April 17, 2013
Credit: American Airlines
American Airlines’ newly filed plan of reorganization, which centers on its proposed merger with US Airways, provides details of a drastic overhaul of its regional operation’s cost structure through a combination of aircraft returns and reduced leasing payments.
The cost of American Eagle Airlines’ fleet was a burden to its parent company prior to the company’s Chapter 11 filing in November 2011, and during the court protected restructuring American first negotiated the return of 18 Embraer ERJ-135s and later a sale and leaseback of the 21 ERJ-135s remaining in Eagle’s fleet.
But court filings submitted late April 15 now disclose the full extent of American’s plan for Eagle’s Embraer fleet. Those 21 ERJ-135s, for instance, are only on lease for $40,000 a month on contracts expiring between Jan. 1 and Dec. 31, 2013. At year-end, American will “no longer have any payment obligations,” the airline notes in its disclosure statement.
American also says the lease payments on its fleet of 58 ERJ-140s will be cut 49% and payments on 68 of its 188 ERJ-145s by 34%, pending amendments to existing financing documents.
Lease payments on the remaining 50 ERJ-145s in Eagle’s fleet are unchanged, American notes.
The changes to the Embraer fleet will save American about $670 million. No changes to the debt associated with Eagle’s 47 Bombardier CRJ700s are detailed.
American’s disclosure statement also confirms that the mainline carrier intends to take delivery of 130 leased A320-family aircraft between 2013 and 2017 and purchase another 130 Airbus A320NEO-family aircraft between 2017 and 2022, as well as “approximately 300 new aircraft, including 737, 777 and 787 aircraft” from Boeing between 2012 and 2025.
Airbus’s current order book currently lists 130 A321s on order from American, although the first deliveries are expected to be A319s starting this summer. Boeing’s current order book lists 102 737-800s, 100 737MAX, 15 777-300ERs, 12 787-8s and 12 787-9s destined for American.
The April 15 plan of reorganization is another step in American’s merger with US Airways and emergence from Chapter 11. Objections to this plan are due by May 23 and the airline’s bankruptcy court will consider the disclosure statement seven days later.