Note that AMR is trying to raise 344 million but using airplanes appraised at 529M as collateral.


AMR?s American Seeking to Sell $344.1 Million in Debt (Update1) - Bloomberg.com


AMR’s American Seeking to Sell $344.1 Million in Debt (Update1)

By Mary Schlangenstein and Gabrielle Coppola

July 24 (Bloomberg) -- AMR Corp.’s American Airlines, the world’s second-biggest carrier, is trying to issue as much as $344.1 million in debt to help build cash before the slow U.S. winter travel season.

The proposed sale, being led by Morgan Stanley and Stifel, Nicolaus & Co., was detailed in a July 20 preliminary offering memorandum obtained by Bloomberg News. The secured notes, due in August 2016, would be backed by 15 of American’s jets.

Airlines including American are struggling to build cash reserves in the U.S. summer months, when carriers typically are busiest, because the recession is crimping business and leisure traffic. AMR’s second-quarter revenue fell 21 percent, and its loss excluding one-time items was $319 million.

“Based on our forecasts for year-end liquidity, capital needs are most pressing at AMR,” Jamie Baker, a JPMorgan Chase & Co. analyst in New York, said in a July 20 report. He rates Fort Worth, Texas-based AMR as “overweight.”

Andy Backover, an American spokesman, declined to comment about the airline’s plans.

AMR reported cash at the end of June totaling $3.3 billion, including $460 million dedicated to a specific use, and estimated that it had $3.7 billion in unencumbered assets and other sources of liquidity.

Bag Fees, Debt

Seeking more revenue from sources besides fares, American said today it will add $5 to the fees to check a first and second bag. The change to $20 for a first piece of luggage and $30 for the second covers tickets purchased on or after Aug. 14.

Delta Air Lines Inc., Continental Airlines Inc. and US Airways Group Inc. have boosted bag charges by $5 since April for passengers who pay the fees at airports instead of online. American doesn’t have online technology for those payments.

Continental last month sold $389.7 million in debt backed by planes, while UAL Corp.’s United Airlines issued $175 million in debt secured by engines and spare parts. It was UAL’s most- expensive debt in at least nine years.

“Even a seemingly miraculous surge in demand wouldn’t negate the necessity for significant incremental capital” at AMR, UAL and US Airways, JPMorgan’s Baker wrote. “The availability of capital will largely determine the industry’s size, shape and profitability next year.”

A successful offering would be American’s second in less than a month, after issuing $520.1 million in debt backed by planes on June 29. American also persuaded lenders last month to ease terms of a $435 million loan.

Backed by Jets

The new debt would be secured by 10 Boeing Co. 737-800s delivered to American in 1999; three Boeing 767-300ERs from 1998 and 1999; and two 777-200s also delivered in 1999, according to the memo. The planes have a total appraised value of more than $529.3 million.

American used the same jets to secure a 1999 issue of enhanced equipment trust certificates that will mature on Oct. 15, freeing the aircraft to be used in the proposed offering.

In the June offering, American sold 10-year pass-through certificates backed by 4 planes already in its fleet and 16 it plans to purchase during the next year. The 10.375 percent debt priced to yield 7.2 percentage points more than similar maturity Treasuries, according to data compiled by Bloomberg. It was AMR’s first debt offering since 2005.

To contact the reporter on this story: Mary Schlangenstein in Dallas at [email protected]; Gabrielle Coppola in New York at [email protected];

Last Updated: July 24, 2009 17:16 EDT

 

Aren't we all, aren't we all.

 

"AMR Trying To Raise Cash But Don't Worry, We'll Always Have Some Extra For Those Well-Deserved Management Bonuses... Regardless Of Quarterly Performance."

 

"sell" us Eagle....E-Jets!!

 

Why stop at E jets, just offer to fly the 80 for 80 like you all did last time.....

Heck, how about the 75 for 75!!!!! Geez, I bet some of the junior (young) eagle guys would pay AMR money to fly a 757...


AA "NO WAY EGL GETS E JETS"

 

Hah, AA man you seriously mis-characterize the youth of Eagle. Have you actually had conversations with Eagle FO jump seaters about it?

 

[QUOTE=


AA "NO WAY EGL GETS E JETS"[/QUOTE]

HA HA HA! Sure, We never would get jets either....

 

I get a kick out of how regional pilots complain about pay, schedules, etc and in the very same or next sentence brag about flying E-jets and being able to secure 100 seat flying. Don't you guys see the irony?

 

Ha ha....The last jumpseat I couldn't get on because of guess what.... A weight restriction.... Guess what the FOs response was.. You should let us fly bigger jets and then you wouldn't have to deal with these weight restrictions.

NO... I am keenly aware of the number of EGL pilots that would do my job at half the cost I do it.. I am aware of what would happen if EGL was the receive E-170 or even E-190 aircraft..

Would love pay restoration this contract, but SCOPE is numero uno. I get a real kick at how so many of you would love to watch AMR dismantle our SCOPE clause yet just recently the *****ing of how Trans States may have violated your SCOPE clause. Oh the irony..

I wish our two groups could get a long better, I wish we could unite against management, however I know way too many that would jump at the chance to secure 100 seat flying at EGL.

Heck, Herb Mark even sent a letter to Arpey a few years back explaining how EGL pilots could fly these jets at a cheaper cost than mainline..

AAflyer

 

Hey now, in all fairness, who wouldn't pay to fly a 757? She is a sexy beast. I could almost resist the temptation until she grew a nice pair of winglets...