WingNaPrayer
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DALLAS -- AMR Corp.''s (AMR) American Airlines moved to mortgage seven airplanes -- virtually the last remaining available aircraft assets it could borrow against -- to raise $254.9 million.
The offering of notes backed by the Boeing Co.(NYSE:BA) (BA) jets is a further sign that the world''s largest carrier believes that its restructuring will allow it to escape a bankruptcy filing, according to analysts and investment bankers.
Lenders who lined up to provide more than $1 billion in bankruptcy financing last spring -- when AMR came within hours of having to seek Chapter 11 bankruptcy-court protection from creditors -- would have sought the aircraft as collateral for new lending. Now, with American believing bankruptcy is far less likely, the company is borrowing against some of its last remaining unencumbered assets that could have been offered to bankruptcy-financing lenders.
In a filing Wednesday with the Securities and Exchange Commission, American said it would offer notes backed by three Boeing 737s, one 767 and three 777s. With the offering, the airline has mortgaged virtually all of our ... eligible aircraft, American said in the filing.
American, Fort Worth, Texas, said it expected its operations in June, like in May, to generate positive cash flow. The company passed a hurdle June 30 by having more than $1 billion in unrestricted cash -- a requirement imposed by lenders.
Standard & Poor''s estimated in late June that AMR had about $1.45 billion in unrestricted cash. Cash losses have rapidly narrowed and should reach modest, positive levels later this year, the ratings agency said.
In addition, American recently received $180 million in cash from the sale of its stake in the Worldspan computer-reservation system. The aircraft borrowing, expected to close July 9, would further bolster cash reserves.
In April, American hammered out a package of contract concessions from its three labor unions that will yield, the company said, $1.8 billion in annual wage and productivity savings. In addition, structural changes such as grounding aircraft, concessions from suppliers and vendors and other cuts will raise total annual savings to $4 billion, American said.
The offering of notes backed by the Boeing Co.(NYSE:BA) (BA) jets is a further sign that the world''s largest carrier believes that its restructuring will allow it to escape a bankruptcy filing, according to analysts and investment bankers.
Lenders who lined up to provide more than $1 billion in bankruptcy financing last spring -- when AMR came within hours of having to seek Chapter 11 bankruptcy-court protection from creditors -- would have sought the aircraft as collateral for new lending. Now, with American believing bankruptcy is far less likely, the company is borrowing against some of its last remaining unencumbered assets that could have been offered to bankruptcy-financing lenders.
In a filing Wednesday with the Securities and Exchange Commission, American said it would offer notes backed by three Boeing 737s, one 767 and three 777s. With the offering, the airline has mortgaged virtually all of our ... eligible aircraft, American said in the filing.
American, Fort Worth, Texas, said it expected its operations in June, like in May, to generate positive cash flow. The company passed a hurdle June 30 by having more than $1 billion in unrestricted cash -- a requirement imposed by lenders.
Standard & Poor''s estimated in late June that AMR had about $1.45 billion in unrestricted cash. Cash losses have rapidly narrowed and should reach modest, positive levels later this year, the ratings agency said.
In addition, American recently received $180 million in cash from the sale of its stake in the Worldspan computer-reservation system. The aircraft borrowing, expected to close July 9, would further bolster cash reserves.
In April, American hammered out a package of contract concessions from its three labor unions that will yield, the company said, $1.8 billion in annual wage and productivity savings. In addition, structural changes such as grounding aircraft, concessions from suppliers and vendors and other cuts will raise total annual savings to $4 billion, American said.
02 AM LaBradford22 wrote: 
