AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 2002.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMERICAN AIRLINES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 4512 13-150278
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
---------------------
4333 AMON CARTER BOULEVARD
FORT WORTH, TEXAS 76155
(817) 963-1234
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
---------------------
ANNE H. MCNAMARA, ESQ. JOHN T. CURRY, III, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL DEBEVOISE & PLIMPTON
AMERICAN AIRLINES, INC. 919 THIRD AVENUE
P.O. BOX 619616 NEW YORK, NEW YORK 10022
DALLAS/FORT WORTH AIRPORT, TEXAS (212) 909-6000
(817) 963-1234
(Name, address, including zip code, and telephone number, including area code,
of agents for service)
COPY TO:
ROHAN S. WEERASINGHE, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 848-4000
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as possible after this registration statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE(1)
----------------------------------------------------------------------------------------------------------------------------
Pass Through Certificates, Series
2001-2A-1............................. $322,404,000 100% $321,515,809 $29,579.45
----------------------------------------------------------------------------------------------------------------------------
Pass Through Certificates, Series
2001-2A-2............................. $828,761,000 100% $828,761,000 $76,246.01
----------------------------------------------------------------------------------------------------------------------------
Pass Through Certificates, Series
2001-2B............................... $180,087,000 100% $180,087,000 $16,568.00
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Pass Through Certificates, Series
2001-2C............................... $281,038,000 100% $281,038,000 $25,855.50
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Pass Through Certificates, Series
2001-2D............................... $260,542,000 100% $260,542,000 $23,969.86
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(1) Pursuant to Rule 457(f)(2), the registration fee has been calculated using
the book value of the securities being registered.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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--------------------------------------------------------------------------------
The information in this Preliminary Prospectus is not complete and may be
changed. We may not sell these securities or accept offers to buy these
securities until the Registration Statement filed with the Securities and
Exchange Commission is effective. This Preliminary Prospectus is not an offer to
sell these securities and we are not soliciting offers to buy these securities
in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 13, 2002
$1,872,832,000
[AA AMERICAN AIRLINES LOGO]
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 2001-2,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
FOR ANY AND ALL OUTSTANDING PASS THROUGH CERTIFICATES, SERIES 2001-2
THE NEW CERTIFICATES
- The terms of the new pass through certificates we are issuing will be
substantially identical to the terms of the outstanding pass through
certificates, except that the new pass through certificates are being
registered under the Securities Act of 1933, as amended, and will not contain
restrictions on transfer or provisions relating to interest rate increases,
and the new pass through certificates will be available only in book-entry
form.
- No public market currently exists for the pass through certificates.
THE EXCHANGE OFFER
- The exchange offer expires at 5:00 p.m., New York City time, on ,
2002, unless we extend it.
THE CERTIFICATES AND THE EXCHANGE OFFER INVOLVE RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 25.
PASS THROUGH INTEREST FINAL EXPECTED
CERTIFICATES FACE AMOUNT RATE DISTRIBUTION DATE
------------ ------------ -------- -----------------
Class A-1........................................... $322,404,000 6.978% April 1, 2011
Class A-2........................................... 828,761,000 7.858 October 1, 2011
Class B............................................. 180,087,000 8.608 April 1, 2011
Class C............................................. 281,038,000 7.800 October 1, 2006
Class D............................................. 260,542,000 9.092 October 1, 2006
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is , 2002.
TABLE OF CONTENTS
PRESENTATION OF INFORMATION....................... ii
WHERE YOU CAN FIND MORE INFORMATION............... ii
PROSPECTUS SUMMARY................................ 1
The Exchange Offer.............................. 1
Summary of Terms of Certificates................ 5
Equipment Notes and the Aircraft................ 6
Loan to Aircraft Value Ratios................... 7
Cash Flow Structure............................. 9
The Certificates................................ 10
The Company..................................... 16
Summary Historical Consolidated Financial and
Operating Data................................ 17
RISK FACTORS...................................... 19
Special Risk Factor............................. 19
Risk Factors Relating to the Certificates and
the Exchange Offer............................ 19
Consequences of Failure to Exchange......... 19
Appraisals and Realizable Value of
Aircraft.................................. 20
Repossession................................ 20
Priority of Distributions; Subordination.... 21
Control over Collateral; Sale of
Collateral................................ 21
Ratings of the Certificates................. 22
No Protection Against Highly Leveraged or
Extraordinary Transactions................ 22
Limited Ability to Resell the
Certificates.............................. 22
THE EXCHANGE OFFER................................ 23
General......................................... 23
Expiration Date; Extensions; Amendments;
Termination................................... 25
Distributions on the New Certificates........... 25
Procedures for Tendering........................ 25
Acceptance of Old Certificates for Exchange;
Delivery of New Certificates.................. 27
Book-Entry Transfer............................. 27
Guaranteed Delivery Procedures.................. 28
Withdrawal of Tenders........................... 28
Conditions...................................... 29
Exchange Agent.................................. 29
Fees and Expenses............................... 29
THE COMPANY....................................... 31
USE OF PROCEEDS................................... 31
DESCRIPTION OF THE CERTIFICATES................... 31
General......................................... 31
Distribution of Payments on Equipment Notes..... 32
Subordination................................... 34
Pool Factors.................................... 34
Reports to Certificateholders................... 35
Indenture Events of Default and Certain Rights
upon an Indenture Event of Default............ 36
Purchase Rights of Certificateholders........... 38
PTC Event of Default............................ 38
Merger, Consolidation and Transfer of Assets.... 39
Modification of the Pass Through Trust
Agreements and Certain Other Agreements....... 39
Possible Issuance of Series E Equipment Notes... 41
Termination of the Trusts....................... 42
The Trustees.................................... 42
Book-Entry Registration; Delivery and Form...... 42
DESCRIPTION OF THE LIQUIDITY FACILITIES........... 44
General......................................... 45
Drawings........................................ 45
Replacement of Liquidity Facilities............. 46
Reimbursement of Drawings....................... 48
Liquidity Events of Default..................... 49
Liquidity Provider.............................. 49
DESCRIPTION OF THE INTERCREDITOR AGREEMENT........ 50
Intercreditor Rights............................ 50
Priority of Distributions....................... 51
Addition of Trustee for Class E Certificates.... 55
The Subordination Agent......................... 55
DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS.... 56
The Aircraft.................................... 56
The Appraisals.................................. 56
DESCRIPTION OF THE EQUIPMENT NOTES................ 58
General......................................... 58
Subordination................................... 58
Principal and Interest Payments................. 59
Redemption...................................... 59
Security........................................ 60
Loan to Value Ratios of Equipment Notes......... 60
Defeasance...................................... 61
Limitation of Liability......................... 61
Indenture Events of Default, Notice and
Waiver........................................ 61
Remedies........................................ 62
Modification of Indentures...................... 63
Indemnification................................. 64
Certain Provisions of the Indentures............ 64
CERTAIN FEDERAL INCOME TAX CONSEQUENCES........... 68
CERTAIN ERISA CONSIDERATIONS...................... 69
General......................................... 69
Plan Assets Issues.............................. 69
Prohibited Transaction Exemptions............... 69
Special Considerations Applicable to Insurance
Company General Accounts...................... 70
PLAN OF DISTRIBUTION.............................. 70
LEGAL OPINIONS.................................... 71
EXPERTS........................................... 71
APPRAISERS........................................ 71
INDEX OF TERMS...............................Appendix I
APPRAISAL LETTERS...........................Appendix II
EQUIPMENT NOTE PRINCIPAL PAYMENTS......................
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES................
..
Appendix III Appendix IV
i
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS AND
THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR TO WHICH WE HAVE
REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT
IS DIFFERENT. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION,
YOU SHOULD NOT RELY ON IT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL TO
OFFER OR SELL THESE SECURITIES. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN
THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS
PROSPECTUS. ALSO, YOU SHOULD NOT ASSUME THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF AMERICAN SINCE THE DATE OF THIS PROSPECTUS.
PRESENTATION OF INFORMATION
We have given certain capitalized terms specific meanings for purposes of
this Prospectus. The "Index of Terms" attached as Appendix I to this Prospectus
lists the page in this Prospectus on which we have defined each such term.
At varying places in this Prospectus, we refer you to other sections for
additional information by indicating the caption heading of such other sections.
The page on which each principal caption included in this Prospectus can be
found is listed in the Table of Contents.
This Prospectus contains various "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which represent our expectations or beliefs
concerning future events. When used in this Prospectus and in documents
incorporated by reference, the words "expects," "plans," "anticipates" and
similar expressions are intended to identify forward-looking statements.
Forward-looking statements include, without limitation, our expectations
concerning operations and financial conditions, including changes in capacity,
revenues and costs, expectations as to future financing needs, overall economic
conditions and plans and objectives for future operations, the ability to
continue to successfully integrate with our operations the assets acquired from
Trans World Airlines, Inc. ("TWA") and the former TWA workforce, and the impact
on us of the events of September 11, 2001 and the sufficiency of our financial
resources to absorb that impact. Other forward-looking statements include
statements which do not relate solely to historical facts, such as, without
limitation, statements which discuss the possible future effects of current
known trends or uncertainties, or which indicate that the future effects of
known trends or uncertainties cannot be predicted, guaranteed or assured. All
forward-looking statements in this Prospectus and the documents incorporated by
reference are based upon information available to us on the date of this
Prospectus or such document. We undertake no obligation to publicly update or
revise any forward-looking statement, whether as a result of new information,
future events or otherwise. Forward-looking statements are subject to a number
of factors that could cause actual results to differ materially from our
expectations. The following factors, in addition to other possible factors not
listed, could cause actual results to differ materially from those expressed in
forward-looking statements: failure to reach agreement with any labor union
representing our employees, changes in economic or other conditions, increases
in the price of jet fuel or reductions in supply of jet fuel, future fare
reductions in the airline industry, changes in our business strategy, actions by
government agencies, the adverse impact of the September 11, 2001 terrorist
attacks and the possible occurrence of other terrorist attacks, the availability
of future financing and any amendments to, or interpretations of, the
Stabilization Act or successful challenges to the Stabilization Act that are
contrary to the mitigation of the material adverse consequences of the events of
September 11, 2001 provided by the Stabilization Act. Additional information
concerning these and other factors is contained in our Securities and Exchange
Commission filings, including but not limited to our Form 10-K for the year
ended December 31, 2001.
WHERE YOU CAN FIND MORE INFORMATION
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments, exhibits and appendices, the "Registration
Statement") filed by American with the Securities and Exchange Commission (the
"Commission") under the Securities Act. This Prospectus does not contain all of
the information included in the Registration Statement, the exhibits and certain
other parts of which are
ii
omitted in accordance with the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and you should review the full
texts of those contracts and other documents.
We file annual, quarterly and special reports with the Commission. These
Commission filings are available to the public over the Internet at the
Commission's web site at http://www.sec.gov. You may also read and copy any such
document we file at the Commission's public reference rooms at 450 Fifth Street,
N.W., Washington, D.C. 20549, and in New York, New York and Chicago, Illinois.
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference rooms and copy charges.
We incorporate by reference the documents listed below and any future
filings made with the Commission under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act until the termination of the Exchange Offer.
- Annual Report on Form 10-K for the year ended December 31, 2001.
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2002.
- Current Report on Form 8-K filed January 16, 2002.
You may obtain a copy of the Registration Statement and these filings
(other than their exhibits, unless those exhibits are specifically incorporated
by reference in the filings) at no cost by writing or telephoning us at the
following address:
Corporate Secretary
American Airlines, Inc.
P.O. Box 619616, Mail Drop 5675
Dallas/Fort Worth Airport, Texas 75261-9616
(817) 967-1254
iii
PROSPECTUS SUMMARY
This summary highlights selected information from this Prospectus and may
not contain all of the information that is important to you. For more complete
information about the Certificates and American Airlines, Inc., you should read
this entire Prospectus, as well as the materials filed with the Commission that
are considered to be a part of this Prospectus. See "Where You Can Find More
Information" and "The Company." Unless otherwise indicated, "we," "us," "our"
and similar terms, as well as references to "American" or the "Company," refer
to American Airlines, Inc. The term "you" refers to prospective investors in the
Certificates.
THE EXCHANGE OFFER
The Certificates.............. On October 4, 2001 we issued, through three
separate trusts, Class A-1, Class A-2 and Class
B Pass Through Certificates, Series 2001-2 and
privately placed an aggregate of $322,404,000
Class A-1 Certificates, $828,761,000 Class A-2
Certificates and $180,087,000 Class B
Certificates pursuant to exemptions from the
registration requirements of the Securities
Act. On October 26, 2001 and December 12, 2001,
respectively, we issued, through separate
trusts, Class C and Class D Pass Through
Certificates, Series 2001-2 and privately
placed an aggregate of $281,038,000 Class C
Certificates and $260,542,000 Class D
Certificates pursuant to exemptions from the
registration requirements of the Securities
Act. On April 1, 2002 principal payments on the
Series A-1 Equipment Notes reduced the Pool
Balance of the Class A-1 Certificates
outstanding from $322,404,000 to $321,515,809.
The "Placement Agents" of the Certificates were
Morgan Stanley & Co. Incorporated, Credit
Suisse First Boston Corporation, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, J.P.
Morgan Securities Inc. and Salomon Smith Barney
Inc.
When we use the term "Old Certificates" in this
Prospectus, we mean the Class A-1, Class A-2
and Class B, the Class C and the Class D
Certificates, Series 2001-2, which were
privately placed with the Placement Agents on
October 4, 2001, October 26, 2001 and December
12, 2001, respectively, and were not registered
with the Commission.
When we use the term "New Certificates" in this
Prospectus, we mean the Class A-1, Class A-2,
Class B, Class C and Class D Certificates
registered with the Commission and offered
hereby in exchange for the Old Certificates.
When we use the term "Certificates" in this
Prospectus, the related discussion applies to
both the Old Certificates and the New
Certificates.
Registration Rights
Agreement..................... On October 4, 2001, October 26, 2001 and
December 12, 2001, we entered into Registration
Rights Agreements with the Placement Agents and
the Trustee providing, among other things, for
the Exchange Offer.
The Exchange Offer............ We are offering New Certificates in exchange
for an equal amount of Old Certificates of the
same class. The New Certificates will be issued
to satisfy our obligations under the
Registration Rights Agreements.
