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October 10, 2012

American asks court for permission to borrow $1.5 billion to refinance debt

In a court filing made on Tuesday afternoon, American Airlines and its parent company, AMR Corp., asked the judge to allow it to borrow $1.5 billion to refinance about $1.3 billion in current debt.

The carrier wants to consolidate its prepetition $1.3 billion in debt in a new enhanced equipment trust certificate financing since low interest rates are available.

"As part of their ongoing efforts to improve liquidity and achieve a competitive and sustainable cost structure, the Debtors have considered various potential financing arrangements involving the Aircraft. Based on the low interest rates available in the EETC financing market compared to the interest rates available in other transaction structures, and the capacity of the EETC financing market to absorb a large securities issuance, the Debtors concluded that proceeding with an EETC financing as soon as possible to take advantage of current market conditions was in the best interests of the Debtors and their economic
stakeholders," the filing said.

The new debt would be secured with up to 41 Boeing 737-800s, 14 Boeing 757-200s, one Boeing 767-300ER and 19 Boeing 777-200ERs.

Click here to read the full filing.

-Andrea Ahles


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