, any preliminary feedback or data that you’ve seen sort of on how Easter may have actually flowed through to April? I think we generally tend to think it’s about 1 to 2 points a RASM load. Any preliminary thoughts there that you would be willing to share with us?

I think I would confirm that’s the way we’re thinking about it. It’s about 1 to 2 load factor points for the month. Hunter Keay - Stifel Nicolaus & Company, Inc.: And that’s loads or RASMs?

It’s load. It’s same range for load and RASM.

Your next question comes from William Greene - Morgan Stanley.

I’m wondering if you can talk a little bit about the RASM contributions from a variety of buckets, if you will. So we’ve got macroeconomic factors, but we’ve also got FX and we’ve got fuel. Is there any way that you can break down what you think the impact from, in particular, FX and fuel would have been? Because, as you mentioned in your comments, you were chasing fuel a bit and we have the industry pushing on fares, so some of that has got to be given back, even if it’s not an explicit fuel surcharge.

Yes, and we have seen some of the fuel surcharges coming off. In fact, if you look at pricing in the industry, on the domestic side I think it’s telling that there were no fare increases attempted in the first quarter and on the international side there were a number of surcharge reductions in sales in the international market. So clearly a good bit of that is related to the change in fuel prices but I think maybe even more importantly it is an indication that there is too much international capacity out there. We have tried to be pretty careful on international capacity over the past few years, and in fact, if you go back to 2005, our international capacity is actually down a little bit. Several of our domestic competitors are actually up over 20%. So I think this is an indication that there is still a bit too much capacity on the international side, driven by capacity increases that we’ve seen around the industry. So that’s one point. On the foreign exchange side, yes, there is clearly a foreign exchange impact in our revenues and to help frame that out for you, just to give you a sense for how it might have impacted us, in 2008 about 20% of our revenues are denominated in foreign currency. And as you would expect, only about 3% to 4% of our costs are denominated in FX. So we are long currency. And then on the revenue side, in some cases, foreign exchange effects tend to be at least somewhat offset with demand effects. However, in the current economic environment we’ve seen less of the demand impact and thus the stronger dollar tends to weaken our revenue results more directly.

Maybe I can turn to a balance sheet question as well. As you know, there is a lot of discussion about your mileage sale, or your potential sale of miles. And I just want to make sure I’m thinking about this. I realize you haven’t announced this so you’re not going to a number on what it could be, but simplistically as a framework, if United sort of had a headline number of around 900.0 million and Delta around a 1.5 billion, I realize there’s a lot of puts and takes and some of that comes over a couple of years, but I sort of would put you sort of in between those two brackets, given the size of your frequent flyer plan but I’m not 100% sure I know enough about your relationship with Citibank to know if that’s a fair way to think about it or if there’s a piece of it that I’m perhaps missing.

Unfortunately, as you can imagine, there’s not much I can say about that other than to say the Advantage program is big and powerful and I think it’s as good an asset as exists in the industry. That’s how we think about that.

Let me come at it from a different perspective then. You have more unencumbered assets than you do liquidity.

Yes.

And I’m not sure why that’s a good position, given the credit markets and the difficulty financing that we see. I would assume the timing of monetizing that should be relatively quick then, but maybe this is a suggestion that perhaps you don’t think that’s the best way to handle the balance sheet. Maybe you can comment on some of that.

I think that it is fair to assume that we are actively pursuing a lot of avenues to build as much financial flexibility as we can in this climate. But as you know, the financing climate is quite poor and so that’s the challenge that we have. But as we pointed out in the remarks, we were able to get some financing done in the first quarter so we’re tracking along our financing plan now, but there is clearly more to be done.

Your next question comes from Michael Linenberg – Banc of America. Michael Linenberg – Banc of America: Tom, when we look at your debt maturities this year and you’ve already paid over 700 in the first quarter. When we think about the rest of the year, is it split up evenly or is it lumpy, and if it’s lumpy, when is the next big debt payment due? Which quarter?

There is a $400.0 million double ETC maturity in early fourth quarter. That’s the kind of the biggest lump. Everything else is relatively—well, we’ve got the revolver due in the second quarter but other than that it’s bits and pieces here and there. Michael Linenberg – Banc of America: It was cited earlier today, I think right as your press release came out, I think there was a letter from Tom Deval talking about delaying planned layoffs among U.S. airport and cargo agents and I think it was written in there that it was on the expectation that travel demand will increase this summer. And I was wondering if there is anything that maybe you are seeing that underlies the decision to do that. Tom, you may have actually already addressed this by basically saying things domestically, they’re not getting worse, they’re not getting better. Any additional color would be great.

