1. AMR Proprietary and Confidential1 Version 2 AMERICAN AIRLINES REVERSE AUCTION TRAINING November 2007

2. AMR Proprietary and Confidential2 Version 2 SUPPLIERS Each supplier must be pre-qualified and approved by the internal customer Supplier must have capability/capacity/quality to handle AA requirements Must be willing to award to the lowest bidder at the end of the auction no additional bids will be accepted after the auction Sufficient number of competitive suppliers/bidders available (use market analysis and/or RFP process to determine) 3 or more suppliers confirmed at two days before the auction 2 or more very aggressive bidders confirmed, auction may still be an option with VP approval Suppliers must be notified that an electronic bid may occur Suppliers who participate must register at least two days before the auction and sign a license agreement with auction provider 1. AUCTION CRITERIA

3. AMR Proprietary and Confidential3 Version 2 SUPPLIERS Pricing of the commodity to be auctioned should be equalized units of measure currency delivery point Volume of Business (VOB) of the deal must be considered no specific limit is required Once a decision to use an auction as the preferred method is made, develop a timeline and a strategy Suppliers must be provided with registration instructions, Getting Started Guide and Seller’s Guide 1. AUCTION CRITERIA

4. AMR Proprietary and Confidential4 Version 2 TIMETABLE (potential milestones) Review Timeline w/ Purchasing Mgmt Target Date Review Timeline w/ StakeholdersTarget Date Issue RFITarget Date Bidder Pre-qualifying Target Date Issue RFP (if applicable)Target Date Bidders’ Conference Target Date Bidder PresentationTarget Date Short List, if applicableTarget Date Commercial terms agreement reachedTarget Date Prepare & review reverse auction strategy & check listTarget Date Hold Mock AuctionTarget Date Reverse Auction Target Date Contract AwardedTarget Date Contract Implementation Target Date 2. TIMING

5. AMR Proprietary and Confidential5 Version 2 AUCTION TYPE What type of auction should be used? Self- service – AA handles all details of the auction There is no limit to the number of auctions There is no fee associated with the auction AA guidelines state that an AA “auction expert” must work with first time CMs using this tool Semi-managed – Auction provider will set-up the auction, provide buyer training and monitor the action AA pays a nominal fee Managed – Auction provider handles the complete process AA pays a percentage of the first year savings Collaborative – Auction provider combines several requirements from several companies into one auction Recurring – self-managed, market or strategy dictates no long term agreement should be used. 3. AUCTION STRATEGY

6. AMR Proprietary and Confidential6 Version 2 Auction Style Open – all auctioneer and bidders see all bids (not recommended) Blind – only the auctioneer can see all bids (MOST USED BY AA) Sealed – neither auctioneer nor bidder can see bids until they are unlocked Bid Ranking Price Only Ranking – based on price Multi-Attribute Scoring Ranking – based on the ratio of price to the sum of all weighted attributes (not used by AA for auctions) Rank Indicator (Supplier View) Win/Lose - word – win or lose is displayed 1, 2, 3 … Rank – order is displayed (MOST USED BY AA) None – no indicator is displayed 3. AUCTION STRATEGY

7. AMR Proprietary and Confidential7 Version 2 MULTIPLE AUCTION EVENTS Multiple lines in one auction There are several lines that suppliers can bid on simultaneously Lines are scheduled to begin and end at the same time Multiple events There are several auctions that suppliers can bid on sequentially Each subsequent auction begins after the previous one ends BUNDLING/LOTTING AUCTION EVENTS Auctions are held for items individually and then one held combining previous auctions – The whole is better than the sum of the parts Auctions are held in for a large quantity of parts or services – combine items that no one really wants with items that suppliers do want 3. AUCTION STRATEGY

8. AMR Proprietary and Confidential8 Version 2 PRICING Bid decreases or decrements - This is a critical element in the auction strategy. This is the amount which the bidder to must decrease bids by a predetermined minimum amount. This can be a dollar amount or a percentage of the VOB. AA typically use a dollar figures. Minimum Release Amount – Not used by AA Starting price – This amount is based on the paper bids or market analysis. Target price – This is the price at which it becomes cost effective to award to the lowest bidder and make a change in suppliers. Target pricing is set to ensure that AA is under no obligation to award to the auction winner if that winner’s bid is not low enough to meet AA’s goals. The target price is set prior to the auction, but is NOT published to suppliers. Current price – Must input this amount for the tool to calculate savings. Always reserve the right to fall back to previously provided paper bids, if applicable. 3. AUCTION STRATEGY

9. AMR Proprietary and Confidential9 Version 2 TRADITIONAL PAPER AUCTION/RFP When should a paper bid be done? What is the benefit of this bid? Insight to market value Assist with determining starting price MOCK AUCTION Always hold a mock auction prior to a real auction. If it is not successful: Determine the cause and schedule another mock event The format could be changed and another mock event scheduled The actual event could be postponed until there is a 100% degree of certainty that all participants are comfortable and proficient prior to holding the real auction 3. AUCTION STRATEGY

10. AMR Proprietary and Confidential10 Version 2 COMMUNICATION Auction provider information needed: List of suppliers, including e-mail addresses Event dates and times planned Invitation to the auction when it is held Bidder Communication Send applicable documentation (Ts&Cs, NDA, etc.) Send “Supplier Welcome Package” from auction provider Send item/product information, quantities, etc. Bidder Registration & Training Bidders must register with auction provider (one week in advance) CM schedules individual bidder training via phone or on-line Run a mock auction for additional training and confidence MD Signoff Review strategy and check list with respective manager, MD and John Rau 3. AUCTION STRATEGY

11. AMR Proprietary and Confidential11 Version 2 AEROXCHANGE TOOL REVIEW REVIEW STEPS IN PROCESS Step One - Describe Your Auction Step Two – Enter Business Terms & Conditions Step Three – Add Items Step Four – Select Bid Controls Step Five – Invite Bidders Step Six – Review and Submit

12. AMR Proprietary and Confidential12 Version 2 FACILITIES / EQUIPMENT / CONNECTIVITY Reserve conference room (large enough for stakeholders) Reserve and test equipment Laptop #3 Projector Internet cables (in case the wireless doesn’t work) Test all equipment and connectivity at least one day prior to auction NOTIFICATION Notify all stakeholders, purchasing groups and other interested parties via e-mail at least three days prior to auction 4. DAY OF AUCTION

13. AMR Proprietary and Confidential13 Version 2 COMMUNICATION Get dedicated cell phone and land lines for all bidders Phone numbers of all suppliers Phone numbers of conference room and cell phone of CM Phone number of auction provider support Phone numbers of internal customers Contact each supplier by phone prior to the auction to confirm they are able to be reached 4. DAY OF AUCTION 5. POST AUCTION / AWARD Follow up Cost Breakdown Submission Post Auction Reporting Notification of Award