American Airlines Ditches More Jet Leases
Jan. 27, 2012
AMR Corp 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 U.S. Bankruptcy Court in New York. AMR had initially planned to ditch 18 jet leases, but an attorney for the company said AMR salvaged half those leases in last-minute renegotiations with lessors.
The motion had included both Boeing 757s and older MD-80 models, but it was unclear on Friday which models remained after the renegotiations. The company is also rejecting six engine leases.
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 labor concessions.
AMR, whose American Airlines subsidiary is the third-largest U.S. carrier, had previously abandoned leases on 24 planes, mostly outdated MD-80s.
The company entered bankruptcy with about 900 planes. It has already committed to keep at least 120 of those leases, and attempts to renegotiate others are ongoing, according to court filings.
The company, which has about US$30 billion in total liabilities, is planning to upgrade its fleet, having ordered 460 new narrowbody planes from Boeing and Airbus, set to arrive between 2013 and 2022.