American Airlines' parent AMR has put together a strategic $2.9 billion liquidity and aircraft financing package that includes the advanced sale of frequent flyer miles and strong support from GECAS.
In turn the carrier has selected GEnx-1B 74/75 engines to power the Boeing 787s it has on order.
Specific portions of the deal include a $1 billion advance sale of frequent flyer miles to Citibank and a $280 million loan from GECAS secured by 13 aircraft owned by American. The company has received $225 million of that amount, tied to 10 aircraft. AMR says it expects to pledge three more aircraft to secure the facility in October, and receive the remaining $55 million at that time.
The company has brokered a $1.6 billion sale-leaseback deal with GECAS for 737s it has on order.
AMR explains the transaction with Citibank will "largely be treated as a loan for accounting purposes". Citibank has the right to use the miles in equal monthly instalments over the 2012-2016 timeframe.
Additionally, American is attempting to get onto equal competitive footing with its peers in its regional operations through the addition of a first class section on 25 Bombardier CRJ700s operated by its American Eagle subsidiary.
American has also committed to Eagle's fleet expansion as the regional carrier has signed a letter of intent with Bombardier to exercise options for 22 additional CRJ700s. Deliveries are scheduled to begin in mid-2010.
In a letter to employees AMR CEO Gerard Arpey says Eagle will deploy most of its 25 CRJ700s configured with the new first class seating in the Chicago market. American's rival in Chicago United has a first class offering on all of its larger regional jets.
Source: Air Transport Intelligence news