1
The New Certificates will be entitled to the
benefits of and will be governed by the same
Pass Through Trust Agreements that govern the
Old Certificates. The form and terms of the New
Certificates are the same in all material
respects as the form and terms of the Old
Certificates, except that we registered the New
Certificates under the Securities Act so their
transfer is not restricted like the Old
Certificates, the New Certificates do not
contain terms with respect to transfer
restrictions or interest rate increases and the
New Certificates will be available only in
book-entry form.
As of the date of this Prospectus,
$1,872,832,000 face amount ($1,871,943,809 Pool
Balance) of Old Certificates are outstanding.
Conditions to the Exchange
Offer......................... The Exchange Offer is not conditioned upon any
minimum amount of Old Certificates being
tendered for exchange. However, the Exchange
Offer is subject to certain customary
conditions, which may be waived by us. See "The
Exchange Offer -- Conditions."
Procedures for Tendering Old
Certificates.................. If you wish to accept the Exchange Offer, you
must deliver your Old Certificates to the
Exchange Agent for exchange no later than 5:00
p.m., New York City time, on , 2002.
The Expiration Date may be extended under
certain circumstances.
You must also deliver a completed and signed
letter of transmittal together with the Old
Certificates (the "Letter of Transmittal"). A
Letter of Transmittal has been sent to
Certificateholders and a form can be found as
an exhibit to the Registration Statement.
Please refer to "The Exchange
Offer -- Procedures for Tendering."
You must deliver the Old Certificates and the
Letter of Transmittal to State Street Bank and
Trust Company of Connecticut, National
Association (the "Exchange Agent"), as follows:
State Street Bank and Trust Company of
Connecticut, National Association
c/o State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, Massachusetts 02111
Attn: Ralph Jones/Account Services Group
Telephone: (617) 662-1548 Facsimile: (617)
662-1452
If you hold Old Certificates through DTC and
wish to accept the Exchange Offer, you may do
so through DTC's Automated Tender Offer
Program. By accepting the Exchange Offer
through such program, you will agree to be
bound by the Letter of Transmittal as though
you had signed the Letter of Transmittal and
delivered it to the Exchange Agent.
See "The Exchange Offer -- Procedures for
Tendering," "-- Book-Entry Transfer" and
"-- Exchange Agent."
Guaranteed Delivery
Procedures.................... If you wish to tender Old Certificates and your
Old Certificates are not immediately available
or you cannot deliver your Old Certificates and
a properly completed Letter of Transmittal or
any other documents required by the Letter of
Transmittal to the Exchange
2
Agent prior to the Expiration Date or you
cannot complete the book-entry transfer
procedures prior to the Expiration Date, you
may tender your Old Certificates according to
the guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery
Procedures."
Denominations................. You may only tender Old Certificates in
integral multiples of $1,000. Similarly, the
New Certificates will only be issued in
integral multiples of $1,000.
Withdrawal Rights............. You may withdraw a tender of Old Certificates
at any time before 5:00 p.m., New York City
time, on the Expiration Date. To withdraw a
tender of Old Certificates, the Exchange Agent
must receive a written or facsimile
transmission notice requesting such withdrawal
at its address set forth under "The Exchange
Offer -- Exchange Agent" prior to 5:00 p.m.,
New York City time, on the Expiration Date. See
"The Exchange Offer -- Withdrawal of Tenders."
Resale of New Certificates.... We believe that you can offer for resale,
resell and otherwise transfer the New
Certificates without complying with the
registration and prospectus delivery
requirements of the Securities Act if:
- you acquire the New Certificates in the
ordinary course of your business;
- you have no arrangements or understanding
with any person to participate in the
distribution of the New Certificates; and
- you are not an "affiliate," as defined in
Rule 405 of the Securities Act, of ours or of
any Trustee or a broker-dealer who acquired
Old Certificates directly from a Trustee for
your own account.
If any of these conditions is not satisfied and
you transfer any New Certificate without
delivering a proper prospectus or without
qualifying for a registration exemption, you
may incur liability under the Securities Act.
We do not assume or indemnify you against such
liability.
Each broker-dealer that receives New
Certificates in exchange for Old Certificates
held for its own account as a result of market-
making or other trading activities must
acknowledge that it will deliver a prospectus
in connection with any resale of such New
Certificates. A broker-dealer may use this
Prospectus for an offer to resell, resale or
other transfer of such New Certificates issued
to it in the Exchange Offer.
For more information on the resale of New
Certificates, see "The Exchange
Offer -- General."
Registration, Clearance and
Settlement.................... The New Certificates will be represented by one
or more permanent global certificates, which
will be registered in the name of the nominee
of DTC. The global certificates will be
deposited with the Trustee as custodian for
DTC. See "Description of the New
Certificates -- Book Entry; Delivery and Form."
3
Delivery of New
Certificates.................. The Exchange Agent will deliver New
Certificates in exchange for all properly
tendered Old Certificates promptly following
the expiration of the Exchange Offer.
Certain Federal Income Tax
Consequences.................. The exchange of New Certificates for Old
Certificates will not be treated as a taxable
event for federal income tax purposes. See
"Certain Federal Income Tax Consequences."
Fees and Expenses............. We will pay all expenses, other than certain
applicable taxes, of completing the Exchange
Offer and compliance with the Registration
Rights Agreements. See "The Exchange
Offer -- Fees and Expenses."
Failure to Exchange Old
Certificates.................. Once the Exchange Offer has been completed, if
you do not exchange your Old Certificates for
New Certificates in the Exchange Offer, you
will no longer be entitled to registration
rights and will not be able to offer or sell
your Old Certificates, unless (i) such Old
Certificates are subsequently registered under
the Securities Act (which, subject to certain
exceptions set forth in the Registration Rights
Agreements, we will have no obligation to do)
or (ii) your transaction is exempt from, or
otherwise not subject to, the Securities Act
and applicable state securities laws. See "Risk
Factors -- Risk Factors Relating to the
Certificates and the Exchange
Offer -- Consequences of Failure to Exchange"
and "The Exchange Offer."
Use of Proceeds............... We will not receive any cash proceeds from the
exchange of the New Certificates for the Old
Certificates.
4
SUMMARY OF TERMS OF CERTIFICATES
CLASS A-1 CLASS A-2 CLASS B CLASS C CLASS D
CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
---------------- ---------------- ---------------- ---------------- ---------------
Aggregate face amount at the
respective issuance dates of
the Old Certificates.......... $322,404,000 $828,761,000 $180,087,000 $281,038,000 $260,542,000
Interest Rate................... 6.978% 7.858% 8.608% 7.800% 9.092%
Ratings:
Moody's......................... Baa1 Baa1 Baa2 Ba1 Ba3
Standard & Poor's(1)............ AA+ AA+ AA- A BBB-
Initial loan to Aircraft value
at the respective issuance
dates of the Old Certificates
(cumulative)(2)............... 41.6% 41.6% 48.1% 58.3% 67.7%
Expected maximum loan to
Aircraft value (cumulative)... 42.2% 42.2% 50.6% 60.6% 71.4%
Expected principal distribution
window (in years)(3).......... 0.5-9.5 10.0 9.5 4.9 4.9
Initial average life (in
years)(3)..................... 4.7 10.0 9.5 4.9 4.9
Regular Distribution Dates...... April 1 and April 1 and April 1 and April 1 and April 1 and
October 1 October 1 October 1 October 1 October 1
Final expected regular
distribution date............. April 1, 2011 October 1, 2011 April 1, 2011 October 1, 2006 October 1, 2006
Final Legal Distribution Date... October 1, 2012 April 1, 2013 October 1, 2012 April 1, 2008 October 1, 2006
Minimum denomination............ $1,000 $1,000 $1,000 $1,000 $1,000
Section 1110 protection......... Yes Yes Yes Yes Yes
Liquidity Facility coverage..... Three semiannual Three semiannual Three semiannual Three semiannual None
interest interest interest interest
payments payments payments payments
---------------
(1) The ratings assigned to the Certificates by Standard & Poor's are on
Standard & Poor's CreditWatch with negative implications.
(2) These percentages are calculated as of January 1, 2002. The aggregate
Assumed Aircraft Value of the Aircraft was $2,767,183,333 as of such date.
See "Loan To Aircraft Value Ratios" in this Summary for the method we used
in calculating the Assumed Aircraft Value and the loan to Aircraft value
ratios.
(3) Measured from the respective dates of issuance of the Old Certificates.
5
EQUIPMENT NOTES AND THE AIRCRAFT
The Trusts hold Equipment Notes issued for each of two Boeing 737-823
aircraft, ten Boeing 757-223ER, six Boeing 757-223 aircraft and 13 Boeing
777-223ER aircraft. All of the Aircraft were delivered new to American from
January 2001 to December 2001. The Equipment Notes issued with respect to each
Aircraft are secured by a security interest in such Aircraft. See "Description
of the Aircraft and the Appraisals" for a description of the Aircraft. Set forth
below is information about the Equipment Notes held in the Trusts and the
Aircraft.
PRINCIPAL
U.S. AMOUNT OF
REGISTRATION MONTH EQUIPMENT APPRAISED BASE
AIRCRAFT TYPE NUMBER DELIVERED(1) NOTES VALUE(1)
------------- ------------ ------------ ----------- --------------
Boeing 737-823................ N965AN June 2001 $32,026,032 $ 47,760,000
Boeing 737-823................ N966AN June 2001 32,031,298 47,766,667
Boeing 757-223ER.............. N185AN May 2001 38,772,764 57,890,000
Boeing 757-223ER.............. N186AN May 2001 38,775,398 57,893,333
Boeing 757-223ER.............. N187AN May 2001 38,780,671 57,900,000
Boeing 757-223ER.............. N188AN June 2001 38,930,163 58,116,667
Boeing 757-223ER.............. N189AN July 2001 40,028,392 58,333,333
Boeing 757-223ER.............. N190AA July 2001 40,028,392 58,333,333
Boeing 757-223ER.............. N191AN August 2001 40,178,885 58,546,667
Boeing 757-223ER.............. N192AN August 2001 40,189,715 58,560,000
Boeing 757-223ER.............. N193AN November 2001 40,311,807 58,920,000(2)
Boeing 757-223ER.............. N194AA November 2001 40,311,807 58,920,000(2)
Boeing 757-223................ N195AN November 2001 38,263,132 56,120,000(2)
Boeing 757-223................ N196AA November 2001 38,263,132 56,120,000(2)
Boeing 757-223................ N197AN November 2001 38,417,422 56,310,000
Boeing 757-223................ N198AA December 2001 38,421,436 56,310,000(2)
Boeing 757-223................ N199AN December 2001 38,516,770 56,490,000
Boeing 757-223................ N175AN December 2001 38,516,770 56,490,000
Boeing 777-223ER.............. N797AN January 2001 90,946,024 133,023,333
Boeing 777-223ER.............. N798AN February 2001 88,950,606 133,376,667
Boeing 777-223ER.............. N799AN March 2001 89,178,158 133,730,000
Boeing 777-223ER.............. N750AN March 2001 89,193,904 133,750,000
Boeing 777-223ER.............. N751AN April 2001 89,673,881 134,070,000
Boeing 777-223ER.............. N752AN May 2001 89,866,493 134,446,667
Boeing 777-223ER.............. N753AN May 2001 89,940,285 134,540,000
Boeing 777-223ER.............. N754AN June 2001 90,110,274 134,816,667
Boeing 777-223ER.............. N755AN July 2001 92,503,057 135,140,000
Boeing 777-223ER.............. N756AM August 2001 92,636,315 135,370,000
Boeing 777-223ER.............. N757AN November 2001 92,893,380 135,820,000(2)
Boeing 777-223ER.............. N758AN November 2001 93,025,303 136,050,000
Boeing 777-223ER.............. N759AN December 2001 93,150,334 136,270,000
---------------
(1) The appraised base value of each Aircraft set forth above is the lesser of
the average and median appraised base values of such Aircraft as of the
issuance date of the Class D Certificates, or, in the case of the Aircraft
that had not been delivered prior to the issuance of the Class D
Certificates, projected as of
6
the scheduled delivery month of such Aircraft, as appraised by three
independent appraisal and consulting firms. Such appraisals are based upon
varying assumptions (which may not reflect current market conditions) and
methodologies. An appraisal is only an estimate of value and should not be
relied upon as a measure of realizable value. Although each of the
appraisals is dated after September 11, 2001, each appraisal contains a
disclaimer as to the effect of the events of that day on aircraft values.
See "Risk Factors -- Risk Factors Relating to the Certificates and the
Exchange Offer -- Appraisals and Realizable Value of Aircraft."
(2) The appraised base values of two Boeing 757-223ER aircraft, three Boeing
757-223 aircraft and one Boeing 777-223ER aircraft are based on the
appraisals described above, which were prepared based on the scheduled
delivery months of such Aircraft. However, delivery of each such Aircraft
actually occurred in the next following month.
LOAN TO AIRCRAFT VALUE RATIOS
The following table sets forth loan to Aircraft value ratios ("LTVs") for
each Class of Certificates as of January 1, 2002 and each Regular Distribution
Date thereafter. The table should not be considered a forecast or prediction of
expected or likely LTVs but simply a mathematical calculation based upon one set
of assumptions. See "Risk Factors -- Risk Factors Relating to the Certificates
and the Exchange Offer -- Appraisals and Realizable Value of Aircraft."
The following table was compiled on an aggregate basis. However, the
Equipment Notes secured by an Aircraft are not secured by any other Aircraft.
This means that any excess proceeds realized from the sale of an Aircraft or
other exercise of default remedies will not be available to cover any shortfalls
on the Equipment Notes relating to any other Aircraft. See "Description of the
Equipment Notes -- Loan to Value Ratios of Equipment Notes" and Appendix IV for
LTVs for the Equipment Notes issued in respect of individual Aircraft, which may
be more relevant in a default situation than the aggregate values shown below.
