American Airlines 2009 Annual Report Download - page 66

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6. Indebtedness (Continued)
Maturities of long-term debt (including sinking fund requirements) for the next five years are: 2010 - $1.0 billion;
2011 - $2.3 billion; 2012 - $1.7 billion; 2013 - $957 million, 2014 - $1.4 billion.
As of December 31, 2009, AMR had issued guarantees covering approximately $1.6 billion of American’s tax-
exempt bond debt (and interest thereon) and $450 million of American’s secured debt (and interest thereon).
American had issued guarantees covering approximately $885 million of AMR’s unsecured debt (and interest
thereon). In addition, as of December 31, 2009, AMR and American had issued guarantees covering
approximately $262 million of AMR Eagle’s secured debt (and interest thereon) and AMR has issued additional
guarantees covering $2.0 billion of AMR Eagle’s secured debt (and interest thereon). AMR also guarantees $186
million of American’s leases of certain Super ATR aircraft, which are subleased to AMR Eagle.
In the first quarter of 2009, AMR retired, by purchasing with cash $318 million principal amount of its 4.50 Notes.
Virtually all of the holders of the 4.50 Notes exercised their elective put rights and the Company purchased and
retired these notes at a price equal to 100 percent of their principal amount. Under the terms of the 4.50 Notes, the
Company had the option to pay the purchase price with cash, stock, or a combination of cash and stock, and the
Company elected to pay for the 4.50 Notes solely with cash.
On July 7, 2009, American closed a $520 million Pass Through Trust Certificates (the Certificates) financing
covering four Boeing 777-200ER aircraft owned by American and 16 of American’s Boeing 737-800 deliveries.
Equipment notes underlying the Certificates bear interest at 10.375 percent per annum and principal and interest
on the notes are payable in semi-annual installments with a balloon payment at maturity in 2019. Approximately
$314 million of the proceeds from the sale of the Certificates were received by American as of December 31,
2009 in exchange for equipment notes secured by the four Boeing 777-200ER aircraft and the delivery and
financing of seven Boeing 737-800 aircraft. The remainder of the proceeds is being held in escrow for the benefit
of holders of the Certificates. When American finances each of the remaining nine Boeing 737-800 aircraft under
this arrangement, an allocable portion of the proceeds will be released to American in exchange for equipment
notes secured by the individual aircraft and such debt will be recorded by American. American currently expects
that it will use the escrowed proceeds of the Certificates to finance nine Boeing 737-800 aircraft scheduled to be
delivered to American between February 2010 and April 2010, but American could elect to use this financing on
any nine of its next 37 Boeing 737-800 aircraft deliveries currently scheduled for delivery between February 2010
and October 2010.
In addition, a third party is holding collateral from American to cover interest distributable on the Certificates prior
to when the remaining nine Boeing 737-800 aircraft are delivered and the related equipment notes are issued.
Any collateral not remitted to the holders for interest will be returned to the Company.
Once fully issued, American will hold variable interests in the pass through trusts created for the Certificates, but
is not expected to be the primary beneficiary of the trust.
On July 31, 2009, American closed a $276 million private placement offering of senior secured notes due 2016
(2009-2 Secured Notes), which were priced at par to yield 13 percent. The purpose of the offering was to
refinance, in part, the outstanding $401 million principal amount of the Company’s 1999-1 enhanced equipment
trust certificates (1999 EETC). Following the payment of the 1999 EETC at maturity on October 15, 2009, twelve
of the 15 aircraft that previously secured the 1999 EETC were pledged to secure the 2009-2 Secured Notes, and
the cash collateral was released to the Company. The other three aircraft were pledged to secure the 2009 Loan
Facility referred to below.
On September 16, 2009, American entered into an arrangement under which Citibank paid to American
$1.0 billion in order to pre-purchase AAdvantage Miles (the Advance Purchase Miles) under American’s
AAdvantage frequent flier loyalty program (the Advance Purchase).
To effect the Advance Purchase, American and Citibank entered into an Amended and Restated AAdvantage
Participation Agreement (as so amended and restated, the Amended Participation Agreement). Under the
Amended Participation Agreement, American agreed that it would apply in equal monthly installments, over a five
year period beginning on January 1, 2012, the Advance Purchase Miles to Citibank cardholders’ AAdvantage
accounts.