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American Airlines secures $2.89 billion in credit facilities

EditorBrando Bricchi
Published 06/04/2024, 05:04 PM

American Airlines Group Inc. (NASDAQ: NASDAQ:AAL) has successfully amended its credit agreements, consolidating its revolving commitments to a total of $2.89 billion, the company disclosed in a regulatory filing on Tuesday. This strategic financial restructuring is aimed at enhancing the airline's liquidity and financial flexibility.

The carrier, in tandem with its parent company American Airlines Group, entered into the Tenth Amendment to the Amended and Restated Credit and Guaranty Agreement. This amendment resulted in a new $1.5 billion revolving credit facility and $200 million in letter of credit commitments, collectively referred to as the 2014 Revolving Facility. This facility is slated to mature on June 4, 2029, replacing the previous commitments which had maturity dates in 2024 and 2026.

In addition to the 2014 Revolving Facility, American Airlines also amended its 2013 credit agreement through the Ninth Amendment, establishing a $500 million revolving credit commitment and $100 million in letter of credit commitments. The 2013 Revolving Facility shares the same maturity date as the 2014 Facility.

Furthermore, the First and Second Amendments to the Credit and Guaranty Agreement resulted in a new $890 million revolving credit facility, known as the 2023 Revolving Facility, and the replacement of the initial term loans with new term loans totaling $1.1 billion, both with the same maturity date of June 4, 2029.

The interest rates for these facilities are contingent on American Airlines Group's public corporate rating and are set at a base rate plus a margin or an option for the Secured Overnight Financing Rate (SOFR) plus a margin, with floors of 1.00% and 0.00% respectively. Notably, SOFR borrowings under these facilities are not subject to a cost spread adjustment.

In a concurrent move, American Airlines voluntarily terminated all existing commitments under the April 2016 Credit Agreement, which had no outstanding revolving borrowings or term loans at the time of termination. This action resulted in the release of all related liens.

These amendments reflect American Airlines' proactive management of its capital structure and are based on the information contained in the company's SEC filing. The restructuring of these credit facilities is expected to provide the airline with a more streamlined and flexible financial foundation as it navigates the dynamic aviation industry.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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