American Airlines Said to Seek Lower Rate on $1.9 Billion LoanChristine Idzelis
American Airlines Inc. is seeking to reduce the cost of a $1.9 billion term loan after last week winning bankruptcy court approval of the deal it reached with regulators to complete its merger with US Airways Group Inc., according to a person with knowledge of the transaction.
The carrier is seeking to pay 3 percentage points to 3.25 percentage points more than the London interbank offered rate for the loan, said the person, who asked not to be identified because terms of the deal aren’t set. Libor, the variable benchmark for loan, will have a 1 percent minimum.
Deutsche Bank AG is arranging the re-pricing of the debt, which was secured earlier this year with a spread of 3.75 percentage points more than Libor, according to data compiled by Bloomberg.
In April, American Airlines parent AMR Corp. filed a plan to exit bankruptcy based on a proposed merger with US Airways that would create the world’s largest airline. AMR, based in Fort Worth, Texas, won bankruptcy court approval of its merger settlement on Nov. 27 after the U.S. Justice Department agreed to drop its antitrust challenge if the carriers gave up some airport slots.
AMR had filed for Chapter 11 bankruptcy protection in Manhattan in November 2011 and announced the deal with US Airways in February. The parent plans to complete the merger on Dec. 9 and rename the company American Airlines Group Inc.