American Airlines 2005 Annual Report Download - page 64

Download and view the complete annual report

Please find page 64 of the 2005 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 108

  • 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
  • 104
  • 105
  • 106
  • 107
  • 108

61
5. Leases (Continued)
Rent expense, excluding landing fees, was $1.3 billion, $1.3 billion and $1.4 billion in 2005, 2004 and 2003,
respectively.
American has determined that it holds a significant variable interest in, but is not the primary beneficiary of,
certain trusts that are the lessors under 84 of its aircraft operating leases. These leases contain a fixed price
purchase option, which allows American to purchase the aircraft at a predetermined price on a specified date.
However, American does not guarantee the residual value of the aircraft. As of December 31, 2005, future lease
payments required under these leases totaled $2.6 billion.
6. Indebtedness
Long-term debt consisted of (in millions):
December 31,
2005 2004
Secured variable and fixed rate indebtedness due through 2021
(effective rates from 4.33% - 10.68% at December 31, 2005)
$ 6,473
$ 6,340
Enhanced equipment trust certificates due through 2012
(rates from 3.86% - 12.00% at December 31, 2005)
3,424
3,707
6.125% - 8.5% special facility revenue bonds due through 2036 1,697 946
Credit facility agreement due through 2010
(effective rate of 8.73% at December 31, 2005)
788
850
4.25% - 4.50% senior convertible notes due 2023 – 2024 619 619
9.0% - 10.20% debentures due through 2021 320 330
7.88% - 10.55% notes due through 2039 286 303
13,607 13,095
Less current maturities 1,077 659
Long-term debt, less current maturities $ 12,530 $ 12,436
Maturities of long-term debt (including sinking fund requirements) for the next five years are: 2006 - $1.1 billion;
2007 - $1.2 billion; 2008 - $665 million; 2009 - $1.7 billion; 2010 - $1.1 billion.
In September 2005, American sold and leased back 89 spare engines with a book value of $105 million to a
variable interest entity (VIE). The net proceeds received from third parties were $133 million. American is
considered the primary beneficiary of the activities of the VIE as American has substantially all of the residual
value risk associated with the transaction. As such, American is required to consolidate the VIE in its financial
statements. At December 31, 2005, the book value of the engines was $103 million and was included in Flight
equipment on the consolidated balance sheet. The engines serve as collateral for the VIE’s long-term debt of
$133 million at December 31, 2005, which has also been included in the consolidated balance sheet. The VIE
has no other significant operations.