I am going to jump in here for Tom, I think you kind of answered your own question there. The letter from Tom Deval was not intended to be Wall Street guidance, that was an internal communication to explain to our front line agent workforce what we were anticipating for the summer in terms of employment levels. So I think in terms of your space, I think Tom summarized it well and depending on you’re a glass-half-full or half-empty guy, the fact that we’re not seeing further deterioration, I think you could look at that and have a good feeling about that. On the other hand, we would all like to see corporate travel picking back up faster than it is but I do think, and again, this is just my gut, I think in this extraordinary economic climate we’ve been in, clearly a lot of companies have hunkered down rather dramatically and again, this is gut, it’s not based on advance bookings or any technical data I can give you, but I think a lot of companies, if history is any indication, will not stay that hunkered down because travel is an integral part of their business. So they need to have sales conferences, they need to go to conventions, they need to go out and drum up business. And I think that if the economy begins to pick up steam, which Chairman Bernanke thinks we’re making some progress, that will bode well for our traffic in the back half of this year.

And I think the environment where the government has been talking down business and talking down business travel has not been very helpful and hopefully we’re coming out of that.

Your next question comes from Gary Chase - Barclays Capital.

Two questions for Tom, one on the financing side and then one on the cost side. On the financing, could you tell us when in the quarter you placed $100.0 million and is there any way to extrapolate—in other words, based on the ability to place that $100.0 million and thinking about the aircraft collateral that’s rolling this year, is there some number that you might guide to as reasonable for what you may be able to extract out of it? Is it $500.0 million, is it $400.0 million. How can we think about how much of this collateral you might actually be able to turn into liquidity?

I think that’s very much dependent upon the state of the markets, which it would be impossible for me to predict. I take some comfort from the fact that we were able to do a financing deal that involved vintage aircraft. Some 757s and 777s, even in the darkest of times in the credit market. So we are going to keep working at it. I would think we ought to be able to get at several hundred million dollars on the aircraft side and there are other sources of liquidity that I mentioned there that I think could also be quite attractive.

Is there an LTV you could point to on that $100.0 million?

No.

And the revolver, is there specific collateral backing that up? Is it reasonable to think that can roll?

There is collateral behind the revolver and we would intend to roll that as well.

On the cost side, you talk about 2.6 points coming out of the mainline guidance, which looks to be the bulk of the consolidated change as well. If we’re doing the math right, it comes to somewhere between $400.0 million and $500.0 million. And I know you mentioned some of the revenue variable costs but it doesn’t feel like that’s going to be a big part of it. When we think about the sustainability of these cost reductions, how much of it’s going to come back if and when revenue returns and how much of it is really cost that you’ve been able to take out?

That’s a good question and I would say about half of it. About half of it is sort of natural cost reduction that comes down as revenues and traffic have come down and the other half is a lot of grinding on everything from the pay and hiring freeze to IT projects and consulting and more aggressively harvesting some of the fleets that we’re retiring, just really looking for costs every place we can find it. So it’s a mix.

And is the $400.0 million a good stab at it, Tom?

Yes, plus or minus. The only thing I would add to that, I think in our effort to revise our plan this year, we were very mindful of the fact that we want to sustain the progress that we’ve made on the reliability front. So none of the changes that we’ve made or revisions to the plan in any way for right, diminish any of the improvements we’re seeing on the customer service front. I think the changes we’ve made I think are all sensible in this environment but don’t undermine anything we’re trying to do for the long run.

Your next question comes from Kevin Crissey – UBS.

I wanted to ask about, kind of after September 11 you made a lot of progress on the distribution cost side. What opportunities are out there? I’ve heard some carriers talk about kind of international agency commissions maybe being able to be pressured or what kind of distribution cost savings might there be out there?

Tom can jump in here, but I think the same approach that we’ve taken here in the U.S. certainly lends itself to the international distribution of our tickets where we’re still paying much higher levels of commission and booking fees, etc., and I think a lot that hinges on the use of technology and the competitive environment because a lot of those commissions or overrides or booking fees are paid in order to stimulate traffic and if we can, as an industry, do a better job keeping the supply of seats in line with the demand, I think that will help us on those fronts. So I think there are significant opportunities around the world to make the kind of progress that we’ve made here in the U.S. and not to be too dramatic but I can see a day, and maybe I’m dreaming here, where those folks who are the intermediary between us and our customer, have to pay for access to our product rather than us paying them to distribute our product. So that would be my long-term vision.

You’re not alone in that I’ve heard that from another carrier and I certainly would love to see that. How about on the pension expense, what was the pension expense in Q1 that would be non-cash and what’s left for the rest of the year? Was it $640.0 million or something for the year previously?

It’s about $160.0 million for the first quarter.

And was it $640.0 million for the year?

That’s just about right.

And if nothing changed, Tom, and certainly it will and there’s a revaluation and all that, but if nothing changed with your pension, what kind of cash contribution would you have for 2010? It seems like a while away but it really isn’t.

Well, it can move around a little bit, as you suggest, but think of it as potentially several hundred million dollars.

Your next question comes from Helane Becker - Jesup & Lamont Securities Corporation. Helane Becker - Jesup & Lamont Securities Corporation: Gerard, you were alluding to the fact that you think there’s still too much international capacity. So do you think you would lead the way in maybe the second half of the year in adjusting capacity in those markets or do you think you’ve done enough at this point in time?

