American Airlines 2012 Annual Report Download - page 84

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Table of Contents
Specifically, American is required to meet certain collateral coverage tests on a periodic basis on two financing transactions: (1) 10.5% $450 million Senior
Secured Notes due 2012, (the 10.5% Notes) and (2) Senior Secured Notes, as described below:
(1)
10.5% Notes
(2)
Senior Secured Notes
Frequency of
Appraisals
Semi-Annual
(April and October, ending April 2011)
Semi-Annual
(June and December)
LTV
Requirement
43%; failure to meet collateral
test requires posting of additional
collateral
1.5x Collateral valuation to
amount of debt outstanding
(67% LTV); failure to meet
collateral test results in
American paying 2% additional
interest until the ratio is at least
1.5x; additional collateral can be
posted to meet this requirement
LTV as of
Last
Measurement
Date
47.5% 38.8%
Generally, certain route authorities, take-off and landing slots, and
rights to airport facilities used by American to operate certain
services between the U.S. and London Heathrow, Tokyo
Narita/Haneda, and China
Collateral
Description
143 aircraft consisting of:
Type
# of
Aircraft
MD-80
74
B757-200
41
B767-200ER
3
B767-300ER
25
TOTAL
143
At December 31, 2012, the Company was in compliance with the most recently completed collateral coverage tests for the Senior Secured Notes. As of
December 31, 2012, American had $41 million of cash collateral posted with respect to the 10.5% Notes but was not in compliance with the most recently
completed collateral coverage test for that transaction. The Company has not remedied its non-compliance with that test due to the ongoing Chapter 11 Cases.
On October 1, 2012, the indebtedness underlying the 2005 Spare Engine EETC with respect to which American was required to comply with a collateral
coverage test was paid in full, so American is no longer required to comply with a collateral coverage test for that transaction.
Cash payments for interest, net of capitalized interest, were $498 million, $628 million and $627 million for 2012, 2011 and 2010, respectively.
Almost all of the Company’s aircraft assets (including aircraft and aircraft-related assets eligible for the benefits of section 1110 of the Bankruptcy Code) are
encumbered, and the Company has a very limited quantity of assets which could be used as collateral in financing.
The Chapter 11 Cases triggered defaults on substantially all debt and lease obligations of the Debtors. However, under section 362 of the Bankruptcy Code,
the commencement of a Chapter 11 case automatically stays most creditor actions against the Debtors’ estates.
The Debtors cannot predict the impact, if any, that the Chapter 11 Cases might have on these obligations. For further information
84