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As an airline operating a fleet of more than 900 aircraft, the company consumes a significant amount of jet fuel. The burning of this fossil fuel during flight generates carbon dioxide, a greenhouse gas (GHG). We recognize the importance of this issue and understand that it is a high priority concern for many of our stakeholders.
The ultimate effects of climate change are as yet unclear, including the extent to which climate change may be related to more variable and severe weather events. Nevertheless, we are managing our exposure to such risks by investing in resources and technology tools that allow us to better mitigate impacts of adverse weather activity. We also continuously monitor weather activity as part of our normal business operations and act quickly to adjust schedules to maintain safety and minimize travel disruptions for our customers.
It is one of our highest priorities to effectively manage our fuel consumption and associated GHGs. We make many of the company's most critical decisions, including decisions about aircraft acquisition, aircraft modifications and other investments, based largely on their impact on fuel use and associated GHG emissions.
We have established a four-pronged strategy to maximize fuel efficiency and minimize GHG emissions:
For complete disclosure regarding our measurement, management, risk profile, goals and performance regarding carbon emissions, please visit our Carbon Disclosure Project response.
|Greenhouse Gas Emissions (metric tons CO2)||2011|
*Estimate based on average commute length and average fuel efficiency.
Over 98 percent of our direct (Scope 1) GHG emissions are related to the consumption of jet fuel. Our indirect (Scope 2) emissions, which are related to the purchase of electricity, make up the majority of our remaining emissions. Employee commuting (Scope 3) emissions are very small in comparison with our direct emissions.
Employee travel for business on American Airlines flights, and any associated GHGs are included as Scope 1 emissions rather than broken out as separate Scope 3 emissions. Although emissions from ground-level employee commuting are minimal, we have implemented programs to help reduce this environmental impact. Employees have the option to purchase discounted mass transit passes or to purchase transit passes using pre-tax payroll deductions.
The airline industry collectively contributes only approximately two percent of the world's manmade emissions of carbon dioxide, according to the United Nations Intergovernmental Panel on Climate Change. As an industry, we are committed to doing our part to decrease this percentage even further. Our collective goals are to:
At American, we have established a 20-year goal to reduce our GHG intensity ratio by 30 percent between 2005 and 2025.
Our intensity ratio compares the amount of CO2 we emitted with the work we performed as measured by revenue ton miles (RTMs), which is the weight of passengers and cargo we are paid to transport. Our intensity ratio decreased 6.6 percent between 2005 and 2010, which puts us behind the pace needed to meet our 20-year GHG efficiency goal.
Beginning in 2012, aviation is included in the European Union's Emissions Trading Scheme (EU ETS). The ETS is a cap and trade system that requires companies within specific industries to submit allowances to cover the emissions they emit. With limited exceptions, all flights landing or departing the EU will be covered in the ETS regardless of where the operator is incorporated. Emissions from all phases of the flight are included in the ETS, including emissions prior to departure.
Although American believes the EU ETS violates international law, we are complying with applicable requirements. We have made clear, however, that we are complying under protest given significant legal concerns.
For complete information about American's position on the EU ETS, please visit the public policy section of this report.
Established in 2005, Fuel Smart is the cornerstone of our fuel conservation efforts. It encourages employees to search out fuel-saving opportunities and make them part of everyday routines. Since 2005, we have invested more than $300 million in fuel-saving initiatives, such as winglets, high-speed tugs and ground power units. This investment of capital, as well as the time and efforts of employees, has resulted in approximately 700 million gallons of fuel savings since the program began, worth $1.5 billion at prevailing fuel prices.
Given that a one-cent increase in the price of a gallon of fuel translates into an additional $25 million annual cost for American Airlines, Fuel Smart will continue to be an important part of reducing costs as well as reducing GHG emissions. To put this into context, consider that jet fuel costs jumped from an average of $2.31 per gallon in 2010 to $3.01 per gallon in 2011 & raising our annual operating costs by approximately $2 billion.
(in U.S. dollars)
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Employees suggest and implement Fuel Smart ideas that offer the greatest financial impact. In 2011, we concentrated specifically on achieving greater fuel efficiency by optimizing our route selection, reducing fuel use while aircraft are parked (through such actions as shutting down aircrafts' auxiliary power units and using available ground power and pre-conditioned air equipment instead), and through new initiatives such as replacing heavier cargo containers onboard aircraft with lighter weight containers. Utilizing the lighter weight cargo containers will save approximately 1.5 million gallons of fuel each year. We also introduced new technology. For example, we received FAA approval for use of iPads in cockpits. This shift toward paperless cockpits has multiple benefits, including fuel savings by eliminating the weight of manuals, which is estimated to save nearly 500,000 gallons of fuel annually.
Read more about these and other impactful initiatives on our Fuel Smart website.
In 2011, American Airlines took decisive action in moving forward with its fleet renewal efforts. In July 2011, we placed the largest aircraft order in aviation history: 460 narrowbody jets from Boeing and Airbus to be delivered in 2013 through 2022. As part of this order, American will take delivery of the latest generation single-aisle aircraft from Boeing and Airbus. Expected in 2017, the Boeing 737MAX and Airbus A320neo aircraft will be powered by next generation engine technology and will provide significant fuel efficiency gains over today's current models. These aircraft will enable us to establish American's fleet as the youngest and most fuel efficient among our competitors.
Read more about our fleet renewal efforts.
American Airlines closely follows innovations in technological solutions for reducing its carbon and overall environmental footprint. We invest in or participate in pilot programs to test new equipment and develop alternative fuels, and partner with our industry peers to support promising developments. For example, in June 2011, American was named the "launch customer" for the Boeing's evolutionary ecoDemonstrator Program, designed to test and accelerate the market readiness of new fuel efficiency, carbon reduction and noise abatement technologies.
We view the development of alternatives to fossil fuel–based jet fuel as a future opportunity to further minimize our GHG emissions. We therefore participate in organizations such as CAAFI (Commercial Aviation Alternative Fuels Initiative), which brings together key stakeholders to support the development and deployment of environmentally sustainable fuel for commercial aviation. We also support the efforts of industry associations, including those of A4A (Airlines for America) and IATA (the International Air Transport Association) to promote the development of alternative fuels with lower life-cycle emissions than traditional petroleum-based jet fuel.
American Airlines has signed a letter of intent with Solena Fuels and is negotiating an agreement along with other major U.S. carriers to purchase biofuel made from recycled waste. This new biomass fuel source would be used on flights from San Francisco Bay Area airports including Oakland, San Jose and San Francisco. Solena's Northern California biomass-to-liquids plant will produce up to 16 million gallons of jet fuel per year from 550,000 tons of recycled agricultural and urban waste.
Although American does not currently use biofuels in regularly scheduled flights (in part because of limited availability and high cost — about three times that of traditional fuel), the company plans to pilot this project and continue monitoring technological advances in alternative fuels in coming years.
American's ability to reduce GHG emissions will also depend on investment by governments in modernizing air traffic control systems. For example, in the United States, the FAA oversees the implementation of NextGen, a comprehensive overhaul of the National Airspace System. The goal of NextGen is to make air travel more convenient and dependable, while ensuring that flights remain as safe, secure and hassle-free as possible. As part of NextGen improvements, the FAA is building the capability to guide and track air traffic more precisely and efficiently to save fuel and reduce noise and pollution.
Read more about the NextGen Air Transportation System on the FAA website.