American Airlines debt load is raising eyebrows on Wall Street, with analysts worrying about its ability to pay its bills if the economy slows down.

The Fort Worth, Texas-based carrier had $22.3 billion in long-term debt and capital leases, net current maturities, at the end of September, a quarterly financial filing shows. That was up 1.8% in the third quarter, and up less than 1% year-over-year.

The amount is nearly $10 billion higher than United Airlines, and nearly $15 billion higher than Delta Air Lines, its two principal US competitors.

"American will be left with a material non-operating expense disadvantage if the economic cycle deteriorates significantly," write JP Morgan analysts in a report today, echoing concerns raised by other analysts during American's third quarter earnings call earlier in October.

Doug Parker, chairman and chief executive of the airline, said at the time that their plan to increase earnings and reduce capital expenditures will result in a "natural deleveraging" of American's balance sheet in the coming years.

Parker, as he frequently does, emphasised the low all-in interest rates on the carrier's debt burden, something JP Morgan agrees is attractive.

Bloomberg data shows the weighted average coupon of American's debt is 4.59%, says JP Morgan.

Still, many analysts believe the US economy is at or near the top of the cycle, raising question marks about American's – and the industry's – revenue growth projections.

In just the third quarter, American borrowed $1.8 billion primarily to fund aircraft deliveries, the filing shows. This includes $756 million in secured aircraft or pre-delivery deposit funds, $588 million in proceeds from sale-and-leasebacks, and $500 million added in September to a credit facility backed by its assets at London Heathrow airport.

The airline invested $994 million in capital expenditures during the third quarter, when it took delivery of four Boeing 737 Max 8 and three Boeing 787-9 aircraft.

American expects capital expenditures to total $3.7 billion in 2018, with JP Morgan forecasting capex rising to $4.6 billion in 2019.

The airline anticipates adding its first 17 Airbus A321neos, 20 737-8s, and two 787-9s, as well as six Airbus A319s, to its mainline fleet next year. Derek Kerr, chief financial officer of American, says all but one of these deliveries are funded.

Cash and short-term investments at American increased 4.1% to $4.86 billion during the three months end in September, the filing shows. Cash was down 15.8% year-over-year.

American had $7.36 billion in liquidity, including the full $2.5 billion available under its revolving credit facilities, at the end of September.

Source: Cirium Dashboard