BRIEF: AMR to sell $520.1 million in debt to finance planes, gain cash

Tue. June 30, 2009; Posted: 02:05 AM

Jun 30, 2009 (The Dallas Morning News - McClatchy-Tribune Information Services via COMTEX) -- AMR | Quote | Chart | News | PowerRating -- AMR Corp., parent of Fort Worth-based American Airlines Inc., plans to sell more than a half-billion dollars of debt to finance 16 new planes and bolster its balance sheet.

The $520.1 million worth of 10-year notes will help finance the purchase of new Boeing 737-800 planes and refinance some of its older Boeing 777 aircraft. The new planes are key to improving the fuel efficiency of American's fleet.

The offering should also give AMR $154 million in cash after money is set aside for planes, according to analysts.

"While the terms on this specific offering are poor by historical standards, it is an incrementally positive sign that the company is able to raise cash," said Stifel Nicolaus analyst Hunter Keay in a note to investors Monday.

AMR's ability to tap capital markets will become increasingly important if energy prices continue to rise and if air travel demand remains limp.

Standard & Poor's Ratings Services rated the new AMR debt A- but said its outlook on the issue was negative because of uncertainty over AMR and the industry's financial health.

AMR last week won easier credit terms from lenders on a $433 million loan. AMR shares closed unchanged Monday at $4.25.

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For full details on Amr Corporation (AMR) click here. Amr Corporation (AMR) has Short Term PowerRatings of 8. Details on Amr Corporation (AMR) Short Term PowerRatings is available at This Link.

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