American Parent Says It’s Reducing Debt: AMR Says Actions Will Cut Annual Interest By About $15 Million
By Suzanne Marta, The Dallas Morning News
Mar. 31–The parent company of American Airlines Inc. said Friday that it is paying down debt and refinancing bonds to strengthen its balance sheet.
Officials for Fort Worth-based AMR Corp. said the actions would cut its annual interest by about $15 million.
“While there is more work to do, we are building a stronger company by reducing debt and increasing liquidity while continuing to find ways to grow revenue and reduce costs,” said chief financial officer Thomas W. Horton.
AMR paid off $285 million in revolving debt, which had been fully tapped since December 2004.
The company’s regional jet subsidiary, American Eagle Airlines Inc., has prepaid $79 million in aircraft debt. The prepayment, which occurred in February, is in addition to AMR’s $1.3 billion in scheduled principal payments in 2007.
By mid-April, the company expects to refinance $350 million in municipal bonds issued in 1990 to help fund its maintenance and engineering at Alliance Airport in Fort Worth. The refinanced bonds are expected to carry an interest rate of 5.46 percent, down from the current rate of 7.5 percent. The bonds will mature in 2029.
AMR reduced its total debt from $20.8 billion at the end of 2002 to $18.4 billion at the end of last year. By today, the end of the first quarter of 2007, AMR’s total debt is expected to be around $17.6 billion.
The company has also kept more cash on its balance sheet and expects to have $5.8 billion at the end of the first quarter, with $500 million restricted. During the same period last year, AMR had $4.8 billion in cash, of which $510 million was restricted.
Shares in AMR closed at $30.45, up 31 cents.
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Copyright (c) 2007, The Dallas Morning News
Distributed by McClatchy-Tribune Business News.
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