AMR Seeks Approval For $785M In Financing Secured By Airplanes In Its Fleet

by Tara Arick on October 4, 2013 · 0 comments

in Bankruptcy

Bankrupt AMR Corp. on Oct. 2 moved in the U.S. Bankruptcy Court for the Southern District of New York for approval of $ 785 million in post-petition financing, also called debtor-in-possession (DIP) financing, which would be secured by planes currently in American Airlines’ fleet (In Re: AMR Corporation, No. 11-15463, Chapter 11, S.D. N.Y. Bkcy.).

Bankruptcy

AMR filed for Chapter 11 bankruptcy in 2011. American Airlines Inc., as an affiliate of AMR, filed for Chapter 11 bankruptcy at the same time.

AMR seeks $ 785 million in DIP financing through the enhanced equipment trust certificate (EETC) financing market, which the company says is offering interest rates “near historic lows.”

AMR contends that in its effort to improve liquidity and achieve a competitive and sustainable cost structure it has considered various potential financing arrangements and that based on the low interest rates available in the EETC financing market, new EETC financing is in the best interest of its stakeholders.

DIP Financing

AMR says it has previously obtained DIP financing through other EETCs; specifically, the existing 2013-2 EETC under which American Airlines issued $ 1,408,113,000 in American Pass Through Certificates, called Series 2013-2 Class A Certificates with an interest rate of 4.95 percent.

The new 2013-2 EETC would be secured on a first priority basis by various planes in American Airlines’ fleet. Specifically, the EETC would be secured by 41 Boeing 737-823s, 14 Boeing 757-223s, one Boeing 767-323ER and 19 Boeing 777-223ERs, AMR says.

AMR is represented by Michael E. Wiles, Richard F. Hahn and Jasmine Ball of Debevoise & Plimpton in New York and Stephen Karotkin and Alfredo R. Perez of Weil Gotshal & Manges in New York.

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