American completes sale of $1 billion in debt‎

[MERV]

American completes sale of $1 billion in debt‎
BusinessWeek
Some airlines have begun diverting flights away from Tokyo due to delays related to ... American's London slots figure in the airline's trans-Atlantic joint

http://www.businessweek.com/ap/financialnews/D9M0FN0G0.htm

 

[WorldTraveler]

This is the most significant part of the article:

"In its annual report filed last month with the SEC, American Airlines parent AMR Corp. said the company "will need to raise substantial additional funds."

"In 2011, AMR will be required to make about $2.5 billion in principal payments on long-term debt and capital leases, $1.6 billion in capital expenditures including aircraft, and $520 million in contributions to pension plans, according to the annual report."

It is also noteworthy that AA says that almost all of its aircraft are already mortgaged and that the collateral for this debt issuance includes route authorities and airport slots, assets that usually are held as an asset of last resort to pledge so that it can become a part of debtor in possession financing should that be necessary.

In other words, the next 12 months is highly critical for AA from a cash flow standpoint... it either must raise a whole lot more money or renegotiate or reduce its cash stash.....

 

[Frank Szabo]

... snip

In other words, the next 12 months is highly critical for AA from a cash flow standpoint... it either must raise a whole lot more money or renegotiate or reduce its cash stash.....

That will only happen if the three workgroups can be persuaded to accept further concessions.

 

[star power]

This is the most significant part of the article:

"In its annual report filed last month with the SEC, American Airlines parent AMR Corp. said the company "will need to raise substantial additional funds."

"In 2011, AMR will be required to make about $2.5 billion in principal payments on long-term debt and capital leases, $1.6 billion in capital expenditures including aircraft, and $520 million in contributions to pension plans, according to the annual report."

It is also noteworthy that AA says that almost all of its aircraft are already mortgaged and that the collateral for this debt issuance includes route authorities and airport slots, assets that usually are held as an asset of last resort to pledge so that it can become a part of debtor in possession financing should that be necessary.

In other words, the next 12 months is highly critical for AA from a cash flow standpoint... it either must raise a whole lot more money or renegotiate or reduce its cash stash.....

I kind of figured that AMR would pay the executive bouns first, then payments for fuel hedging second, then make down payments to Boeing for the 15 B737-800 that AA is to start receiving in the later half of May 2011.

I also figure that by years end 2011, that AA will have about 20 aircraft off or coming off mortgage agreements with their lending institutions, say about 11 MD 80s, 5 B737-800, 2 Boeing 757-200, and 2 Boeing 767-300. This will be all because they instituted some new or renegotiated new mortgage agreements in 2001 with their lending agents and with the TWA merger/acquisition in the 2Q01, which AMR re-negotiated the mortgage/lease/capital lease terms of most of the TWA aircraft, either by lease/capital lease/mortgage/ or bought off short term lease with a sale and lease back with a lending insitution that AMR had better agreements with.

So new mortgage and/or sale and lease back of these 20 aircraft may bring in 300m to 350m by years end 2011. so the next 12 months may not be so highly critical of a cash flow problem for AA, The increase in fuel price and time will tell the story.

 

[WorldTraveler]

it's possble you might be close or even right - but AMR is required to file w/ the SEC based on REASONABLE expectations for the business.

AMR can and likely would be able to renegotiate some debt - but that might not happen if the business deteriorates outside of bankruptcy.

Also, AMR's statement of cash needs doesn't include losses which could slow down markedly or even eliminate cash which can be used to pay these obligations.

 

[PhatSappy]

This is the most significant part of the article:

"In its annual report filed last month with the SEC, American Airlines parent AMR Corp. said the company "will need to raise substantial additional funds."

"In 2011, AMR will be required to make about $2.5 billion in principal payments on long-term debt and capital leases, $1.6 billion in capital expenditures including aircraft, and $520 million in contributions to pension plans, according to the annual report."

It is also noteworthy that AA says that almost all of its aircraft are already mortgaged and that the collateral for this debt issuance includes route authorities and airport slots, assets that usually are held as an asset of last resort to pledge so that it can become a part of debtor in possession financing should that be necessary.

In other words, the next 12 months is highly critical for AA from a cash flow standpoint... it either must raise a whole lot more money or renegotiate or reduce its cash stash.....

Costs of settling employee group contracts will be a fraction, and while not minor - will benefit AMR with planned expenditures and obligations in the near to long term.
Damn I sound like a businessman. HA! Then again . . .