American Airlines 2004 Annual Report Download - page 28

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As discussed in Note 5 to the consolidated financial statements, the Company reached concessionary agreements
with certain lessors in 2003. Certain of the Vendor Agreements provide that the Company’s obligations under the
related lease revert to the original terms if certain events (Events) occur prior to December 31, 2005, including: (i)
an event of default under the related lease (which generally occurs only if a payment default occurs), (ii) an event
of loss with respect to the related aircraft, (iii) rejection by the Company of the lease under the provisions of
Chapter 11 of the U.S. Bankruptcy Code or (iv) the Company’s filing for bankruptcy under Chapter 7 of the U.S.
Bankruptcy Code. If any one of these Events were to occur, the Company would be responsible for approximately
$72 million in additional operating lease payments and $59 million in additional payments related to capital leases
as of December 31, 2004. This amount will increase to approximately $119 million in operating lease payments
and $111 million in payments related to capital leases prior to the expiration of the provision on December 31,
2005. These amounts are being accounted for as contingent rentals and will only be recognized if they become
payable.
Contractual Obligations
The following table summarizes the Company’s obligations and commitments as of December 31, 2004 (in
millions):
Payments Due by Year(s) Ended December 31,
Contractual Obligations Total 2005
2006
Through
2007
2008
Through
2009
2010 and
Beyond
Operating lease payments for
aircraft and facility obligations 1$ 12,422 $ 1,092 $ 2,018 $ 1,778 $ 7,534
Firm aircraft commitments 23,450 345 101 - 3,004
Capacity purchase agreements 3329 96 141 92 -
Long-term debt 413,095 659 2,470 2,272 7,694
Capital lease obligations 2,056 258 448 400 950
Other purchase obligations 51,973 440 595 326 612
Other long-term liabilities6,7 2,103 193 382 409 1,119
Total obligations and commitments $ 35,428 $ 3,083 $ 6,155 $ 5,277 $ 20,913
1 Certain special facility revenue bonds issued by municipalities - which are supported by
operating leases executed by American - are guaranteed by AMR and/or American. The
special facility revenue bonds with mandatory tender provisions discussed above are
included in this table under their ultimate maturity date rather than their mandatory
tender provision date. See Note 5 to the consolidated financial statements for additional
information.
2 As of December 31, 2004, the Company had commitments to acquire: 20 Embraer
regional jets in 2005; two Boeing 777-200ERs in 2006; and an aggregate of 47 Boeing
737-800s and seven Boeing 777-200ERs in 2013 through 2016. The Company has pre-
arranged financing or backstop financing for all of its aircraft deliveries in 2005 and
2006.
3 The table reflects minimum required payments under capacity purchase contracts
between American and two regional airlines, Chautauqua Airlines, Inc. (Chautauqua)
and Trans States Airlines Inc. However, based on expected utilization, the Company
expects to make payments of $174 million in 2005, $177 million in 2006, $179 million in
2007, $181 million in 2008, $184 million in 2009 and $721 million in 2010 and beyond.
In addition, if the Company terminates its contract with Chautauqua without cause,
Chautauqua has the right to put its 15 Embraer aircraft to the Company. If this were to
happen, the Company would take possession of the aircraft and become liable for lease
obligations totaling approximately $21 million per year with lease expirations in 2018
and 2019. These lease obligations are not included in the table above. See Note 4 to
the consolidated financial statements for additional information.
4 Excludes related interest amounts.