American Airlines 1999 Annual Report Download - page 48

AMR CORPORATION
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future minimum lease payments required under operating leases
that have initial or remaining non-cancelable lease terms in excess
of one year as of December 31, 1999, were (in millions):
Capital Operating
Year Ending December 31, Leases Leases
2000 $ 347 $ 1,015
2001 329 1,006
2002 280 952
2003 198 965
2004 249 954
2005 and subsequent 1,081 12,169
2,4841$17,0612
Less amount representing interest 637
Present value of net minimum lease payments $1,847
1Future minimum payments required under capital leases include $187 million
guaranteed by AMR relating to special facility revenue bonds issued by
municipalities.
2Future minimum payments required under operating leases include
$6.5 billion guaranteed by AMR relating to special facility revenue bonds
issued by municipalities.
At December 31, 1999, the Company had 205 jet aircraft
and 71 turboprop aircraft under operating leases, and 79 jet
aircraft and 61 turboprop aircraft under capital leases. The aircraft
leases can generally be renewed at rates based on fair market
value at the end of the lease term for one to five years. Most
aircraft leases have purchase options at or near the end of
the lease term at fair market value, but generally not to exceed
a stated percentage of the defined lessor’s cost of the aircraft
or at a predetermined fixed amount.
During 1996, American made prepayments on the cancelable
operating leases it had on 12 of its Boeing 767-300 aircraft.
Upon the expiration of the amended leases, American can
purchase the aircraft for a nominal amount. As a result, the
aircraft were recorded as flight equipment under capital leases.
During 1999, the Company exercised its option to purchase two
of the Boeing 767-300 aircraft for a nominal fee. As such, these
two aircraft were reclassified from flight equipment under capital
leases to owned flight equipment.
Rent expense, excluding landing fees, was $1.3 billion for
1999 and $1.1 billion for 1998 and 1997.
5. INDEBTEDNESS
Long-term debt (excluding amounts maturing within one year)
consisted of (in millions):
December 31,
1999 1998
Secured variable and fixed rate indebtedness
due through 2015 (effective rates from
6.232% – 9.597% at December 31, 1999) $2,556 $ 857
7.875% – 10.62% notes due through 2039 812 865
9.0% – 10.20% debentures due through 2021 437 437
6.0% – 7.10% bonds due through 2031 176 176
Variable rate indebtedness due through 2024
(3.55% at December 31, 1999) 86 86
Other 11 15
Long-term debt, less current maturities $4,078 $2,436
Maturities of long-term debt (including sinking fund require-
ments) for the next five years are: 2000 – $302 million;
2001 – $516 million; 2002 – $150 million; 2003 – $116 million;
2004 – $123 million.
American has a $1.0 billion credit facility agreement that
expires December 19, 2001. At American’s option, interest on the
agreement can be calculated on one of several different bases.
For most borrowings, American would anticipate choosing a
floating rate based upon the London Interbank Offered Rate
(LIBOR). At December 31, 1999, no borrowings were outstanding
under the agreement.
Certain debt is secured by aircraft, engines, equipment and
other assets having a net book value of approximately $2.7
billion. In addition, certain of American’s debt and credit facility
agreements contain restrictive covenants, including a minimum
net worth requirement, which could limit American’s ability to
pay dividends. At December 31, 1999, under the most restrictive
provisions of those debt and credit facility agreements, approxi-
mately $2.6 billion of the retained earnings of American was
available for payment of dividends to AMR.
Cash payments for interest, net of capitalized interest, were
$237 million, $277 million and $411 million for 1999, 1998 and
1997, respectively.