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American Plans $1.5 Billion in New Aircraft Financing

AMR Corp., the airline owner restructuring in bankruptcy, is seeking court approval to obtain as much as $1.5 billion in financing backed by aircraft that it said will reduce interest expenses.

AMR has negotiated terms of the financing and will repay $1.3 billion in outstanding notes, the parent company of American Airlines said yesterday in a filing in U.S. Bankruptcy Court in Manhattan.

“Time is of the essence because there can be no assurance that market conditions will continue,” the company said.

AMR’s $174.2 million of 13 percent secured notes due in August 2016 dropped 3 cents to 103.5 cents on the dollar at 8:31 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Its $703.6 million of 8.625 pass-through certificates plunged 4 cents to 103.5.

The airline wants to redeem the 13 percent notes, the 8.625 certificates and $445.6 million of 10.375 percent pass-through debt, “without the payment of any make-whole amount” or “any other premium or prepayment penalty,” AMR said in the court filing.

AMR, based in Fort Worth, Texas, said interest-expense savings under the financing may be more than $200 million. The request requires approval from U.S. Bankruptcy Judge Sean Lane.

The bankruptcy case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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