OUTSTANDING POOL BALANCE(2) LTV(3)
AGGREGATE ------------------------------------------------------------------------ ------------
AIRCRAFT CLASS A-1 CLASS A-2 CLASS B CLASS C CLASS D CLASS A-1
DATE VALUE(1) CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
---- -------------- ------------ ------------ ------------ ------------ ------------ ------------
January 1, 2002...... $2,767,183,333 $322,404,000 $828,761,000 $180,087,000 $281,038,000 $260,542,000 41.6%
April 1, 2002........ 2,728,829,704 321,515,809 828,761,000 180,087,000 281,038,000 260,542,000 42.2
October 1, 2002...... 2,683,672,481 276,178,875 828,761,000 180,087,000 281,038,000 260,542,000 41.2
April 1, 2003........ 2,645,318,852 275,290,684 828,761,000 180,087,000 281,038,000 260,542,000 41.7
October 1, 2003...... 2,600,161,628 233,380,069 828,761,000 180,087,000 281,038,000 260,542,000 40.8
April 1, 2004........ 2,561,807,999 232,491,878 828,761,000 180,087,000 281,038,000 260,542,000 41.4
October 1, 2004...... 2,516,650,776 193,972,695 828,761,000 180,087,000 281,038,000 260,542,000 40.6
April 1, 2005........ 2,478,297,147 193,084,504 828,761,000 180,087,000 281,038,000 260,542,000 41.2
October 1, 2005...... 2,433,139,923 161,420,874 828,761,000 180,087,000 281,038,000 260,542,000 40.7
April 1, 2006........ 2,394,786,294 160,532,683 828,761,000 180,087,000 281,038,000 260,542,000 41.3
October 1, 2006...... 2,349,629,070 129,720,347 828,761,000 180,087,000 0 0 40.8
April 1, 2007........ 2,311,275,442 128,832,156 828,761,000 180,087,000 0 0 41.4
October 1, 2007...... 2,266,118,218 100,551,138 828,761,000 180,087,000 0 0 41.0
April 1, 2008........ 2,227,764,589 99,662,947 828,761,000 180,087,000 0 0 41.7
October 1, 2008...... 2,182,607,365 73,217,284 828,761,000 180,087,000 0 0 41.3
April 1, 2009........ 2,144,253,736 70,140,641 828,761,000 180,087,000 0 0 41.9
October 1, 2009...... 2,099,096,513 44,013,514 828,761,000 180,087,000 0 0 41.6
April 1, 2010........ 2,060,742,884 31,624,242 828,761,000 180,087,000 0 0 41.8
October 1, 2010...... 2,015,585,660 11,201,319 828,761,000 180,087,000 0 0 41.7
April 1, 2011........ 1,977,232,031 0 828,761,000 0 0 0 NA
October 1, 2011...... 1,932,074,808 0 0 0 0 0 NA
LTV(3)
---------------------------------------------------------
CLASS A-2 CLASS B CLASS C CLASS D
DATE CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
---- ------------ ------------ ------------ ------------
January 1, 2002...... 41.6% 48.1% 58.3% 67.7%
April 1, 2002........ 42.2 48.8 59.1 68.6
October 1, 2002...... 41.2 47.9 58.4 68.1
April 1, 2003........ 41.7 48.5 59.2 69.0
October 1, 2003...... 40.8 47.8 58.6 68.6
April 1, 2004........ 41.4 48.5 59.4 69.6
October 1, 2004...... 40.6 47.8 59.0 69.3
April 1, 2005........ 41.2 48.5 59.8 70.4
October 1, 2005...... 40.7 48.1 59.6 70.4
April 1, 2006........ 41.3 48.8 60.6 71.4
October 1, 2006...... 40.8 48.5 NA NA
April 1, 2007........ 41.4 49.2 NA NA
October 1, 2007...... 41.0 49.0 NA NA
April 1, 2008........ 41.7 49.8 NA NA
October 1, 2008...... 41.3 49.6 NA NA
April 1, 2009........ 41.9 50.3 NA NA
October 1, 2009...... 41.6 50.2 NA NA
April 1, 2010........ 41.8 50.5 NA NA
October 1, 2010...... 41.7 50.6 NA NA
April 1, 2011........ 41.9 NA NA NA
October 1, 2011...... NA NA NA NA
---------------
(1) In calculating the aggregate Assumed Aircraft Value, we have assumed that
the initial appraised base value of each Aircraft, determined as described
under "-- Equipment Notes and the Aircraft," declines by approximately 3% of
the initial appraised base value per year. Other rates or methods of
depreciation would result in materially different LTVs. We cannot assure you
that the depreciation rate and method
7
assumed for purposes of the table are the ones most likely to occur or
predict the actual future value of any Aircraft. See "Risk Factors -- Risk
Factors Relating to the Certificates and the Exchange Offer -- Appraisals
and Realizable Value of Aircraft."
(2) The "pool balance" for each Class of Certificates indicates, as of any date,
the portion of the original face amount of such Class of Certificates that
has not been distributed to Certificateholders.
(3) We obtained the LTVs for each Class of Certificates for each Regular
Distribution Date by dividing (i) the expected outstanding pool balance of
such Class together with the expected outstanding pool balance of all other
Classes ranking equal or senior in right to distributions to such Class
after giving effect to the distributions expected to be made on such date,
by (ii) the assumed value of all of the Aircraft on such date based on the
assumptions described above.
8
CASH FLOW STRUCTURE
This diagram illustrates the structure for the offering of the Certificates
and certain cash flows.
(DIAGRAM)
---------------
(1) American issued Series A-1, Series A-2, Series B, Series C and Series D
Equipment Notes in respect of each Aircraft. Each Aircraft is subject to a
separate Indenture.
(2) Separate Liquidity Facilities are available with respect to the Class A-1,
Class A-2, Class B and Class C Certificates for up to three semiannual
interest distributions on the Certificates of the relevant Class. There is
no liquidity facility available with respect to the Class D Certificates.
9
THE CERTIFICATES
Trusts........................ The Class A-1 Trust, Class A-2 Trust, Class B
Trust, Class C Trust and Class D Trust were
formed pursuant to a separate trust supplement
to a basic pass through trust agreement between
American and State Street Bank and Trust
Company of Connecticut, National Association,
as trustee under each trust.
Certificates Offered.......... - Class A-1 Certificates
- Class A-2 Certificates
- Class B Certificates
- Class C Certificates
- Class D Certificates
Each Class of Certificates represents
fractional undivided interests in the related
Trust.
Use of Proceeds............... The proceeds from the sale of the Old
Certificates were used to purchase the
Equipment Notes held by each Trust. A portion
of the proceeds of the sale of the Old
Certificates was initially held in escrow and
deposited with a depositary. Each Trust
withdrew funds from the deposits relating to
such Trust to purchase Equipment Notes from
time to time as certain Aircraft were financed.
The Equipment Notes are full recourse
obligations of American issued under 31
separate Indentures.
Subordination Agent,
Trustee and Loan Trustee...... State Street Bank and Trust Company of
Connecticut, National Association.
Liquidity Provider for the
Class A-1, Class A-2, Class B
and Class C Certificates...... Westdeutsche Landesbank Girozentrale, New York
Branch. There is no liquidity facility
available with respect to the Class D
Certificates.
Trust Property................ The property of each Trust includes:
- Equipment Notes acquired by such Trust.
- All rights of such Trust under the
Intercreditor Agreement described below
(including all monies receivable pursuant to
such rights).
- For the Class A-1, Class A-2, Class B and
Class C Trusts, all monies receivable under
the Liquidity Facility for such Trust.
- Funds from time to time deposited with the
Trustee in accounts relating to such Trust.
Regular Distribution Dates.... April 1 and October 1, commencing on April 1,
2002.
Record Dates.................. The fifteenth day preceding the related
Distribution Date.
Distributions................. The Trustee will distribute all payments of
principal, Make-Whole Amount (if any) and
interest received on the Equipment Notes held
in each Trust to the holders of the
Certificates of such Trust,
10
subject to the subordination provisions
applicable to the Certificates.
Subject to the subordination provisions
applicable to the Certificates, scheduled
payments of principal and interest made on the
Equipment Notes will be distributed on the
applicable Regular Distribution Dates. Payments
of principal, Make-Whole Amount (if any) and
interest made on the Equipment Notes resulting
from any early redemption of such Equipment
Notes will be distributed on a Special
Distribution Date after not less than 15 days
notice to Certificateholders.
Intercreditor Agreement....... The Trusts, the Liquidity Provider and the
Subordination Agent are parties to the
Intercreditor Agreement. The Intercreditor
Agreement states how payments made on the
Equipment Notes and the Liquidity Facilities
will be distributed among the Trusts and the
Liquidity Provider. The Intercreditor Agreement
also sets forth agreements among the Trusts and
the Liquidity Provider relating to who will
control the exercise of remedies under the
Equipment Notes and the Indentures.
Subordination................. Under the Intercreditor Agreement, after the
Liquidity Provider is reimbursed (if necessary)
and certain other fees and expenses are paid,
distributions on the Certificates generally
will be made in the following order:
- First, to the holders of the Class A-1 and
Class A-2 Certificates.
- Second, to the holders of the Class B
Certificates.
- Third, to the holders of the Class C
Certificates.
- Fourth, to the holders of the Class D
Certificates.
If American is in bankruptcy or other specified
defaults have occurred but American is
continuing to meet certain of its payment
obligations, the subordination provisions
applicable to the Certificates permit
distributions to be made on junior Certificates
prior to making distributions in full on the
more senior Certificates.
Control of Loan Trustee....... The holders of at least a majority of the
outstanding principal amount of Equipment Notes
issued under each Indenture will be entitled to
direct the Loan Trustee under such Indenture in
taking action as long as no Indenture Event of
Default is continuing thereunder. If an
Indenture Event of Default is continuing under
such Indenture, subject to certain conditions,
the Controlling Party will direct the Loan
Trustee in taking action under such Indenture
(including in exercising remedies, such as
accelerating such Equipment Notes or
foreclosing the lien on the Aircraft securing
such Equipment Notes).
The Controlling Party will be:
- The Class A-1 Trustee or Class A-2 Trustee,
whichever represents the Class with the
larger Pool Balance of Certificates
outstanding at the time the Indenture Event
of Default occurs.
11
- Upon payment of Final Distributions to the
holders of such larger Class, the other of
the Class A-1 Trustee or Class A-2 Trustee.
- Upon payment of Final Distributions to the
holders of Class A-1 and Class A-2
Certificates, the Class B Trustee.
- Upon payment of Final Distributions to the
holders of Class B Certificates, the Class C
Trustee.
- Upon payment of Final Distributions to the
holders of Class C Certificates, the Class D
Trustee.
- Under certain circumstances, and
notwithstanding the foregoing, the Liquidity
Provider with the greatest amount owed to it.
In exercising remedies during the nine months
after the earlier of (a) the acceleration of
the Equipment Notes issued pursuant to any
Indenture or (b) the bankruptcy of American,
the Controlling Party may not, without the
consent of each Trustee, sell such Equipment
Notes or the Aircraft subject to the lien of
such Indenture for less than certain specified
minimums.
Right to Buy Other Classes
of Certificates............... If American is in bankruptcy or certain other
specified events have occurred,
Certificateholders will have the right to buy
certain other Classes of Certificates on the
following basis:
- If either the Class A-1 or Class A-2
Certificateholders are then represented by
the Controlling Party, the Certificateholders
of such Class that is not so represented will
have the right to purchase all, but not less
than all, of the Certificates of such Class
that is so represented.
- The Class B Certificateholders will have the
right to purchase all, but not less than all,
of the Class A-1 and Class A-2 Certificates.
- The Class C Certificateholders will have the
right to purchase all, but not less than all,
of the Class A-1, Class A-2 and Class B
Certificates.
- The Class D Certificateholders will have the
right to purchase all, but not less than all,
of the Class A-1, Class A-2, Class B and
Class C Certificates.
The purchase price in each case described above
will be the outstanding balance of the
applicable Class of Certificates plus accrued
and undistributed interest.
Liquidity Facilities.......... Under the Liquidity Facilities for the Class
A-1, Class A-2, Class B and Class C Trusts, the
Liquidity Provider will, if necessary, make
advances in an aggregate amount sufficient to
pay interest distributions on the applicable
Class of Certificates on up to three successive
semiannual Regular Distribution Dates at the
applicable interest rate for such Certificates.
The Liquidity Facilities cannot be used to pay
any other amount in respect of the
Certificates.
12
Notwithstanding the subordination provisions
applicable to the Certificates, the holders of
the Certificates issued by each of the Class
A-1, Class A-2, Class B and Class C Trusts will
be entitled to receive and retain the proceeds
of drawings under the Liquidity Facility for
such Trust.
Upon each drawing under any Liquidity Facility
to pay interest distributions on any of the
Class A-1, Class A-2, Class B or Class C
Certificates, the Subordination Agent will be
obligated to reimburse the applicable Liquidity
Provider for the amount of such drawing,
together with interest on such drawing. Such
reimbursement obligation and all interest, fees
and other amounts owing to the Liquidity
Provider under each Liquidity Facility will
rank senior to all of the Certificates in right
of payment.
There is no liquidity facility available with
respect to the Class D Certificates.
Equipment Notes
(a) Issuer.................... Under the Indenture for each Aircraft, American
issued Series A-1, Series A-2, Series B, Series
C and Series D Equipment Notes, which were
acquired, respectively, by the Class A-1, the
Class A-2, the Class B, the Class C and the
Class D Trusts.
(b) Interest.................. The Equipment Notes held in each Trust accrue
interest at the rate per annum for the
Certificates issued by such Trust set forth on
the cover page of this Prospectus. Interest on
the Equipment Notes is payable on April 1 and
October 1 of each year, commencing on April 1,
2002. Interest is calculated on the basis of a
360-day year consisting of twelve 30-day
months.
(c) Principal................. Amortizing Notes. Principal payments on the
Series A-1 Equipment Notes are scheduled to be
received in specified amounts on April 1 and
October 1 in certain years, commencing on April
1, 2002 and ending on April 1, 2011.
Bullet Maturity Notes. The entire principal
amount of the Series A-2 Equipment Notes is
scheduled to be paid on October 1, 2011, the
entire principal amount of the Series B
Equipment Notes is scheduled to be paid on
April 1, 2011 and the entire principal amount
of the Series C and Series D Equipment Notes is
scheduled to be paid on October 1, 2006.
(d) Redemption................ Aircraft Event of Loss. If an Event of Loss
occurs with respect to an Aircraft, all of the
Equipment Notes issued with respect to such
Aircraft will be redeemed, unless such
Aircraft, at American's election, is replaced
by American under the related Indenture. The
redemption price in such case will be the
unpaid principal amount of such Equipment
Notes, together with accrued interest, but
without any Make-Whole Amount. See Description
of the Equipment Notes -- Redemption."
