American hints at further share repurchases with cash

Washington DC
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American Airlines chief executive Doug Parker hints at further share repurchases, as it considers what to do with its nearly $10 billion in available cash.

The Fort Worth, Texas-based carrier’s management team and board are discussing how to use the $9.66 billion in cash and short-term investments that it had at the end of March, he said during an earnings call on 24 April. While they plan to announce details later in 2014, he notes that the $525 million share repurchase in the first quarter “hopefully” provides a view on their plans.

Cash balances rose 4.4% at American during the first quarter and were up nearly 43% compared to the $6.77 billion in combined cash balances of American and US Airways at the end of March 2013.

The two carriers merged in December 2013.

About $750 million in cash is held in Venezuelan bolivars at an average exchange rate of Bs6.32 to $1, according to American. The airline is working with local authorities on when it can repatriate these funds.

American reports a $307 million cash gain from the sale of 86 slots at Ronald Reagan Washington National airport during the first quarter. These slots were auctioned in bundles to JetBlue Airways, Southwest Airlines and Virgin America.

Long-term debt and capital leases net current maturities fell 1.3% to $15.2 billion at American during the three months ending in March. Debt is up 47.6% compared to the $10.3 billion in combined balances of American and US Airways a year ago.

The carrier repaid $100 million in legacy American’s 7.5% senior secured notes due 2016 in March, according to a stock exchange filing. There is still $900 million outstanding on the notes due in a bullet payment at maturity.

Capital expenditures were $1.05 billion at American in the first quarter. The airline took delivery of 19 mainline aircraft during the period.