American airlines to sell debt in Tulsa.

[AA Tulsa Mechanic]

http://www.tulsaworld.com/article.aspx/American_Airlines_seeks_to_sell_debt_on_projects_tied/20130420_54_E1_Americ596?rss_lnk=5

 

[AA Tulsa Mechanic]

From the Tulsa World.....

 Sections & Search 

American Airlines seeks to sell debt on projects tied to Tulsa airport lease

By KYLE ARNOLD World Staff Writer on Apr 20, 2013, at 1:52 AM  Updated on 4/20/13 at 7:28 AMAmerican Airlines hopes to sell $215 million worth of debt related to its lease at Tulsa International Airport, a positive sign for the long-term future of the company's maintenance base here. According to court documents, parent company AMR Corp. will ask a judge at a May 9 hearing to approve the sale of a series of bonds dating back to two packages of improvements to the company's Maintenance & Engineering Center in 1988 and 1991. Gary Betow, secretary for the Tulsa Airport Authority, said American Airlines would not be selling the bonds unless there was some surety that it was keeping the Tulsa base. "American would not be putting the bonds out on the public market unless they have made a decision to stay in Tulsa and continue making lease payments," Betow said. Officially, American is making the move "after an analysis of current market conditions and to increase their liquidity," the court documents say. As part of American's lease with the city and the airport trust, it pays the interest on the bonds on top of its base rent of about $190,000 a year on the 260-acre property. AMR, which has been in bankruptcy since November 2011, plans to exit the process this summer and merge with US Airways Group Inc. The projects related to the bonds more than 20 years ago included the construction of Hangar 6, expansion of the plating shop, upgrades to warehouses and parking lots, and industrial waste treatment. American issued the bonds through the Tulsa Airport Authority to take advantage of a tax-free status in the form of a government entity. Over time, American Airlines reacquired the bonds from institutional investors but now hopes to sell them again to free up more cash. The interest-only bonds came due in 2000 and 2001, and were reissued. They will come due again in 2020 and 2035. About $425 million worth of bonds are related to the Tulsa base. American owns some $215 million of that, all of which it plans to resell. 

 

[jimntx]

"American would not be putting the bonds out on the public market unless they have made a decision to stay in Tulsa and continue making lease payments," Betow said.

Oh, these poor people who screw themselves over by applying logic to what AMR does or does not do. If Betow were an AMR employee, that logical statement would be a Rule 32 violation (using logic in connection with our operations is in the same category as talkin' dirty).

What package of improvements did they do that they are still paying for them 25 years later? And, there is enough of the debt left to make a bond issue worthwhile?

 

[eolesen]

What package of improvements did they do that they are still paying for them 25 years later? And, there is enough of the debt left to make a bond issue worthwhile?

Perhaps you should try reading all the way to the bottom?... 😉

The projects related to the bonds more than 20 years ago included the construction of Hangar 6, expansion of the plating shop, upgrades to warehouses and parking lots, and industrial waste treatment.

 

[FWAAA]

Pretty simple really; mergers cost a lot of cash, and this $215 million is easy money, and it's at low rates (tax-free bonds).