Optional Redemption. American may elect to
redeem at any time all of the Equipment Notes
issued with respect to an Aircraft prior to
maturity. The redemption price in such case
will be the unpaid principal amount of such
Equipment Notes, together with accrued
13
interest, plus a Make-Whole Amount. See
"Description of the Equipment
Notes -- Redemption."
(e) Security.................. The Equipment Notes issued with respect to each
Aircraft are secured by a security interest in
such Aircraft.
The Equipment Notes are not
cross-collateralized. This means that the
Equipment Notes secured by an Aircraft are not
secured by any other Aircraft. Any excess
proceeds from the sale of an Aircraft or other
exercise of default remedies with respect to
such Aircraft will not be available to cover
any shortfalls on the Equipment Notes relating
to any other Aircraft.
By virtue of the Intercreditor Agreement, the
Equipment Notes are effectively
cross-subordinated. This means that payments
received on a junior series of Equipment Notes
issued in respect of one Aircraft may be
applied in accordance with the priority of
payment provisions set forth in the
Intercreditor Agreement to make distributions
in respect of a more senior Class of
Certificates.
There are no cross-default provisions in the
Indentures. This means that if the Equipment
Notes issued with respect to one or more
Aircraft are in default and the Equipment Notes
issued with respect to the remaining Aircraft
are not in default, no remedies will be
exercisable with respect to the remaining
Aircraft.
(f) Section 1110 Protection... American's General Counsel provided opinions to
the Trustees that the benefits of Section 1110
of the Bankruptcy Code are available with
respect to each of the Aircraft.
Certain ERISA
Considerations................ Each person who acquires a Certificate will be
deemed to have represented that either:
- no assets of an employee benefit plan or an
individual retirement account or of any trust
established under such a plan or account have
been used to purchase such Certificate; or
- the purchase and holding of such Certificate
by such person are exempt from the prohibited
transaction restrictions of the Employee
Retirement Income Security Act of 1974 and
the Internal Revenue Code of 1986 pursuant to
one or more prohibited transaction statutory
or administrative exemptions.
See "Certain ERISA Considerations."
Ratings of the Certificates... The Certificates are rated by Moody's and
Standard & Poor's as set forth below:
CERTIFICATES MOODY'S STANDARD & POOR'S
------------ ------- -----------------
Class A-1....................... Baa1 AA+
Class A-2....................... Baa1 AA+
Class B......................... Baa2 AA-
Class C......................... Ba1 A
Class D......................... Ba3 BBB-
The ratings assigned to the Certificates by
Standard & Poor's are on Standard & Poor's
CreditWatch with negative implications. A
rating is not a recommendation to purchase,
hold or sell Certifi
14
cates; and such rating does not address market
price or suitability for a particular investor.
There can be no assurance that such ratings
will not be lowered or withdrawn by a Rating
Agency. See "Risk Factors -- Risk Factors
Relating to the Certificates and the Exchange
Offer -- Ratings of the Certificates."
Threshold Rating Requirements for the CERTIFICATES MOODY'S STANDARD & POOR'S
Liquidity Provider. ------------ ------- -----------------
Class A-1....................... P-1 A-1+
Class A-2....................... P-1 A-1+
Class B......................... P-1 A-1+
Class C......................... P-1 A-1
There is no liquidity facility available with
respect to the Class D Certificates.
Liquidity Provider Rating..... The initial Liquidity Provider meets the
Threshold Rating requirement for the Class A-1,
Class A-2, Class B and Class C Certificates.
15
THE COMPANY
GENERAL
American, the principal subsidiary of AMR Corporation, was founded in 1934.
On April 9, 2001, American purchased substantially all of the assets and assumed
certain liabilities of TWA, the eighth largest United States air carrier.
American (including TWA) is the largest scheduled passenger airline in the
world. American provides scheduled jet service to numerous destinations
throughout North America, the Caribbean, Latin America, Europe and the Pacific.
American is also one of the largest scheduled air freight carriers in the world,
providing a full range of freight and mail services to shippers throughout its
system. The postal address for American's principal executive offices is P.O.
Box 619616, Dallas/Fort Worth Airport, Texas 75261-9616 (Telephone:
817-963-1234).
RECENT DEVELOPMENTS
On September 11, 2001, two of American's aircraft were hijacked and
destroyed in terrorist attacks on The World Trade Center in New York City and
the Pentagon in northern Virginia. On the same day, two United Air Lines
aircraft also were hijacked and used in terrorist attacks. In addition to the
loss of all passengers and crew on board the aircraft, these attacks resulted in
untold deaths and injuries to persons on the ground and massive property damage.
In response to those terrorists attacks, the Federal Aviation Administration
(the "FAA") issued a federal ground stop order on September 11, 2001,
prohibiting all flights to, from and within the United States. Airports did not
reopen until September 13, 2001 (except for Washington Reagan National Airport,
which was partially reopened on October 4, 2001). American was able to operate
only a portion of its scheduled flights for several days thereafter. When
flights were permitted to resume, passenger traffic and yields on the Company's
flights were significantly lower than prior to the attacks. As a result,
American reduced its operating schedule to approximately 80 percent of the
schedule it flew prior to September 11, 2001. In addition, as a result of its
schedule reduction and the sharp fall off in passenger traffic, the Company
eliminated approximately 20,000 jobs. American's future schedule will vary as it
reacts to continuing changes in demand and yields, as well as normal factors
such as seasonality and fleet composition.
On September 22, 2001, President Bush signed into law the Air
Transportation Safety and System Stabilization Act (the "Stabilization Act")
which for all United States airlines and air cargo carriers ("air
carriers")provides for, among other things: (i) $5 billion in compensation for
direct losses (including lost revenue) incurred as a result of the federal
ground stop order and for incremental losses incurred through December 31, 2001
as a direct result of the terrorist attacks on the United States, of which the
Company and TWA LLC had received approximately $703 million as of December 31,
2001 and expect to receive additional payments in 2002 in excess of $100
million; (ii) subject to certain conditions, the availability of up to $10
billion in federal government guarantees of certain loans made to air carriers
for which credit is not reasonably available as determined by a newly
established Air Transportation Stabilization Board; (iii) the authority of the
Secretary of Transportation to reimburse air carriers, which authority expired
180 days after the enactment of the Stabilization Act, for the increase in the
cost of insurance, for coverage ending before October 1, 2002, over the premium
in effect for a comparable operation during the period September 4, 2001 to
September 10, 2001; (iv) at the discretion of the Secretary of Transportation, a
$100 million limit on the liability of any air carrier to third parties with
respect to acts of terrorism committed on or to such air carrier during the
180-day period following the enactment of the Stabilization Act; (v) the
extension of the due date for the payment by eligible air carriers of certain
excise taxes; and (vi) compensation to individual claimants who were physically
injured or killed as a result of the terrorist attacks of September 11, 2001. In
addition, the Stabilization Act provides that, notwithstanding any other
provision of law, liability for all claims, whether for compensatory or punitive
damages, arising from the terrorist-related events of September 11, 2001 against
any air carrier shall not exceed liability coverage maintained by the air
carrier.
For additional information concerning the consequences of the events of
September 11, 2001, see American's Annual Report on Form 10-K for the year ended
December 31, 2001 and Quarterly Report on Form 10-Q for the quarter ended March
31, 2002.
16
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table presents summary historical consolidated financial data
and operating data of American. We derived the annual historical financial data
from American's audited consolidated financial statements and the notes thereto.
These audited consolidated financial statements are incorporated by reference in
this Prospectus and it should be read in conjunction with them. We derived the
consolidated financial data for the interim periods ended March 31, 2002 and
2001 from American's unaudited consolidated financial statements. These
unaudited consolidated financial statements are also incorporated by reference
in this Prospectus and it should be read in conjunction with them. The data for
such interim periods will not be indicative of results for the year as a whole.
On April 9, 2001, American purchased substantially all of the assets of TWA.
This acquisition was accounted for under the purchase method of accounting and,
accordingly, the operating results of TWA since the date of the acquisition have
been included in the summary consolidated financial statements. Accordingly, the
operating statistics of TWA are included in Operating Statistics for the three
months ended March 31, 2002, but are not included in Operating Statistics for
any other period. See "Where You Can Find More Information."
The financial and operating results of American continue to be adversely
impacted by the terrorist attacks of September 11, 2001. See "Risk
Factors -- Special Risk Factor."
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ------------------------------
2002 2001 2001 2000 1999
-------- -------- -------- -------- --------
(IN MILLIONS)
STATEMENT OF OPERATIONS DATA:
Revenues:
Passenger............................... $ 3,484 $ 3,935 $ 15,780 $ 16,394 $ 14,724
Cargo................................... 133 174 656 714 635
Other................................... 191 269 1,048 1,009 979
Operating expenses(1)..................... 4,530 4,390 19,758 16,873 15,318
Operating income (loss)(1)................ (722) (12) (2,274) 1,244 1,020
Other income (expense), net............... (92) (32) (175) 38 34
Earnings (loss) before income taxes(1).... (814) (44) (2,449) 1,282 1,054
Net earnings (loss)(1).................... $ (542) $ (34) $ (1,562) $ 778 $ 627
OTHER DATA:
Ratio of earnings to fixed charges(2)..... -- -- -- 2.07 1.95
OPERATING STATISTICS(3):
Scheduled Service:
Available seat miles (millions)(4)...... 40,089 38,977 153,035 161,030 161,211
Revenue passenger miles (millions)(5)... 27,817 26,452 106,224 116,594 112,067
Passenger load factor (%)(6)............ 69.4% 67.9% 69.4% 72.4% 69.5%
Passenger revenue yield per passenger
mile (cents)(7)...................... 12.52 14.88 13.28 14.06 13.14
Passenger revenue per available seat
mile (cents)......................... 8.69 10.10 9.22 10.18 9.13
Operating expenses per available seat
mile (cents)(8)...................... 11.30 11.26 11.14 10.48 9.50
Cargo ton miles (millions)(9)........... 463 549 2,058 2,280 2,068
Cargo revenue yield per ton mile
(cents).............................. 28.74 31.68 30.24 31.31 30.70
17
AT AT AT
MARCH 31, DECEMBER 31, DECEMBER 31,
2002 2001 2000
--------- ------------ ------------
(IN MILLIONS)
BALANCE SHEET DATA:
Cash and short-term investments........................... $ 2,302 $ 2,973 $ 1,635
Total assets.............................................. 30,560 30,477 23,161
Current liabilities....................................... 7,084 7,173 6,761
Long-term debt, less current maturities................... 6,947 6,530 2,601
Obligations under capital leases, less current
obligations............................................. 1,331 1,396 1,163
Stockholder's equity...................................... 4,942 5,479 6,435
---------------
(1) Operating expenses, operating income (loss), earnings (loss) before income
taxes and net earnings (loss) for the year ended December 31, 2001 included
an asset impairment charge of approximately $911 million relating to the
write-down of the carrying value of 71 Fokker 100 aircraft and related
rotables to their estimated fair market value. In addition, such amounts
include $827 million in compensation under the Stabilization Act recognized
during the year ended December 31, 2001 and approximately $337 million in
special charges related to the terrorist attacks of September 11, 2001,
primarily related to aircraft groundings, facility exit costs and employee
charges.
(2) In April 2001 the Board of Directors of American approved the guarantee by
American of the existing debt obligations of its parent, AMR Corporation. As
of March 31, 2002, this guarantee covered approximately $634 million of
unsecured debt and approximately $573 million of secured debt. The impact of
these unconditional guarantees is not included in the above computation.
Earnings were inadequate to cover fixed charges by $834 million and $83
million for the three months ended March 31, 2002 and March 31, 2001,
respectively, and by $2,584 million for the year ended December 31, 2001.
(3) Operating Statistics for the three months ended March 31, 2002 include
operating statistics of TWA Airlines LLC, the entity holding the assets
acquired from TWA, whereas Operating Statistics for all other periods do
not.
(4) "Available seat miles" represents the number of seats available for
passengers multiplied by the number of scheduled miles the seats are flown.
(5) "Revenue passenger miles" represents the number of miles flown by revenue
passengers in scheduled service.
(6) "Passenger load factor" is calculated by dividing revenue passenger miles by
available seat miles, and represents the percentage of aircraft seating
capacity utilized.
(7) "Passenger revenue yield per passenger mile" represents the average revenue
received from each mile a passenger is flown in scheduled service.
(8) Operating expenses per available seat mile have been restated for the years
ended December 31, 2001, 2000 and 1999 to include certain airline related
businesses. Operating expenses per available seat mile for the year ended
December 31, 2001 exclude an asset impairment charge, compensation under the
Stabilization Act and special charges related to the terrorist attacks of
September 11, 2001 recognized in the period then ended.
(9) "Cargo ton miles" represents the tonnage of freight and mail carried
multiplied by the number of miles flown.
18
RISK FACTORS
You should carefully consider the following risk factors as well as other
information contained in this Prospectus.
SPECIAL RISK FACTOR
On September 11, 2001, two of American's aircraft were hijacked and
destroyed in terrorist attacks on The World Trade Center in New York City and
the Pentagon in northern Virginia. On the same day, two United Air Lines
aircraft were also hijacked and used in terrorist attacks. In addition to the
loss of all passengers and crew on board the aircraft, these attacks resulted in
untold deaths and injuries to persons on the ground and massive property damage.
In response to those terrorist attacks, the FAA issued a federal ground stop
order on September 11, 2001 prohibiting all flights to, from and within the
United States.
Among the effects experienced by American from the September 11, 2001
terrorist attacks have been significant flight disruption costs caused by the
FAA's imposed grounding of the U.S. airline industry's fleet, significantly
increased security and other costs, significantly higher ticket refunds,
significantly reduced load factors and significantly reduced yields. The
occurrence of another terrorist attack (whether domestic or international and
whether against American or another entity) could again have a material adverse
impact on American, its finances and/or its operations.
