American Airlines 2003 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2003 American Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 103

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103

59
5. Leases (Continued)
AMR's subsidiaries lease various types of equipment and property, primarily aircraft and airport facilities. The
future minimum lease payments required under capital leases, together with the present value of such payments,
and 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, 2003, were (in millions):
Year Ending December 31,
Capital
Leases
Operating
Leases
2004 $ 325 $ 1,114
2005 256 1,056
2006 256 990
2007 187 968
2008 224 916
2009 and subsequent 1,111 8,387
2,359 $ 13,431 (1)
Less amount representing interest 933
Present value of net minimum lease payments $ 1,426
(1) As of December 31, 2003, included in Accrued liabilities and Other liabilities and deferred credits on the accompanying
consolidated balance sheet is approximately $1.3 billion relating to rent expense being recorded in advance of future
operating lease payments.
At December 31, 2003, the Company had 259 jet aircraft and 27 turboprop aircraft under operating leases and 99
jet aircraft and 13 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. Some 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 a predetermined fixed amount.
Special facility revenue bonds have been issued by certain municipalities primarily to purchase equipment and
improve airport facilities that are leased by American and accounted for as operating leases. Approximately $1.8
billion of these bonds (with total future payments of approximately $4.8 billion as of December 31, 2003) are
guaranteed by American, AMR, or both. Approximately $532 million of these special facility revenue bonds contain
mandatory tender provisions that require American to make operating lease payments sufficient to repurchase the
bonds at various times: $112 million in 2004, $104 million in 2005, $28 million in 2006, $100 million in 2007 and
$188 million in 2008. Although American has the right to remarket the bonds, there can be no assurance that
these bonds will be successfully remarketed. Any payments to redeem or purchase bonds that are not remarketed
would generally reduce existing rent leveling accruals or be considered prepaid facility rentals and would reduce
future operating lease commitments. The special facility revenue bonds that contain mandatory tender provisions
are included in the table above at their ultimate maturity date rather than their mandatory tender provision date.
Rent expense, excluding landing fees, was $1.4 billion, $1.6 billion and $1.7 billion in 2003, 2002 and 2001,
respectively.