ATLANTA — American Airlines' parent company said Thursday it is taking on significant new debt at a time when revenues are being hammered, but the $2.9 billion in cash and fresh financing it raised should quiet concerns – for now – that it is in danger of a cash crunch and a bankruptcy filing.
Passengers will see big changes from the nation's second-largest airline, including increased flying in Chicago, New York, Los Angeles, Dallas-Fort Worth and Miami, but fewer flights in Raleigh/Durham, N.C. and St. Louis, where American is giving up major ground to Southwest Airlines.
AMR Corp. said the extra funding it has received includes $1 billion in cash from an advance sale of frequent flier miles to Citigroup. The company is treating that money as a loan.
The Fort Worth, Texas, company said it also has received $1.6 billion in sale-leaseback financing commitments from GE Capital Aviation Services, a unit of General Electric Co., and $280 million in cash in a loan from GE Capital Aviation Services secured by aircraft.
Of the $1.3 billion in new liquidity, all but $55 million will be included in the third quarter 2009 cash and short-term investment balance.
The transactions will increase the company's cash balance to roughly $3.7 billion by the end of the third quarter, which is Sept. 30. AMR had $14 billion in total debt at the end of the second quarter. It's unclear how much that figure will increase at the end of the third quarter. And AMR has $1.3 billion in debt maturities in 2010.
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