The impact of the events of September 11, 2001 and their aftermath on
American and the sufficiency of its financial resources to absorb that impact
will depend on a number of factors, including: (i) the magnitude and duration of
the adverse impact of the terrorist attacks on the economy in general and the
airline industry in particular; (ii) American's ability to reduce its operating
costs and conserve its financial resources, taking into account the increased
costs it will incur as a consequence of the attacks, including those referred to
below; (iii) the higher costs associated with new airline security directives
including the impact of the Aviation and Transportation Act enacted in November
2001 and any other increased regulation of air carriers; (iv) the significantly
higher costs of aircraft insurance coverage for future claims caused by acts of
war, terrorism, sabotage, hijacking and other similar perils, and the extent to
which such insurance will continue to be available; (v) American's ability to
raise additional financing and the cost of such financing; (vi) the price and
availability of jet fuel, and the availability to American of fuel hedges in
light of current industry conditions; and (vii) the extent of the benefits
received by American under the Stabilization Act, taking into account any
challenges to and interpretations or amendments of the Stabilization Act or
regulations issued pursuant thereto. For a description of the Stabilization Act,
see "Summary -- The Company."
Due in part to the lack of predictability of future traffic, business mix
and yields, American continues to have difficulty in estimating the impact on it
of the events of September 11, 2001 and their consequences, and the sufficiency
of its financial resources to absorb that impact. However, given the magnitude
of these unprecedented events and the possible subsequent effects, as well as
higher unit costs coupled with the revenue pressures seen in the first quarter
of 2002 and expected to continue into the second quarter, American expects to
incur a loss in the second quarter (although American does not expect this loss
to be of the same magnitude as its first quarter loss), and will likely incur a
loss for 2002.
RISK FACTORS RELATING TO THE CERTIFICATES AND THE EXCHANGE OFFER
CONSEQUENCES OF FAILURE TO EXCHANGE
If you fail to deliver the proper documentation to the Exchange Agent in a
timely fashion, your tender of Old Certificates will be rejected. The New
Certificates will be issued in exchange for the Old Certificates only after
timely receipt by the Exchange Agent of the Old Certificates, a properly
completed and executed Letter of Transmittal, or an Agent's Message in lieu of
the Letter of Transmittal, and all other required documentation. If you wish to
tender your Old Certificates in exchange for New Certificates, you should allow
sufficient time to ensure timely delivery. None of the Exchange Agent, the
Trustee or American is under any duty to give holders of Old Certificates
notification of defects or irregularities with respect to tenders of Old
Certificates for exchange.
19
If you do not exchange your Old Certificates for New Certificates pursuant
to the Exchange Offer, or if your tender of Old Certificates is not accepted,
your Old Certificates will continue to be subject to the restrictions on
transfer of such Old Certificates as set forth in the legend thereon. In
general, you may not offer or sell Old Certificates unless they are registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. We do not currently anticipate that we will register the Old Certificates
under the Securities Act. To the extent that Old Certificates are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Old Certificates could be adversely affected.
APPRAISALS AND REALIZABLE VALUE OF AIRCRAFT
Three independent appraisal and consulting firms prepared appraisals of the
Aircraft in connection with the sale of the Class D Certificates in December
2001. The appraisal letters provided by these firms are annexed to this
Prospectus as Appendix II. We have not undertaken to update the appraisals in
connection with the Exchange Offer. Such appraisals, which are based on the base
value of the Aircraft, rely on varying assumptions and methodologies (which may
differ among the appraisers), and may not reflect current market conditions that
could affect the current market value of the Aircraft. Base value is the
theoretical value for an aircraft that assumes a balanced market, while current
market value is the value for an aircraft in the actual market. The appraisals
were prepared without a physical inspection of the Aircraft. Appraisals that are
based on other assumptions and methodologies may result in valuations that are
materially different from those contained in such appraisals. In addition, the
appraisals of two Boeing 757-223ER aircraft, three Boeing 757-223 aircraft and
one Boeing 777-223ER aircraft were prepared based on the scheduled delivery
months of such Aircraft, which months are the month prior to the month each such
Aircraft was actually delivered. See "Description of the Aircraft and the
Appraisals -- The Appraisals."
An appraisal is only an estimate of value. It does not necessarily indicate
the price at which an aircraft may be purchased from the aircraft manufacturer.
Nor should an appraisal be relied upon as a measure of realizable value. The
proceeds realized upon a sale of any Aircraft may be less than its appraised
value. The value of an Aircraft if remedies are exercised under the applicable
Indenture will depend on various factors, including:
- market and economic conditions;
- the supply of similar aircraft;
- the availability of buyers;
- the condition of the Aircraft; and
- whether the Aircraft are sold separately or as a block.
In addition, the value of the Aircraft will likely be negatively affected,
at least initially, as a consequence of the events of September 11, 2001
referred to under "-- Special Risk Factor." Although each of the appraisals is
dated after September 11, 2001, each appraisal contains a disclaimer as to the
effect of the events of that day on aircraft values. In their appraisal letters
certain of the appraisers point out that current market values of aircraft at
the present time are likely to be less than base values and that aircraft values
are presently uncertain and unstable. See the appraisal letters annexed to this
Prospectus as Appendix II. Accordingly, we cannot assure you that the proceeds
realized upon any such exercise of remedies would be sufficient to satisfy in
full payments due on the Equipment Notes relating to such Aircraft or the full
amount of distributions expected on the Certificates.
REPOSSESSION
There are no general geographic restrictions on our ability to operate the
Aircraft. Although we do not currently intend to do so, we are permitted to
register the Aircraft in certain foreign jurisdictions and to lease the Aircraft
to unrelated parties. It may be difficult, time-consuming and expensive for the
Loan Trustee to exercise its repossession rights if an Aircraft is located
outside the United States, is registered in a foreign
20
jurisdiction or is leased to a foreign or domestic operator. Additional
difficulties may exist when a lessee is the subject of a bankruptcy, insolvency
or similar event.
In addition, certain jurisdictions may allow for certain other liens or
other third party rights to have priority over the related Loan Trustee's
security interest in an Aircraft. As a result, the benefits of the related Loan
Trustee's security interest in an Aircraft may be less than they would be if
such Aircraft were located or registered in the United States.
PRIORITY OF DISTRIBUTIONS; SUBORDINATION
Under the Intercreditor Agreement, the Liquidity Provider will receive
payment of all amounts owed to it (including reimbursement of drawings made to
pay interest on more junior Classes of Certificates) before the holders of any
Class of Certificates receive any funds. In addition, in certain default
situations the Subordination Agent and the Trustees will receive certain
payments before the holders of any Class of Certificates receive distributions.
See "Description of the Intercreditor Agreement -- Priority of Distributions."
Certain Classes of Certificates are subordinated to other Classes in rights
to distributions. See "Description of the Certificates -- Subordination."
Consequently, a payment default under any Equipment Note or a Triggering Event
may cause the distribution to more senior Classes of Certificates of payments
received on one or more junior series of Equipment Notes. If this should occur,
the interest accruing on the remaining Equipment Notes may be less than the
amount of interest expected to be distributed on the remaining Certificates of
more junior Classes. This is because the interest that Certificates of junior
Classes are expected to receive may accrue at a higher rate than interest on the
remaining Equipment Notes. As a result of this possible interest shortfall, the
holders of one or more junior Classes of Certificates may not receive the full
amount expected after a payment default under any Equipment Note even if all
Equipment Notes are eventually paid in full.
However, if American is in bankruptcy or other specified defaults have
occurred but American is continuing to meet certain of its payment obligations
and the applicable loan to Aircraft value tests are met, the subordination
provisions applicable to the Certificates permit distributions to be made to
junior Certificates prior to making distributions in full on more senior
Certificates. This could include distributions in respect of the principal paid
at maturity of the Series C Equipment Notes held in the Class C Trust and the
Series D Equipment Notes held in the Class D Trust.
CONTROL OVER COLLATERAL; SALE OF COLLATERAL
If an Indenture Event of Default is continuing, subject to certain
conditions, the Loan Trustee under the related Indenture will be directed by the
Controlling Party in exercising remedies under such Indenture, including
accelerating the applicable Equipment Notes or foreclosing the lien on the
Aircraft securing such Equipment Notes. See "Description of the
Certificates -- Indenture Events of Default and Certain Rights upon an Indenture
Event of Default."
The Controlling Party will be:
- the Class A-1 Trustee or Class A-2 Trustee, whichever represents the
Class with the larger Pool Balance of Certificates outstanding at the
time the Indenture Event of Default occurs;
- upon payment of Final Distributions to the holders of such larger Class,
the other of the Class A-1 Trustee or Class A-2 Trustee;
- upon payment of Final Distributions to the holders of Class A-1 and Class
A-2 Certificates, the Class B Trustee;
- upon payment of Final Distributions to the holders of Class B
Certificates, the Class C Trustee;
- upon payment of Final Distributions to the holders of Class C
Certificates, the Class D Trustee; and
21
- under certain circumstances, and notwithstanding the foregoing, the
Liquidity Provider with the greatest amount owed to it.
During the continuation of any Indenture Event of Default, the Controlling
Party may accelerate the Equipment Notes issued under the related Indenture and
sell such Equipment Notes or the related Aircraft, subject to certain
limitations. See "Description of the Intercreditor Agreement -- Intercreditor
Rights -- Sale of Equipment Notes or Aircraft." The market for Equipment Notes
during any Indenture Event of Default may be very limited, and we cannot assure
you as to whether they could be sold or the price at which they could be sold.
If the Controlling Party sells any Equipment Notes for less than their
outstanding principal amount, certain Certificateholders will receive a smaller
amount of principal distributions than anticipated and will not have any claim
for the shortfall against us or any Trustee.
In addition, the Equipment Notes are not cross-collateralized. This means
that the Equipment Notes secured by an Aircraft are not secured by any other
Aircraft. Accordingly, any proceeds realized from the sale of an Aircraft or
other exercise of default remedies with respect to such Aircraft in excess of
the principal amount of the Equipment Notes related to such Aircraft will not be
available to cover shortfalls, if any, on the Equipment Notes relating to any
other Aircraft. See "Description of the Equipment Notes -- Remedies."
RATINGS OF THE CERTIFICATES
When issued the Class A-1, Class A-2, Class B, Class C and Class D
Certificates were assigned ratings by Moody's Investors Services, Inc.
("Moody's") of A2, A2, A3, Baa2 and Ba2, respectively, and by Standard & Poor's
Ratings Services, a division of McGraw-Hill Companies, Inc. ("Standard &
Poor's," and together with Moody's, the "Rating Agencies") of AA+, AA+, AA--, A
and BBB-, respectively. Such ratings were subsequently downgraded by Moody's.
Currently, the Class A-1, Class A2, Class B, Class C and Class D Certificates
are rated Baa1, Baa1, Baa2, Ba1 and Ba3, respectively, by Moody's. The ratings
assigned to the Certificates by Standard & Poor's are on Standard & Poor's
CreditWatch with negative implications. A rating is not a recommendation to
purchase, hold or sell Certificates; and such rating does not address market
price or suitability for a particular investor. A rating may not remain for any
given period of time and may be lowered or withdrawn entirely by a Rating Agency
if in its judgment circumstances in the future (including the downgrading of
American or the Liquidity Provider) so warrant.
The ratings of each Class of Certificates are based primarily on the
default risk of the Equipment Notes held for such Class, the availability of the
Liquidity Facility for the benefit of holders of such Certificates, the
collateral value provided by the Aircraft securing such Equipment Notes and the
subordination provisions applicable to such Certificates. The foregoing ratings
address the likelihood of timely payment of interest when due on such
Certificates and the ultimate payment of principal of such Certificates by the
Final Legal Distribution Date. Such ratings do not address the possibility of
certain defaults, voluntary redemptions or other circumstances (such as a loss
event to an Aircraft) which could result in the payment of the outstanding
principal amount of such Certificates prior to the Final Legal Distribution
Date. See "Description of the Certificates."
The reduction, suspension or withdrawal of the ratings of the Certificates
will not, by itself, constitute an Event of Default.
NO PROTECTION AGAINST HIGHLY LEVERAGED OR EXTRAORDINARY TRANSACTIONS
The Certificates, the Equipment Notes and the related underlying agreements
do not contain any financial or other covenants or "event risk" provisions
protecting the Certificateholders in the event of a highly leveraged or other
extraordinary transaction affecting American or its affiliates. See "The
Company."
LIMITED ABILITY TO RESELL THE CERTIFICATES
Prior to the Exchange Offer, there has been no public market for the
Certificates. Neither American nor any Trust intends to apply for listing of the
Certificates on any securities exchange or otherwise. The Placement Agents may
assist in resales of the Certificates, but they are not required to do so. A
secondary
22
market for the Certificates may not develop. If a secondary market does develop,
it might not continue or it might not be sufficiently liquid to allow you to
resell any of your Certificates. If an active public market does not develop,
the market price and liquidity of the Certificates may be adversely affected.
THE EXCHANGE OFFER
The following summary describes certain provisions of the registration
rights agreements, dated as of October 4, 2001, October 26, 2001 and December
12, 2001, respectively (the "Registration Rights Agreements"), among American,
the Placement Agents and the Trustee. This summary does not purport to be
complete and is qualified in its entirety by reference to all of the provisions
of the Registration Rights Agreements, which have been filed as exhibits to the
Registration Statement. Copies are available as set forth under "Where You Can
Find More Information."
GENERAL
In connection with the issuance of the Old Certificates, the Placement
Agents became entitled to the benefits of the Registration Rights Agreements.
Pursuant to the Registration Rights Agreements, we have agreed to use our
reasonable best efforts to, within 270 calendar days after October 4, 2001,
which is the date the Class A-1, Class A-2 and Class B Certificates were issued
(the "Issuance Date"): (i) file the Registration Statement, of which this
Prospectus is a part, with the Commission for a registered exchange offer (the
"Exchange Offer") with respect to an issue of New Certificates identical in all
material respects to the Old Certificates (except that the New Certificates
would not contain terms with respect to transfer restrictions or interest rate
increases); (ii) cause the Registration Statement to become effective; (iii)
have the Registration Statement remain effective until the closing of the
Exchange Offer; and (iv) have the Exchange Offer consummated. However, if any
changes in law or the applicable interpretations of the staff of the Commission
do not permit us to effect the Exchange Offer, or if the Registration Statement
is not declared effective within 270 calendar days after the Issuance Date under
certain circumstances, or at the request of a holder not eligible to participate
in the Exchange Offer or under certain other circumstances described in the
Registration Rights Agreements, we have agreed to use our reasonable best
efforts to (a) file with the Commission a shelf registration statement (the
"Shelf Registration Statement") covering resales of the Old Certificates; (b)
cause the Shelf Registration Statement to be declared effective under the
Securities Act by the 270th calendar day after the Issuance Date; and (c) keep
effective the Shelf Registration Statement for a period of two years after its
effective date (or for such shorter period as shall end when all of the Old
Certificates covered by the Shelf Registration Statement have been sold pursuant
thereto or may be freely sold pursuant to Rule 144 under the Securities Act).
