American Airlines 2009 Annual Report Download - page 65

62
5. Leases (Continued)
At December 31, 2009, the Company was operating 181 jet aircraft and 39 turboprop aircraft under operating
leases and 80 jet 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.
During 2009, the Company raised $768 million through sale leasebacks of certain aircraft which have lease terms
of six to seven years. Gains of $28 million on sale leasebacks are being amortized over the respective remaining
lease terms, while non-recurring charges related to losses on certain sale leasebacks of vintage aircraft of $88
million were realized in 2009 and included in Other operating income.
Special facility revenue bonds have been issued by certain municipalities primarily to improve airport facilities and
purchase equipment. To the extent these transactions were committed to prior to May 21, 1998, they are
accounted for as operating leases under U.S. GAAP. Approximately $1.5 billion of these bonds (with total future
payments of approximately $3.3 billion as of December 31, 2009) are guaranteed by American, AMR, or both.
Approximately $177 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 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. The special facility revenue bonds that contain mandatory
tender provisions are listed in the table above at their ultimate maturity date rather than their mandatory tender
provision date.
Rent expense, excluding landing fees, was $1.3 billion, $1.3 billion and $1.4 billion in 2009, 2008 and 2007,
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, 2009, future lease
payments required under these leases totaled $1.4 billion.
6. Indebtedness
Long-term debt consisted of (in millions):
December 31,
2009
2008
Secured variable and fixed rate indebtedness due through 2021
(effective rates from 2.28% - 13.00% at December 31, 2009)
$ 5,553
$ 4,783
Enhanced equipment trust certificates due through 2019
(rates from 3.85% - 12.00% at December 31, 2009)
2,022
2,382
6.00% - 8.50% special facility revenue bonds due through 2036
1,658
1,674
AAdvantage Miles advance purchase (net of discount of $110 million)
(effective rate 8.30%)
890
-
Credit facility agreement due through 2010
-
691
6.25% senior convertible notes due 2014
460
-
4.50% senior convertible notes due 2024
-
314
9.00% - 10.20% debentures due through 2021
214
213
7.88% - 10.55% notes due through 2039
211
211
11,008
10,268
Less current maturities
1,024
1,845
Long-term debt, less current maturities
$ 9,984
$ 8,423