said its American Airlines unit plans to prepay $545 million in aircraft debt in the fourth quarter as part of the company's continuing attempt to improve its financial condition and strengthen its balance sheet.
The prepayment will probably take place toward the end of the quarter and is in addition to AMR's $1.3 billion in scheduled principal payments this year.
The payment is expected to initially eliminate around $25 million of annual net interest expenses and release 16 aircraft used to secure the loan, which has been outstanding since December 2002 and is scheduled to mature in December 2012.
AMR also said its subsidiary American Eagle Airlines made a $32 million aircraft debt prepayment in the third quarter.
"With our improving financial performance, we have bolstered our liquidity position and we have opportunistically strengthened our balance sheet by reducing debt," said Thomas W. Horton, the chief financial officer of AMR, in a press release. "While we have more work to do, our recent decisions not only improve our balance sheet, but also reduce our interest burden going forward and give us more financial flexibility for the future."
AMR expects to end the third quarter with about $5.7 billion in cash and short-term investments, including a restricted balance of approximately $450 million. That compares to a cash and short-term investment balance of $5.5 billion, including a restricted balance of $464 million, at the end of the third quarter of 2006.
Total debt will probably be roughly $16.6 billion, down about $2.5 billion year over year. Shares of AMR were rising 4.5% to $23.29.