If neither the consummation of the Exchange Offer nor the declaration by
the Commission of the Shelf Registration Statement to be effective (each, a
"Registration Event") occurs on or prior to the 270th calendar day following the
Issuance Date, the interest rate per annum borne by the Equipment Notes and
passed through to holders of Old Certificates shall be increased by 0.50%
effective from and including July 1, 2002, to but excluding the date on which a
Registration Event occurs. If the Shelf Registration Statement ceases to be
effective at any time during the period we are required to keep such Shelf
Registration Statement effective for more than 60 days, whether or not
consecutive, during any 12-month period, the interest rate per annum borne by
the Equipment Notes shall be increased by 0.50% from the 61st day such Shelf
Registration Statement ceases to be effective during the applicable period until
such time as the Shelf Registration Statement again becomes effective.
If the Exchange Offer is consummated, we will not be required to file the
Shelf Registration Statement other than for those Old Certificates held by the
Placement Agents if they are not eligible to participate in the Exchange Offer,
and the interest rate on the Equipment Notes will not be increased.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, we will accept for exchange all
Old Certificates validly tendered prior to 5:00 p.m., New York City time, on the
Expiration Date. New Certificates of the same class will be issued in exchange
for an equal face amount (and current Pool Balance) of outstanding Old
Certificates accepted in the Exchange Offer. Old
23
Certificates may be tendered only in integral multiples of $1,000. The Exchange
Agent will act as agent for the tendering holders of Old Certificates for the
purpose of receiving New Certificates from the Trustee and delivering New
Certificates to such tendering holders. Old Certificates shall be deemed to have
been accepted as validly tendered when, as and if we have given oral or written
notice thereof to the Exchange Agent.
The Exchange Offer is not conditioned upon any minimum amount of Old
Certificates being tendered for exchange. However, the obligation to accept Old
Certificates for exchange pursuant to the Exchange Offer is subject to certain
conditions as set forth herein under "-- Conditions."
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, we believe that the New Certificates
issued pursuant to the Exchange Offer in exchange for Old Certificates may be
offered for resale, resold or otherwise transferred by a holder thereof (other
than (i) a broker-dealer who purchased such Old Certificates directly from the
Trustee for its own account or (ii) a person that is an "affiliate," as defined
in Rule 405 under the Securities Act, of ours or of any Trustee) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that the holder is acquiring such New Certificates in
its ordinary course of business and such holder has no arrangements or
understanding with any person to participate in the distribution of the New
Certificates. Holders of Old Certificates wishing to accept the Exchange Offer
must represent to us that such conditions have been met. We have not sought, and
do not intend to seek, a no-action letter from the Commission with respect to
the effects of the Exchange Offer, and there can be no assurance that the staff
of the Commission would make a similar determination with respect to the New
Certificates as it has in such no-action letters.
Each broker-dealer that receives New Certificates for its own account as a
result of market-making or other trading activities must acknowledge that it
will deliver a prospectus in connection with any resale of such New
Certificates. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, such broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by such a
broker-dealer in connection with resales of New Certificates received in
exchange for Old Certificates. We have agreed that, for a period of 90 days
after the Expiration Date, we will make this Prospectus and any amendment or
supplement to this Prospectus available to any such broker-dealer for use in
connection with such resales. See "Plan of Distribution." If a broker-dealer
would receive New Certificates for its own account in exchange for Old
Certificates, where such Old Certificates were not acquired as a result of
market-making or other trading activities, such broker-dealer will not be able
to participate in the Exchange Offer.
Upon consummation of the Exchange Offer, subject to certain exceptions,
holders of Old Certificates who do not exchange their Old Certificates for New
Certificates in the Exchange Offer will no longer be entitled to registration
rights and will not be able to offer or sell their Old Certificates, unless such
Old Certificates are subsequently registered under the Securities Act which,
subject to limited exceptions, we will have no obligation to do, except pursuant
to an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. See "Risk Factors -- Risk Factors Relating to
the Certificates and the Exchange Offer -- Consequences of Failure to Exchange."
This Prospectus, together with the Letter of Transmittal, is being sent to
all registered holders of Certificates as of , 2002. As of the date of
this Prospectus, $1,872,832,000 face amount ($1,871,943,809 Pool Balance) of Old
Certificates are outstanding.
If any tendered Old Certificates are not accepted for exchange because of
an invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Old Certificates will be returned, without
expenses, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holder of Old Certificates who tender in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Certificates pursuant to the Exchange Offer. We will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "-- Fees and Expenses."
24
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The term "Expiration Date" means , 2002 ( calendar days following
the commencement of the Exchange Offer), unless we, in our sole discretion,
extend the Exchange Offer, in which case the term "Expiration Date" shall mean
the latest date to which the Exchange Offer is extended. Notwithstanding any
extension of the Exchange Offer, if the Exchange Offer is not consummated by
July 1, 2002, the interest rate borne by the Equipment Notes and passed through
to the Certificateholders is subject to increase. See "-- General."
In order to extend the Expiration Date, we will notify the Exchange Agent
of any extension by oral or written notice and will mail to the record holders
of Old Certificates an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. Such announcement may state that we are extending the Exchange Offer for a
specified period of time.
We reserve the right:
- to delay acceptance of any Old Certificates, to extend the Exchange Offer
or to terminate the Exchange Offer and not permit acceptance of Old
Certificates not previously accepted if any of the conditions set forth
herein under "-- Conditions" shall have occurred and shall not have been
waived by us, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent; and
- to amend the terms of the Exchange Offer in any manner deemed by us to be
advantageous to the holders of the Old Certificates.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
Exchange Agent. If the Exchange Offer is amended in a manner determined by us to
constitute a material change, we will promptly disclose such amendment in a
manner reasonably calculated to inform the holders of the Old Certificates of
such amendment.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, we shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
DISTRIBUTIONS ON THE NEW CERTIFICATES
Interest on the Equipment Notes held by each Trust will be distributed to
holders of the New Certificates. The Equipment Notes held by each Trust will
accrue interest at the applicable rate per annum for such Trust set forth on the
cover page of this Prospectus. Distributions on the New Certificates will be
made from the last date on which distributions were made on the Old Certificates
surrendered in exchange therefor. No additional distributions will be made on
Old Certificates tendered and accepted for exchange.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, or an Agent's Message in lieu of
the Letter of Transmittal, have the signatures thereon guaranteed if required by
the Letter of Transmittal and mail or otherwise deliver such Letter of
Transmittal or such facsimile and any other required documents to the Exchange
Agent, or have the Agent's Message delivered, prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either:
- certificates for such Old Certificates must be received by the Exchange
Agent along with the Letter of Transmittal; or
25
- a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Certificates, if such procedure is available,
into the Exchange Agent's account at DTC pursuant to the procedure for
book-entry transfer described under "-- Book-Entry Transfer" below, must
be received by the Exchange Agent prior to the Expiration Date; or
- the holder must comply with the guaranteed delivery procedures described
below.
The method of delivery of Old Certificates, Letters of Transmittal and all
other required documents is at the election and risk of the holders. If such
delivery is by mail, it is recommended that registered mail, properly insured,
with return receipt requested, be used. In all cases, sufficient time should be
allowed to assure timely delivery. No Letters of Transmittal or Old Certificates
should be sent to American. Delivery of all documents must be made to the
Exchange Agent at its address set forth below. Holders may also request their
respective brokers, dealers, commercial banks, trust companies or nominees to
effect such tender for such holders.
The tender by a holder of Old Certificates will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth in this Prospectus and in the Letter of Transmittal.
Only a holder of Old Certificates may tender such Old Certificates in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means any
person in whose name Old Certificates are registered on the Trustee's books or
any other person who has obtained a properly completed bond power from the
registered holder, or any person whose Old Certificates are held of record by
DTC who desires to deliver Old Certificates by book-entry transfer at DTC.
Any beneficial holder whose Old Certificates are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on its behalf. If such beneficial holder wishes to
tender on its own behalf, such beneficial holder must, prior to completing and
executing the Letter of Transmittal and delivering its Old Certificates, either
make appropriate arrangements to register ownership of the Old Certificates in
such holder's name or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (each, an "Eligible Institution") unless the Old
Certificates tendered pursuant thereto are tendered (a) by a registered holder
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (b) for the
account of an Eligible Institution. If the Letter of Transmittal is signed by a
person other than the registered holder or holders of any Old Certificates
listed therein, such Old Certificates must be endorsed or accompanied by bond
powers and a proxy that authorizes such person to tender the Old Certificates on
behalf of the registered holder or holders, in either case as the name of the
registered holder or holders appears on the Old Certificates.
If the Letter of Transmittal or any Old Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by us,
submit with the Letter of Transmittal evidence satisfactory to us of their
authority to so act.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old Certificates will be
determined by us in our sole discretion, which determination will be final and
binding. We reserve the absolute right to reject any and all Old Certificates
not properly tendered or any Old Certificates our acceptance of which would, in
the opinion of our counsel, be unlawful. We also reserve the absolute right to
waive any irregularities or conditions of tender as to particular Old
Certificates. Our interpretation of the terms and conditions of the Exchange
Offer, including the instructions in the Letter of Transmittal, will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection
26
with tenders of Old Certificates must be cured within such time as we shall
determine. Neither we, the Exchange Agent nor any other person shall be under
any duty to give notification of defects or irregularities with respect to
tenders of Old Certificates nor shall any of us incur any liability for failure
to give such notification. Tenders of Old Certificates will not be deemed to
have been made until such irregularities have been cured or waived. Any Old
Certificates received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned without cost by the Exchange Agent to the tendering holder of such Old
Certificates (or, in the case of Old Certificates tendered by the book-entry
transfer procedures described below, such Old Certificates will be credited to
an account maintained with DTC), unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, we reserve the right in our sole discretion, subject to the
provisions of the Indenture, to (a) purchase or make offers for any Old
Certificates that remain outstanding subsequent to the Expiration Date or, as
set forth under "-- Conditions," to terminate the Exchange Offer in accordance
with the terms of the Registration Rights Agreements and (b) to the extent
permitted by applicable law, purchase Old Certificates in the open market, in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers could differ from the terms of the Exchange Offer.
By tendering, each holder of Old Certificates will represent to us that,
among other things, the New Certificates acquired pursuant to the Exchange Offer
are being obtained in the ordinary course of such holder's business, such holder
has no arrangements or understanding with any person to participate in the
distribution of the New Certificates and such holder is not an "affiliate," as
defined under Rule 405 of the Securities Act, of ours or of a Trustee, or if
such holder is an affiliate, that such holder will comply with the registration
and prospectus delivery requirements of the Securities Act to the extent
applicable. If the holder is not a broker-dealer, such holder will be required
to represent that it is not engaged in, and does not intend to engage in, a
distribution of New Certificates. If such holder is a broker-dealer that will
receive New Certificates for its own account in exchange for Old Certificates
that were acquired as a result of market-making or other trading activities, it
will be required to acknowledge that it will deliver a prospectus in connection
with any resale of such New Certificates.
ACCEPTANCE OF OLD CERTIFICATES FOR EXCHANGE; DELIVERY OF NEW CERTIFICATES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Old Certificates properly tendered will be accepted promptly after the
Expiration Date, and New Certificates of the same class will be issued promptly
after acceptance of the Old Certificates. See "-- Conditions" below. For
purposes of the Exchange Offer, Old Certificates shall be deemed to have been
accepted for exchange when, as and if we have given oral or written notice
thereof to the Exchange Agent.
In all cases, issuance of New Certificates for Old Certificates that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of (i) certificates for such Old
Certificates or a timely Book-Entry Confirmation of such Old Certificates into
the Exchange Agent's account at DTC , (ii) a properly completed and duly
executed Letter of Transmittal, or an Agent's Message in lieu of the Letter of
Transmittal, and (iii) all other required documents. If any tendered Old
Certificates are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or if Old Certificates are submitted for a
greater face amount than the holder desires to exchange, such unaccepted or
nonexchanged Old Certificates will be returned without expense to the tendering
holder thereof (or, in the case of Old Certificates tendered by the book-entry
transfer procedures described below, such unaccepted or nonexchanged Old
Certificates will be credited to an account maintained with DTC) as promptly as
practicable after the expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Certificates at DTC for purposes of the Exchange Offer. The Exchange
Agent and DTC have confirmed that any financial institution that is a DTC
Participant may use DTC's Automated Tender Offer Program ("ATOP")procedures
27
to tender Old Certificates in the Exchange Offer. Any financial institution that
is a participant in DTC's book-entry transfer system may make book-entry
delivery of Old Certificates by causing DTC to transfer such Old Certificates
into the Exchange Agent's account at DTC in accordance with DTC's ATOP
procedures for transfer. However, although delivery of Old Certificates may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
the Letter of Transmittal (or facsimile thereof) with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any
other required documents, must, in any case, be transmitted to and received by
the Exchange Agent at the address set forth below under "-- Exchange Agent" on
or prior to 5:00 p.m., New York City time, on the Expiration Date. The term
"Agent's Message" means a message, transmitted by DTC and received by the
Exchange Agent and forming part of a Book-Entry Confirmation, that states that
DTC has received an express acknowledgment from a DTC Participant tendering Old
Certificates that are the subject of such Book-Entry Confirmation that such DTC
Participant has received and agrees to be bound by the terms of the Letter of
Transmittal, and that we may enforce such agreement against such DTC
Participant. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
GUARANTEED DELIVERY PROCEDURES
Holders of the Old Certificates who wish to tender their Old Certificates
and (i) whose Old Certificates are not immediately available, or (ii) who cannot
deliver their Old Certificates, the Letter of Transmittal or any other required
documents to the Exchange Agent prior to the Expiration Date, or (iii) who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Certificates if:
- the tender is made through an Eligible Institution;
- prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery),
setting forth the name and address of the holder of Old Certificates and
the amount of Old Certificates tendered, stating that the tender is being
made thereby and guaranteeing that within five business days after the
Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Old Certificates to be
tendered in proper form for transfer, or a Book-Entry Confirmation, as
the case may be, and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
- such properly completed and executed Letter of Transmittal (or facsimile
thereof) together with the certificates representing the Old Certificates
to be tendered in proper form for transfer, or a Book-Entry Confirmation,
as the case may be, and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five business days
after the Expiration Date.
