Busy Week for AMR Finance

[eolesen]

A couple of financial items worth noting, several of which were announced in the past 48 hours...

1. Moody's upgraded AMR's corporate debt rating to B2. That's a reflection of both current cash-flow and debt reduction during the past couple quarters.
   
2. AMR paid in full a $285 million revolving credit facility, which had been fully drawn since its establishment in December 2004. This annoucement came after the debt upgrade from Moody's.
   
3. American Eagle prepaid $79 million in aircraft debt. This is separate from AMR's $1.3 billion in scheduled principal payments in 2007.
   
4. AMR anticipates ending 1Q07 with approximately $5.8 billion in cash and short-term investments, including a restricted balance of nearly $500 million, compared to a cash and short-term investment balance of $4.8 billion, including a restricted balance of $510 million, in 1Q06.
   
5. AMR also expects to complete by mid-April the refinancing of $350 million in municipal bonds that originally were issued in 1990 to help fund the development of American's Alliance Maintenance and Engineering Base in Fort Worth, Texas. The refinanced bonds will have a blended interest rate of 5.46 percent, down from a rate of 7.5 percent in the current bonds.
   
6. AMR expects to end the first quarter of 2007 with net debt of approximately $12.3 billion (total debt less unrestricted cash and short-term investments).
   
7. AMR expects to end the first quarter of 2007 with total debt of approximately $17.6 billion.

AMR estimates that by paying down the revolving credit facility balance, prepaying the aircraft debt and refinancing the maintenance facility bonds, as described above, it will eliminate approximately $15 million of its annual net interest expense.