I think Tom indicated that’s it’s kind of too early to tell and we kind of want to see how the bookings develop for the summer period, but Tom highlighted and I would just underscore, if you look at capacity levels going back several years, I think we have been very consistent, both domestically and internationally, about constraining our capacity. And you can see that in our international numbers. If you look at our international scope of service in 2009 and compare it to 2005, it’s about flat. And if you look at some of our competitors, they’re up double digits. And I think that many folks move into these markets with the notion that there was strong economy, strong revenue per ASM, but these markets are cyclical. And of course capacity influences the industry RASM in these markets. So a lot of the international markets are very weak right now and I don’t think we have been the leader in causing that. So I think we will watch really carefully the bookings this spring. I do think we are prepared to do more if necessary is the way I would leave it but I think there is a lot of other capacity out there that is a lot more marginal than what we’re operating. Helane Becker - Jesup & Lamont Securities Corporation: Just on other operating expenses in terms of things like airport costs and landing fees, with the decline in capacity, especially domestically, could you just address what you are thinking will happen in those line items and how you are prepared to go back to some of these airports where you have a strong presence and maybe pressure them to keep the fees from rising too outrageously.

That’s a good question and you’ve highlighted an area that’s kind of vexing for us because while the industry has pulled out a lot of capacity, the fact is the physical footprint at the airports and the operating costs at those airports really hasn’t changed that much. So it tends to pressure our unit cost. Not just us, it’s the whole industry. So facility space around the industry has been relatively flat and we have had a hard time getting costs out. Now having said that, we work very carefully with the airport authorities at all the airports, in particular places where we have a big operation, to encourage them at every turn to keep their costs low and keep their operations efficient. And we, as you would expect, we meet with mixed success. But this is an area of challenge for the whole industry.

Your next question comes from Michael Derchin - FTN Equity Capital Markets.

The airlines, as you’ve pointed out, have not had a domestic fare increase since last summer. I believe about a week or so ago there was an attempt by a couple of your competitors to raise prices but it didn’t stick. You’re traditionally a price leader in the industry and you’ve certainly taken the initiative on reducing capacity dramatically domestically. Do you think the fare structure domestically is okay or do you think it’s too low or too high?

I’m not familiar with the increase that you’re referencing and of course we’ve got to be very careful what we say about pricing in the industry. But I’ll give you my view, which I think you’ve heard in the past, which is that one of the seminal problems in this industry, and has been for many years, is we don’t charge enough for our product. And we have been, as you point out, we’ve been a consistent price leader in this industry and that’s not to say we’re not mindful of elasticity and mindful of the fact that you have to do promotional things and we certainly have to be competitive. But the industry has got to collect more revenue for its product. And I think we have been a leader in unbundling our product, in taking risks to charge for services that otherwise end up being bundled in the product and given away for free. And so I think you’re highlighting something that we’ve been focused on, we will continue to be focused on. These are obviously very difficult economic times that we’re in but it doesn’t certainly dissuade me from the fact that we have got to find a way to charge more for our product over the long run. And, of course, the key to that is back to this whole issue of capacity and constraining capacity. And you know a business that has systematically been destroying capital for years has got to stop adding capacity. And we certainly are not adding capacity. The airplanes that we are taking right now, the 737s are replacing MD80s and we get an ROI on that, from fuel savings, maintenance savings and what not. So I don’t mean to start rambling and lecturing here but I’m heavily in tune with you that we’ve got to charge more for our product.

Your final question comes from Jamie Baker - J.P. Morgan.

Tom, a follow-up on the forward mileage sale, the monies that Continental and United received also in part reflected a contract extension. Can you remind us for how long the current Advantage/Citi relationship runs. And secondly, you’re not subject to a credit card holdback right now but if you can remind us as to what Mac flexibility your processor has and how we should be thinking about that perhaps unintended liquidity risk later on this year.

Unfortunately, I’m going to give you kind of an unsatisfactory answer because a lot of what you just asked is confidential between us and Citibank. We did recently renew our contract, as you know, but the terms and conditions are subject to confidentiality. I would put it to like this. There is nothing in that arrangement that would inhibit our ability to do a substantial financing with respect to the Advantage program.

And on the holdback issue?

Our holdback situation today is we at year end didn’t have any credit card holdback as I think you might remember. We currently have about $150.0 million on reserve with one our processors and that agreement caps the processors holdback rights at $200.0 million through August 15. Then after August 15 the holdback will be based on a matrix of unrestricted cash and debt service coverage ratio and given all the volatility around the business and fuel prices and such, it’s hard to forecast what amount, if any, would be required at the time the limit comes off. However, if conditions persisted and we were unable to renegotiate that, the amount could be significant but you can be sure that we’ll be in discussions with the credit card processor to seek as much relief as possible on that. And you know, we’ve been successful on that in the past so I would like to think that we would be successful in the future.

Any guidance, if that matrix were applied based on the first quarter results, any guidance on what sort of holdback that would be beyond what you just said?

No, other it could be significant. More significant than $200.0 million.

This concludes the analyst and financial community Q&A session for today’s conference call.