WITHDRAWAL OF TENDERS
Tenders of Old Certificates may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date, unless previously accepted for
exchange. For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be received by the Exchange Agent prior to 5:00 p.m.,
New York City time, on the Expiration Date at the address set forth below under
"-- Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Old Certificates to be withdrawn, identify the Old
Certificates to be withdrawn, including the face amount of such Old
Certificates, and (where certificates for Old Certificates have been
transmitted) specify the name in which such Old Certificates are registered, if
different from that of the withdrawing holder. If certificates for Old
Certificates have been delivered or otherwise identified to the Exchange Agent,
then, prior to the release of such certificates, the withdrawing holder must
also submit the serial numbers of the particular certificates to be withdrawn
and a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution unless such holder is an Eligible Institution. If Old Certificates
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at DTC to be credited with the withdrawn Old Certificates and otherwise comply
with the procedures of DTC.
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We will determine all questions as to the validity, form and eligibility
(including time of receipt) of such notices. Our determination shall be final
and binding on all parties. Any Old Certificates so withdrawn will be deemed not
to have been validly tendered for exchange for purposes of the Exchange Offer.
Any Old Certificates that have been tendered for exchange but that are not
exchanged for any reason will be returned to the holder thereof without cost to
such holder (or, in the case of Old Certificates tendered by book-entry transfer
into the Exchange Agent's account at DTC pursuant to the book-entry transfer
procedures described above, such Old Certificates will be credited to an account
maintained with DTC for the Old Certificates) as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Certificates may be retendered by following one of the procedures
described under "-- Procedures for Tendering" and "-- Book-Entry Transfer" above
at any time on or prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, we will not be
required to accept for exchange, or exchange New Certificates for, any Old
Certificates not previously accepted for exchange, and we may terminate or amend
the Exchange Offer before the acceptance of such Old Certificates, if: (i) any
action or proceeding is instituted or threatened in any court or by or before an
governmental agency with respect to the Exchange Offer that, in our judgement,
might materially impair our ability to proceed with the Exchange Offer or (ii)
any law, statute or regulation is proposed, adopted or enacted, or any existing
laws, statute, rule or regulation is interpreted by the staff of the Commission
or a court of competent jurisdiction in a manner that, in our judgement, might
materially impair our ability to proceed with the Exchange Offer. In addition,
we have no obligation to, and will not knowingly, permit acceptance of tenders
of Old Certificates from our affiliates (within the meaning of Rule 405 under
the Securities Act) or from any other holder or holders who are not eligible to
participate in the Exchange Offer under applicable law or interpretations
thereof by the Commission, or if the New Certificates to be received by such
holder or holders of Old Certificates in the Exchange Offer, upon receipt, will
not be tradable by such holder without restriction under the Securities Act and
the Exchange Act and without material restrictions under the "blue sky" or
securities laws of substantially all of the states of the United States.
EXCHANGE AGENT
State Street Bank and Trust Company of Connecticut, National Association,
has been appointed as Exchange Agent for the Exchange Offer. Questions and
requests for assistance and requests for additional copies of this Prospectus or
of the Letter of Transmittal should be directed to the Exchange Agent addressed
as follows:
State Street Bank and Trust Company of Connecticut, National Association
c/o State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, Massachusetts 02111
Attention: Ralph Jones/Account Services Group
Facsimile Transmission:
(617) 662-1452
Confirm by Telephone:
(617) 662-1548
FEES AND EXPENSES
We will pay the expenses of soliciting tenders pursuant to the Exchange
Offer. The principal solicitation for tenders pursuant to the Exchange Offer is
being made by mail; however, additional solicitations may be made by telegraph,
telephone, telecopy or in person by our officers and regular employees.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. We will, however, pay the Exchange
Agent reasonable and customary fees for its services and
29
will reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection with its services. We may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of the Prospectus and related documents to
the beneficial owners of the Old Certificates, and in handling or forwarding
tenders for exchange.
We will pay the expenses to be incurred in connection with the Exchange
Offer, including fees and expenses of the Exchange Agent and Trustee and
accounting, legal, printing and related fees and expenses. We will pay all
transfer taxes, if any, applicable to the exchange of Old Certificates pursuant
to the Exchange Offer. If, however, certificates representing New Certificates
or Old Certificates for amounts not tendered or accepted for exchange are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Old Certificates tendered, or if tendered Old
Certificates are registered in the name of any person other than the person
signing the Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the exchange of Old Certificates pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
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THE COMPANY
American, the principal subsidiary of AMR Corporation, was founded in 1934.
On April 9, 2001, American purchased substantially all of the assets and assumed
certain liabilities of TWA, the eighth largest United States air carrier.
American (including TWA) is the largest scheduled passenger airline in the
world. American provides scheduled jet service to numerous destinations
throughout North America, the Caribbean, Latin America, Europe and the Pacific.
American is also one of the largest scheduled air freight carriers in the world,
providing a full range of freight and mail services to shippers throughout its
system. The postal address for American's principal executive offices is P.O.
Box 619616, Dallas/Fort Worth Airport, Texas 75261-9616 (Telephone:
817-963-1234). See "Summary -- The Company."
USE OF PROCEEDS
There will be no cash proceeds to American as a result of the issuance of
New Certificates pursuant to the Exchange Offer. The proceeds from the sale of
the Old Certificates of each Trust were used to purchase the Equipment Notes
held by such Trust. A portion of the proceeds of the sale of the Old
Certificates was initially held in escrow and deposited with a depositary. Each
Trust withdrew funds from the deposits relating to such Trust to purchase
Equipment Notes from time to time as certain Aircraft were financed. The
Equipment Notes were issued by American. The proceeds from such issuance were
used by American to finance or refinance its acquisition of the Aircraft.
DESCRIPTION OF THE CERTIFICATES
The following summary describes material terms of the Certificates. This
summary does not purport to be complete and is qualified in its entirety by
reference to all of the provisions of the Basic Agreement, the Certificates, the
Trust Supplements, the Liquidity Facilities and the Intercreditor Agreement,
which have been filed as exhibits to the Registration Statement. Copies are
available as set forth under "Where You Can Find More Information."
Except as otherwise indicated, the following summary relates to each of the
Trusts and the Certificates issued by each Trust. The terms and conditions
governing each of the Trusts will be substantially the same, except as described
under "-- Subordination" below and except that the principal amount and
scheduled principal repayments of the Equipment Notes held by each Trust and the
interest rate and maturity date of the Equipment Notes held by each Trust will
differ. The references to Sections in parentheses in the following summary are
to the relevant Sections of the Basic Agreement unless otherwise indicated.
GENERAL
The Class A-1, Class A-2 and Class B Certificates were issued on October 4,
2001, the Class C Certificates were issued on October 26, 2001 and the Class D
Certificates were issued on December 12, 2001. Each Pass Through Certificate
represents a fractional undivided interest in one of the five American Airlines
2001-2 Pass Through Trusts: the "Class A-1 Trust," the "Class A-2 Trust," the
"Class B Trust," the "Class C Trust" and the "Class D Trust," and, collectively,
the "Trusts." The Trusts were formed pursuant to a pass through trust agreement
between American and State Street Bank and Trust Company of Connecticut,
National Association, as trustee (the "Basic Agreement"), and separate
supplements thereto (each, a "Trust Supplement" and, together with the Basic
Agreement, collectively, the "Pass Through Trust Agreements"). The trustee under
the Class A-1 Trust, the Class A-2 Trust, the Class B Trust, the Class C Trust
and the Class D Trust is referred to herein respectively as the "Class A-1
Trustee," the "Class A-2 Trustee," the "Class B Trustee," the "Class C Trustee"
and the "Class D Trustee," and collectively as the "Trustees." The Certificates
issued by the Class A-1 Trust, the Class A-2 Trust, the Class B Trust, the Class
C Trust and the Class D Trust are referred to herein respectively as the "Class
A-1 Certificates," the "Class A-2 Certificates," the "Class B Certificates," the
"Class C Certificates" and the "Class D Certificates." The Class A-1 Trust
purchased all of the Series A-1 Equipment Notes, the Class A-2 Trust purchased
all of the Series A-2 Equipment Notes, the Class B Trust purchased all of the
Series B Equipment Notes, the Class C Trust
31
purchased all of the Series C Equipment Notes and the Class D Trust purchased
all of the Series D Equipment Notes. The holders of the Class A-1 Certificates,
the Class A-2 Certificates, the Class B Certificates, the Class C Certificates
and the Class D Certificates are referred to herein respectively as the "Class
A-1 Certificateholders," the "Class A-2 Certificateholders," the "Class B
Certificateholders," the "Class C Certificateholders" and the "Class D
Certificateholders," and collectively as the "Certificateholders." The sum of
the initial principal balance of the Equipment Notes held by each Trust equaled
the original aggregate face amount of the Certificates of such Trust.
The New Certificates will be issued pursuant to the Pass Through Trust
Agreements. The forms and terms of the New Certificates are the same in all
material respects as the form and terms of the Old Certificates, except that:
- we registered the New Certificates under the Securities Act so their
transfer is not restricted like the Old Certificates;
- the New Certificates will not contain restrictions on transfer or
provisions relating to interest rate increases; and
- the New Certificates will be available only in book-entry form.
Each Certificate represents a fractional undivided interest in the Trust
created by the Basic Agreement and the applicable Trust Supplement pursuant to
which such Certificate is issued. (Section 2.01) The property of each Trust (the
"Trust Property") consists of:
- subject to the Intercreditor Agreement, the Equipment Notes held by such
Trust, all monies at any time paid thereon and all monies due and to
become due thereunder;
- the rights of such Trust under the Intercreditor Agreement (including all
rights to receive monies and other property payable thereunder);
- for the Class A-1, Class A-2, Class B and Class C Trusts, monies
receivable under the Liquidity Facility for such Trust; and
- funds from time to time deposited with the Trustee in accounts relating
to such Trust.
The Certificates represent interests in the respective Trusts only, and all
payments and distributions thereon will be made only from the Trust Property of
the related Trust. (Section 3.09) The Certificates do not represent indebtedness
of the Trusts, and references in this Prospectus to interest accruing on the
Certificates are included for purposes of computation only. The Certificates do
not represent an interest in or obligation of American, the Trustees, the
Subordination Agent, any of the Loan Trustees or any affiliate of any thereof.
Each Certificateholder by its acceptance of a Certificate agrees to look solely
to the income and proceeds from the Trust Property of the related Trust for
payments and distributions on such Certificates.
New Certificates of each Trust will be issued in fully registered form only
and will be subject to the provisions described below under "-- Book-Entry
Registration; Delivery and Form." New Certificates will be issued only in
minimum denominations of $1,000 and integral multiples thereof, except that one
Certificate of each Trust may be issued in a different denomination. (Section
3.01)
DISTRIBUTIONS OF PAYMENTS ON EQUIPMENT NOTES
The following description of distributions on the Certificates should be
read in conjunction with the description of the Intercreditor Agreement because
the Intercreditor Agreement may alter the following provisions in a default
situation. See "-- Subordination" and "Description of the Intercreditor
Agreement."
Payments of principal, Make-Whole Amount (if any) and interest on the
Equipment Notes or with respect to other Trust Property held in each Trust will
be distributed by the Trustee to Certificateholders of such Trust on the date
receipt of such payment is confirmed, except in the case of certain types of
Special Payments.
32
The Equipment Notes held in each Trust will accrue interest at the
applicable rate per annum for Certificates issued by such Trust set forth on the
cover page of this Prospectus, payable on April 1 and October 1 of each year,
commencing on April 1, 2002. Such interest payments will be distributed to
Certificateholders of such Trust on each such date until the final Distribution
Date for such Trust, subject to the Intercreditor Agreement. Interest will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Distributions of interest applicable to the Certificates issued by each of
the Class A-1, Class A-2, Class B and Class C Trusts are supported by a separate
Liquidity Facility provided by the Liquidity Provider for the benefit of the
holders of such Certificates in an aggregate amount sufficient to distribute
interest on the Pool Balance thereof at the Stated Interest Rate for such Trust
on up to three successive Regular Distribution Dates (without regard to any
future distributions of principal on such Certificates). The Liquidity Facility
for any Class of Certificates does not provide for drawings thereunder to pay
principal of or Make-Whole Amount on the Certificates of such Class, any
interest with respect to the Certificates of such Class in excess of the Stated
Interest Rate, or, notwithstanding the subordination provisions of the
Intercreditor Agreement, principal of or interest or Make-Whole Amount with
respect to the Certificates of any other Class. Therefore, only the holders of
the Certificates issued by a particular Trust are entitled to receive and retain
the proceeds of drawings under the Liquidity Facility for such Trust. See
"Description of the Liquidity Facilities." There is no liquidity facility
available with respect to the Class D Certificates.
Payments of principal of the Series A-1 Equipment Notes are scheduled to be
received by the Trustee in installments on April 1 and October 1 in certain
years, commencing on April 1, 2002 and ending on April 1, 2011. The entire
principal amount of the Series A-2 Equipment Notes is scheduled for payment on
October 1, 2011, the entire principal amount of the Series B Equipment Notes is
scheduled for payment on April 1, 2011 and the entire principal amount of the
Series C and Series D Equipment Notes is scheduled for payment on October 1,
2006.
Scheduled payments of interest and principal on the Equipment Notes are
referred to herein as "Scheduled Payments," and April 1 and October 1 of each
year are referred to herein as "Regular Distribution Dates" (each Regular
Distribution Date and Special Distribution Date, a "Distribution Date"). See
"Description of the Equipment Notes -- Principal and Interest Payments." The
"Final Legal Distribution Date" for the Class A-1 Certificates is October 1,
2012, for the Class A-2 Certificates is April 1, 2013, for the Class B
Certificates is October 1, 2012, for the Class C Certificates is April 1, 2008
and for the Class D Certificates is October 1, 2006.
