American Airlines Ditches More Jet Leases


American Airlines Ditches More Jet Leases

American Airlines Ditches More Jet Leases

AMR received court permission on Friday to walk away from nine aircraft leases, raising to 33 the total number of planes rejected by the bankrupt parent of American Airlines.

Judge Sean Lane agreed to the request at a hearing in US Bankruptcy Court in New York. AMR had initially planned to ditch 18 jet leases, but half were salvaged in last-minute renegotiations with lessors, an attorney for the company said.

The rejected planes include seven Boeing 757s, one MD-80, one Airbus A300 and their respective engines. Wilmington Trust is trustee on most of the leases.

The company is also separately rejecting leases on six spare engines.

Bankruptcy rules allow companies to walk away from leases they deem burdensome or to try to renegotiate terms of leases. Airlines have historically saved hundreds of millions of dollars through lease restructuring, which is usually the second-biggest source of savings for bankrupt airlines next to labour concessions.

AMR, whose American Airlines subsidiary is the third-largest US airline, had previously abandoned leases on 24 planes, mostly outdated MD-80s.

The company entered bankruptcy with about 900 planes, 219 of which were leased, the rest owned. GE Capital Aviation Services is AMR’s biggest lessor, leasing at least 60 planes to the company.

AMR has already committed to keeping at least 120 of its leases, and attempts to renegotiate others are ongoing, according to court filings.

The company, which has about USD$30 billion in total liabilities, is working to overhaul its costs through bankruptcy, as most of its competitors did in the last decade. It is ultimately planning to upgrade its fleet, having ordered 460 new planes from Boeing and Airbus, set to arrive between 2013 and 2022.


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