American Airlines Announces Pricing of Senior Secured Notes Amidst Financial Restructuring

American Airlines Announces Pricing of Senior Secured Notes Amidst Financial Restructuring

Fort Worth, Texas - American Airlines, Inc., a subsidiary of American Airlines Group Inc. (NASDAQ: AAL), has recently announced the pricing of a significant financial instrument as part of its ongoing financial restructuring efforts. The airline has priced $1.0 billion aggregate principal amount of its 8.50% senior secured notes due 2029, representing an increase of $250.0 million from the initially announced offering amount. The notes, issued at par, will have an interest rate of 8.50% per annum.

Upsizing of Term Loan

Concurrently with the issuance of these notes, American Airlines also expects to borrow up to $1.1 billion in aggregate principal amount of term loans under a new senior secured credit facility. This amount marks an increase of $350.0 million from the previously announced size of the Term Loan. Both the offering of the notes and the Term Loan are expected to close on December 4, 2023, subject to customary closing conditions.

Use of Proceeds

The net proceeds from the offering of the notes, combined with the net proceeds from the Term Loan and cash on hand, are earmarked for the redemption of all of American Airlines' outstanding 11.75% Senior Secured Notes due 2025. This strategic financial move is aimed at restructuring the company's debt profile and reducing its overall debt burden.

Collateral and Guarantees

The notes and the Term Loan will be secured on a first lien basis by the same collateral that currently secures the 11.75% Senior Secured Notes. This collateral includes certain slots, gates, and routes used by American Airlines to provide nonstop scheduled air carrier services between various airports in the United States and international destinations including Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea, and Switzerland. Additionally, the notes and the Term Loan will be guaranteed on a senior unsecured basis by the parent company, American Airlines Group Inc.

Offering and Sale Restrictions

The notes are being offered and sold only to persons reasonably believed to be qualified institutional buyers, as defined in Rule 144A under the Securities Act of 1933, as amended, and to non-U.S. persons in offshore transactions outside the United States in reliance on Regulation S under the Securities Act. They will not be registered under the Securities Act or any other securities laws of any jurisdiction and will not have the benefit of any exchange offer or other registration rights.

Forward-Looking Statements

The announcement contains forward-looking statements regarding the proposed offering and the Term Loan, subject to risks and uncertainties that may cause actual results and financial position to differ materially from the anticipated outcomes. These include factors detailed in American Airlines Group Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, and other filings with the Securities and Exchange Commission.

Conclusion

American Airlines' decision to price its senior secured notes and upsize its Term Loan reflects a strategic approach to financial management and debt restructuring. This move is crucial for the airline as it navigates the complex financial landscape of the aviation industry.