American Airlines gets terms of $433mln loan eased

FORT WORTH, Texas — American Airlines said Thursday it agreed with lenders to change the terms of a $433 million loan.

American said the lenders would waive a fixed-charge covenant for the quarter ending June 30 and ease the requirement for other quarters in exchange for a higher interest rate.

The fully-drawn loan matures in December 2010.

Fort Worth-based American said in a regulatory filing that it entered into the amended terms with Citicorp USA Inc., which was managing the agreement for a syndicate of lenders.

American has been struggling with a downturn in demand, especially among business travelers, who are their most profitable customers. American expects its revenue per seat mile, a key financial measure in the airline industry, to fall about 17 percent this quarter compared with a year ago.

The loan covenant requires parent AMR Corp. to maintain a minimum ratio of cash flow, income taxes, depreciation, amortization and rentals to fixed charges.

Under terms of the new agreement, AMR said, the interest rate will rise to 4 percentage points above the London interbank offered rate, or Libor, from 2 percentage points over Libor. The minimum Libor rate for setting the loan interest will be 2.5 percent.

American said it also will pay certain fees to the lenders, but it did not divulge the amount of fees.

AMR shares rose 33 cents, or 8.4 percent, to $4.28.