American Airlines 2010 Annual Report Download - page 70

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67
6. Indebtedness
Long-term debt consisted of (in millions):
December 31,
2010
2009
Secured variable and fixed rate indebtedness due through 2021
(effective rates from 1.00% - 13.00% at December 31, 2010)
$ 5,114
$ 5,553
Enhanced equipment trust certificates due through 2019
(rates from 5.10% - 12.00% at December 31, 2010)
2,002
2,022
6.00% - 8.50% special facility revenue bonds due through 2036
1,641
1,658
AAdvantage Miles advance purchase (net of discount of $110 million)
(effective rate 8.30%)
890
890
6.25% senior convertible notes due 2014
460
460
9.00% - 10.20% debentures due through 2021
214
214
7.88% - 10.55% notes due through 2039
211
211
10,532
11,008
Less current maturities
1,776
1,024
Long-term debt, less current maturities
$ 8,756
$ 9,984
Payments of long-term debt (including sinking fund requirements) for the next five years are: 2011 - $2.4 billion;
2012 - $1.7 billion; 2013 - $990 million; 2014 - $1.4 billion, 2015 - $713 million. The 2011 amount includes
approximately $600 million that was refinanced in January 2011 as described below and thus is excluded from
current maturities.
As of December 31, 2010, AMR had issued guarantees covering approximately $1.6 billion of American’s tax-
exempt bond debt (and interest thereon) and $459 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, 2010, AMR and American had issued guarantees covering
approximately $216 million of AMR Eagle’s secured debt (and interest thereon) and AMR has issued additional
guarantees covering $2.1 billion of AMR Eagle’s secured debt (and interest thereon). AMR also guarantees $145
million of American’s leases of certain Super ATR aircraft, which are subleased to AMR Eagle.
On January 25, 2011, American closed on a $657 million Pass Through Trust Certificates (the Certificates). The
equipment notes expected to be held by each pass through trust will be issued for each of (a) 15 Boeing 737-823
aircraft delivered new to American from 1999 to 2001, (b) six Boeing 757-223 aircraft delivered new to American
in 1999 and 2001, (c) two Boeing 767-323ER aircraft delivered new to American in 1999 and (d) seven Boeing
777-223ER aircraft delivered new to American from 1999 to 2000. At closing, 27 of the aircraft were encumbered
by either private mortgages or by liens to secure debt incurred in connection with the issuance of enhanced
equipment trust certificates in 2001, all of which mature in 2011. As a result, the proceeds from the sale of the
Certificates of each trust will initially be held in escrow with a depositary, pending the financing of each aircraft
under an indenture relating to the Certificates. Interest of 5.25% and 7.00% per annum on the issued and
outstanding Series A equipment notes and Series B equipment notes, respectively, will be payable semiannually
on January 31 and July 31 of each year, commencing on July 31, 2011, and principal on such equipment notes is
scheduled for payment on January 31 and July 31 of certain years, commencing on July 31, 2011. The payment
obligations of American under the equipment notes will be fully and unconditionally guaranteed by AMR
Corporation.
In 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). Approximately $890 million of the Advance Purchase proceeds is accounted
for as a loan from Citibank with the remaining $110 million recorded as Deferred Revenue in Other liabilities and
deferred credits.