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AA Wins $2.9 Billion Funding, 2010 Hub Changes

September 17, 2009 By: George Dooley

AMR Corporation, the parent company of American Airlines, has obtained $2.9 billion in new liquidity and aircraft financing as it plans to adjust capacity to hubs in Dallas/Fort Worth, Chicago, Miami and New York. The moves will better position the company to meet the industry’s near-term economic challenges, AMR said.

“Today’s announcement positions our company to face today’s industry challenges and allows us to remain focused on the future and on returning to profitability,” said Gerard Arpey, AMR’s chairman and CEO.

The $2.9 billion consists of $1.3 billion in new liquidity, including $1 billion in cash from the advance sale of AAdvantage frequent flyer miles to Citi, and $280 million in cash under a loan from GE Capital Aviation Services (GECAS) secured by owned aircraft. AMR also gained $1.6 billion in sale-leaseback financing commitments from GECAS for Boeing 737s previously ordered.

Arpey said AMR’s mainline capacity for 2010 is expected to increase by approximately 1 percent versus 2009, with domestic capacity flat and international capacity up approximately 2.5 percent year over year. He expects consolidated capacity to rise approximately 1 percent in 2010 versus 2009.

AMR said its new strategy primarily aims to eliminate unprofitable flying and reallocate resources to hubs in Dallas/Fort Worth, Chicago, Miami and New York. Reductions at St Louis and Raleigh/Durham are planned.

Network changes for the summer 2010 schedule versus winter 2009/2010 include 57 additional daily flights at O’Hare International Airport for a total of 487 daily departures. Customers will have access to 12 new domestic destinations and three new international destinations.

American said it is committed to Chicago as its primary Asia gateway and will start new service to Beijing in spring 2010. Other new destinations will include mainline service to Honolulu; Anchorage and Vancouver, British Columbia.

JFK service will be expanded to six new destinations, three international and three domestic. New mainline service includes Madrid; Manchester, England; San Jose, Costa Rica; and Austin,TX. Combined, American and Eagle will offer nearly 200 daily flights at JFK and LaGuardia

At Los Angeles, American and Eagle will add two daily flights for a total of 129. The commitment to Los Angeles also complements its relationship with oneworld partners, which also have a significant presence in that market, AMR said.

At Dallas/Fort Worth, its largest hub, AA will add 19 daily departures for a total of 780. The increase will consist of 17 mainline jet departures. In addition, service to San Salvador, El Salvador will be re-instated after a two-year hiatus, bringing total nonstop destinations from DFW to 160.

In Miami, the carriers will add 23 additional flights for 294 total daily departures. Including changes that will take place by the end of 2009, Miami will serve four new domestic and three new international destinations: Birmingham, AL.; Charleston, S.C.; Pensacola, FL; and Knoxville, TN, as well as North Eleuthera, Governors Harbour and Treasure Cay in the Bahamas.

St. Louis, they will cut daily departures by 46 and discontinue service to 20 destinations. After the reductions, American and Eagle will provide 36 departures per day to nine destinations. In Raleigh/Durham, service to three destinations will be discontinued and a total of nine departures will be eliminated. Raleigh/Durham will continue to provide service to eight destinations with 44 departures per day.


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