American Airlines Group Inc.AAL
American Airlines Group Inc. Fair Value Disclosure
Fair Value Measurements
Assets Measured at Fair Value on a Recurring Basis
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels:
•Level 1 – Observable inputs such as quoted prices in active markets;
•Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
When available, we use quoted market prices to determine the fair value of our financial assets. If quoted market prices are not available, we measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates.
We utilize the market approach to measure the fair value of our financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Our short-term investments, restricted cash and restricted short-term investments classified as Level 2 utilize significant observable inputs, other than quoted prices in active markets, for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2025.
Assets measured at fair value on a recurring basis are summarized below (in millions):
| Fair Value Measurements as of December 31, 2025 | |||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Short-term investments (1), (2): | |||||||||||||||||||||||
| Money market funds | $ | 829 | $ | 829 | $ | — | $ | — | |||||||||||||||
| Corporate obligations | 3,063 | — | 3,063 | — | |||||||||||||||||||
| Bank notes/certificates of deposit/time deposits | 590 | — | 590 | — | |||||||||||||||||||
| Repurchase agreements | 400 | — | 400 | — | |||||||||||||||||||
| 4,882 | 829 | 4,053 | — | ||||||||||||||||||||
Restricted cash and short-term investments (1), (3) | 735 | 425 | 310 | — | |||||||||||||||||||
Long-term investments (4) | 209 | 209 | — | — | |||||||||||||||||||
| Total | $ | 5,826 | $ | 1,463 | $ | 4,363 | $ | — | |||||||||||||||
| Fair Value Measurements as of December 31, 2024 | |||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Short-term investments (1): | |||||||||||||||||||||||
| Money market funds | $ | 680 | $ | 680 | $ | — | $ | — | |||||||||||||||
| Corporate obligations | 2,909 | — | 2,909 | — | |||||||||||||||||||
| Bank notes/certificates of deposit/time deposits | 2,041 | — | 2,041 | — | |||||||||||||||||||
| Repurchase agreements | 550 | — | 550 | — | |||||||||||||||||||
| 6,180 | 680 | 5,500 | — | ||||||||||||||||||||
Restricted cash and short-term investments (1), (3) | 732 | 442 | 290 | — | |||||||||||||||||||
Long-term investments (4) | 161 | 161 | — | — | |||||||||||||||||||
| Total | $ | 7,073 | $ | 1,283 | $ | 5,790 | $ | — | |||||||||||||||
(1)All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.
(2)Our short-term investments as of December 31, 2025 mature in one year or less.
(3)Restricted cash and short-term investments primarily include collateral held to support workers’ compensation obligations, collateral associated with the payment of interest for the AAdvantage Financing and money market funds to be used to finance the cost of improvements at the Tulsa Maintenance Base. Restricted short-term investments principally mature in one year or less.
(4)Long-term investments primarily include our equity investment in China Southern Airlines Company Limited (China Southern Airlines). See Note 8 for further information on our equity investments.
Fair Value of Debt
The fair value of our long-term debt was estimated using quoted market prices or discounted cash flow analyses based on our current estimated incremental borrowing rates for similar types of borrowing arrangements. The fair value of the Convertible Notes, which would have been classified as Level 2, was $1.2 billion as of December 31, 2024.
The carrying value and estimated fair value of our long-term debt, including current maturities, were as follows (in millions):
| December 31, 2025 | |||||||||||||||||||||||||||||
| Carrying Value | Fair Value | ||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
| Long-term debt, including current maturities | $ | 28,280 | $ | 28,582 | $ | — | $ | 25,051 | $ | 3,531 | |||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| Carrying Value | Fair Value | ||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
| Long-term debt, including current maturities | $ | 29,813 | $ | 30,010 | $ | — | $ | 26,402 | $ | 3,608 | |||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 17, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 24, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.