Court approves American and Embraer refinancing

Washington DC
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The US Bankruptcy Court for the Southern District of New York approved term sheets for AMR subsidiary American Eagle Airlines to restructure $1.75 billion in debt on its Embraer fleet on 9 November.

The deal is expected to save the Fort Worth-based airline about 38% by reducing the debt against 166 Embraer 135, 140 and 145 aircraft to $1.08 billion, according to previous court filings.

American Eagle would return 18 ERJ-135s to Embraer, sell and leaseback 21 ERJ-135s and refinance 59 ERJ-140s and 68 ERJ-145s, according to a filing with the court in October. Financing terms would stay the same on 50 ERJ-145s.

AMR is working with Brazilian development bank BNDES and its FINAME division, as well as trustee BNY Mellon, on restructuring the debt.

The sale-leaseback of 21 ERJ-135s would be with Embraer's leasing arm ECC Leasing with the leases terminating on various dates between 1 January 2013 to 1 December 2013. American Eagle could renew or retire the aircraft from its fleet, at the end of the leases.

American Eagle has 47 CRJ700s, 21 E-135s, 59 E-140s and 118 E-145s in its fleet, according to Flightglobal's Ascend Online database.