American Airlines 2007 Annual Report Download - page 34

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31
Off Balance Sheet Arrangements 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, 2007, future lease payments required under these leases totaled $2.0 billion.
Certain 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
$1.7 billion of these bonds (with total future payments of approximately $4.1 billion as of December 31, 2007) are
guaranteed by American, AMR, or both. Approximately $395 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: $218 million in 2008, $112 million in 2014 and $65 million in 2015.
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.
In addition, the Company had other operating leases, primarily for aircraft and airport facilities, with total future
lease payments of $4.1 billion as of December 31, 2007. Entering into aircraft leases allows the Company to
obtain aircraft without immediate cash outflows.