The Trustee of each Trust will distribute, subject to the Intercreditor
Agreement, on each Regular Distribution Date to the Certificateholders of such
Trust all Scheduled Payments received in respect of Equipment Notes held on
behalf of such Trust, the receipt of which is confirmed by the Trustee on such
Regular Distribution Date. Each Certificateholder of each Trust will be entitled
to receive, subject to the Intercreditor Agreement, its proportionate share,
based upon its fractional interest in such Trust, of principal or interest on
Equipment Notes held on behalf of such Trust. Each such distribution of
Scheduled Payments will be made by the applicable Trustee to the
Certificateholders of record of the relevant Trust on the record date applicable
to such Scheduled Payment (generally, 15 days prior to each Regular Distribution
Date) subject to certain exceptions. (Section 4.02(a)) If a Scheduled Payment is
not received by the applicable Trustee on a Regular Distribution Date but is
received within five days thereafter, it will be distributed on the date
received to such holders of record. If it is received after such five-day
period, it will be treated as a Special Payment and distributed as described
below.
Any payment in respect of, or any proceeds of, any Equipment Note or the
Collateral under (and as defined in) any Indenture other than a Scheduled
Payment (each, a "Special Payment") will be distributed on, in the case of an
early redemption of any Equipment Note, the date of such early redemption (which
shall be a Business Day), and otherwise on the Business Day specified for
distribution of such Special Payment pursuant to a notice delivered by each
Trustee as soon as practicable after the Trustee has received funds for such
Special Payment (each a "Special Distribution Date"). Any such distribution will
be subject to the Intercreditor Agreement.
33
Each Trustee will mail a notice to the Certificateholders of the applicable
Trust stating the scheduled Special Distribution Date, the related record date,
the amount of the Special Payment and the reason for the Special Payment. In the
case of a redemption of the Equipment Notes held in the related Trust, such
notice will be mailed not less than 15 days prior to the date such Special
Payment is scheduled to be distributed, and in the case of any other Special
Payment, such notice will be mailed as soon as practicable after the Trustee has
confirmed that it has received funds for such Special Payment. (Section 4.02(c))
Each distribution of a Special Payment, other than a Final Distribution, on a
Special Distribution Date for any Trust will be made by the Trustee to the
Certificateholders of record of such Trust on the record date applicable to such
Special Payment. (Section 4.02(b)) See "-- Indenture Events of Default and
Certain Rights upon an Indenture Event of Default" and "Description of the
Equipment Notes -- Redemption."
Each Pass Through Trust Agreement requires that the Trustee establish and
maintain, for the related Trust and for the benefit of the Certificateholders of
such Trust, one or more non-interest bearing accounts (the "Certificate
Account") for the deposit of payments representing Scheduled Payments received
by such Trustee. Each Pass Through Trust Agreement requires that the Trustee
establish and maintain, for the related Trust and for the benefit of the
Certificateholders of such Trust, one or more accounts (the "Special Payments
Account") for the deposit of payments representing Special Payments received by
such Trustee, which will be non-interest bearing except in certain circumstances
where the Trustee may invest amounts in such account in certain Permitted
Investments. Pursuant to the terms of each Pass Through Trust Agreement, the
Trustee is required to deposit any Scheduled Payments relating to the applicable
Trust received by it in the Certificate Account of such Trust and to deposit any
Special Payments so received by it in the Special Payments Account of such
Trust. (Section 4.01) All amounts so deposited will be distributed by the
Trustee on a Regular Distribution Date or a Special Distribution Date, as
appropriate. (Section 4.02)
The Final Distribution for each Trust will be made only upon presentation
and surrender of the Certificates for such Trust at the office or agency of the
Trustee specified in the notice given by the Trustee of such Final Distribution.
See "-- Termination of the Trusts" below. Distributions in respect of
Certificates issued in global form will be made as described in "-- Book-Entry
Registration; Delivery and Form" below.
If any Distribution Date is a Saturday, a Sunday or other day on which
commercial banks are authorized or required to close in New York, New York,
Dallas, Texas, or the city and state in which the Trustee or any Loan Trustee is
located (any other day being a "Business Day"), distributions scheduled to be
made on such Regular Distribution Date or Special Distribution Date may be made
on the next succeeding Business Day without additional interest.
SUBORDINATION
The Certificates are subject to subordination terms set forth in the
Intercreditor Agreement which vary depending upon whether a Triggering Event has
occurred. See "Description of the Intercreditor Agreement -- Priority of
Distributions."
POOL FACTORS
The "Pool Balance" of the Certificates issued by any Trust indicates, as of
any date, the original aggregate face amount of the Certificates of such Trust
less the aggregate amount of all distributions made in respect of the
Certificates of such Trust other than distributions made in respect of interest
or Make-Whole Amount or reimbursement of any costs and expenses incurred in
connection therewith. The Pool Balance of the Certificates issued by any Trust
as of any Distribution Date will be computed after giving effect to any payment
of principal on the Equipment Notes or other Trust Property held in such Trust
and the distribution thereof to be made on that date. (Section 1.01)
The "Pool Factor" for each Trust as of any date is the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance as of such
date by (ii) the original aggregate face amount of the Certificates of such
Trust. The Pool Factor for each Trust as of any Distribution Date will be
computed after giving effect to any payment of principal on the Equipment Notes
or other Trust Property held in such Trust and the distribution thereof to be
made on that date. (Section 1.01) The Pool Factor for each Trust was
34
1.0000000 on the date of issuance of the Certificates; thereafter, the Pool
Factor for each Trust declines as described herein to reflect reductions in the
Pool Balance of such Trust. The amount of a Certificateholder's pro rata share
of the Pool Balance of a Trust can be determined by multiplying the original
denomination of the Certificateholder's Certificate of such Trust by the Pool
Factor for such Trust as of the applicable Distribution Date. Notice of the Pool
Factor and the Pool Balance for each Trust will be mailed to Certificateholders
of such Trust on each Distribution Date. (Section 4.03)
The following table sets forth the aggregate principal amortization
schedule for the Equipment Notes held in each Trust and resulting Pool Factors
with respect to such Trust. The actual aggregate principal amortization schedule
applicable to a Trust and the resulting Pool Factors with respect to such Trust
may differ from those set forth below because the scheduled distribution of
principal payments for any Trust would be affected if any Equipment Notes held
in such Trust are redeemed or if a default in payment of the principal of such
Equipment Notes occurred.
CLASS A-1 TRUST CLASS A-2 TRUST CLASS B TRUST CLASS C TRUST
----------------------- ------------------------ ------------------------ ------------------------
SCHEDULED EXPECTED SCHEDULED EXPECTED SCHEDULED EXPECTED SCHEDULED EXPECTED
PRINCIPAL POOL PRINCIPAL POOL PRINCIPAL POOL PRINCIPAL POOL
DATE PAYMENTS FACTOR PAYMENTS FACTOR PAYMENTS FACTOR PAYMENTS FACTOR
---- ----------- --------- ------------ --------- ------------ --------- ------------ ---------
January 1, 2002...... $ 0 1.0000000 $ 0 1.0000000 $ 0 1.0000000 $ 0 1.0000000
April 1, 2002........ 888,191 0.9972451 0 1.0000000 0 1.0000000 0 1.0000000
October 1, 2002...... 45,336,934 0.8566236 0 1.0000000 0 1.0000000 0 1.0000000
April 1, 2003........ 888,191 0.8538687 0 1.0000000 0 1.0000000 0 1.0000000
October 1, 2003...... 41,910,615 0.7238746 0 1.0000000 0 1.0000000 0 1.0000000
April 1, 2004........ 888,191 0.7211197 0 1.0000000 0 1.0000000 0 1.0000000
October 1, 2004...... 38,519,183 0.6016448 0 1.0000000 0 1.0000000 0 1.0000000
April 1, 2005........ 888,191 0.5988899 0 1.0000000 0 1.0000000 0 1.0000000
October 1, 2005...... 31,663,630 0.5006789 0 1.0000000 0 1.0000000 0 1.0000000
April 1, 2006........ 888,191 0.4979240 0 1.0000000 0 1.0000000 0 1.0000000
October 1, 2006...... 30,812,336 0.4023534 0 1.0000000 0 1.0000000 281,038,000 0.0000000
April 1, 2007........ 888,191 0.3995985 0 1.0000000 0 1.0000000 0 0.0000000
October 1, 2007...... 28,281,018 0.3118793 0 1.0000000 0 1.0000000 0 0.0000000
April 1, 2008........ 888,191 0.3091244 0 1.0000000 0 1.0000000 0 0.0000000
October 1, 2008...... 26,445,663 0.2270979 0 1.0000000 0 1.0000000 0 0.0000000
April 1, 2009........ 3,076,643 0.2175551 0 1.0000000 0 1.0000000 0 0.0000000
October 1, 2009...... 26,127,127 0.1365166 0 1.0000000 0 1.0000000 0 0.0000000
April 1, 2010........ 12,389,272 0.0980889 0 1.0000000 0 1.0000000 0 0.0000000
October 1, 2010...... 20,422,923 0.0347431 0 1.0000000 0 1.0000000 0 0.0000000
April 1, 2011........ 11,201,319 0.0000000 0 1.0000000 180,087,000 0.0000000 0 0.0000000
October 1, 2011...... 0 0.0000000 828,761,000 0.0000000 0 0.0000000 0 0.0000000
CLASS D TRUST
------------------------
SCHEDULED EXPECTED
PRINCIPAL POOL
DATE PAYMENTS FACTOR
---- ------------ ---------
January 1, 2002...... $ 0 1.0000000
April 1, 2002........ 0 1.0000000
October 1, 2002...... 0 1.0000000
April 1, 2003........ 0 1.0000000
October 1, 2003...... 0 1.0000000
April 1, 2004........ 0 1.0000000
October 1, 2004...... 0 1.0000000
April 1, 2005........ 0 1.0000000
October 1, 2005...... 0 1.0000000
April 1, 2006........ 0 1.0000000
October 1, 2006...... 260,542,000 0.0000000
April 1, 2007........ 0 0.0000000
October 1, 2007...... 0 0.0000000
April 1, 2008........ 0 0.0000000
October 1, 2008...... 0 0.0000000
April 1, 2009........ 0 0.0000000
October 1, 2009...... 0 0.0000000
April 1, 2010........ 0 0.0000000
October 1, 2010...... 0 0.0000000
April 1, 2011........ 0 0.0000000
October 1, 2011...... 0 0.0000000
The Pool Factor and Pool Balance of each Trust will be recomputed if there
has been an early redemption or default in the payment of principal or interest
in respect of one or more of the Equipment Notes held in a Trust, as described
in "-- Indenture Events of Default and Certain Rights upon an Indenture Event of
Default" and "Description of the Equipment Notes -- Redemption." Notice of the
Pool Factors and Pool Balances of each Trust as so recomputed after giving
effect to any Special Payment to Certificateholders resulting from such an early
redemption or default in respect of one more Equipment Notes will be mailed to
Certificateholders of Certificates of the related Trust with such Special
Payment, as described in "-- Reports to Certificateholders."
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, the applicable Trustee will include with each
distribution by it of a Scheduled Payment or Special Payment to
Certificateholders of the related Trust a statement, giving effect to such
distribution to be made on such Distribution Date, setting forth the following
information (per $1,000 aggregate principal amount of Certificate as to items
(1) and (2) below):
(1) the amount of such distribution allocable to principal and the
amount allocable to Make-Whole Amount, if any;
35
(2) the amount of such distribution allocable to interest;
(3) the Pool Balance and the Pool Factor for such Trust. (Trust
Supplements, Section 6.01)
As long as the Certificates are registered in the name of Cede, as nominee
for DTC, on the record date prior to each Distribution Date, the applicable
Trustee will request from DTC a securities position listing setting forth the
names of all DTC Participants reflected on DTC's books as holding interests in
such Certificates on such record date. On each Distribution Date, the applicable
Trustee will mail to each such DTC Participant the statement described above and
will make available additional copies as requested by such DTC Participant for
forwarding to Certificate Owners. (Section 4.03(a))
In addition, after the end of each calendar year, the Trustee will prepare
for each Certificateholder of each Trust at any time during the preceding
calendar year a report containing the sum of the amounts determined pursuant to
clauses (1) and (2) above with respect to the Trust for such calendar year or,
if such person was a Certificateholder during only a portion of such calendar
year, for the applicable portion of such calendar year, and such other items as
are readily available to such Trustee and which a Certificateholder reasonably
requests as necessary for the purpose of such Certificateholder's preparation of
its U.S. federal income tax returns. Such report and such other items will be
prepared on the basis of information supplied to the applicable Trustee by the
DTC Participants and will be delivered by such Trustee to such DTC Participants
to be available for forwarding by such DTC Participants to Certificate Owners.
(Trust Supplements, Section 6.01(b))
At such time, if any, as the Certificates are issued in the form of
definitive certificates, the applicable Trustee will prepare and deliver the
information described above to each Certificateholder of record of each Trust
with respect to such Certificates as the name and period of record ownership of
such Certificateholder appears on the records of the registrar of such
Certificates.
INDENTURE EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN INDENTURE EVENT OF
DEFAULT
Because the Equipment Notes issued under an Indenture will be held in more
than one Trust, a continuing Indenture Event of Default under such Indenture
would affect the Equipment Notes held by each such Trust. For a description of
the Indenture Events of Default under each Indenture, see "Description of the
Equipment Notes -- Indenture Events of Default, Notice and Waiver." There are no
cross-default or cross-acceleration provisions in the Indentures. Consequently,
events resulting in an Indenture Event of Default under any particular Indenture
may or may not result in an Indenture Event of Default under any other
Indenture. If an Indenture Event of Default occurs in fewer than all of the
Indentures related to a Trust, notwithstanding the treatment of Equipment Notes
issued under those Indentures under which an Indenture Event of Default has
occurred, payments of principal and interest on those Equipment Notes issued
pursuant to Indentures with respect to which an Indenture Event of Default has
not occurred will continue to be made as originally scheduled and distributed to
the holders of the Certificates, subject to the Intercreditor Agreement. See
"Description of the Intercreditor Agreement -- Priority of Distributions."
If the same institution acts as Trustee of multiple Trusts, in the absence
of instructions from the Certificateholders of any such Trust, such Trustee
could be faced with a potential conflict of interest upon an Indenture Event of
Default. In such event, each Trustee has indicated that it would resign as
Trustee of some or all such Trusts, and a successor trustee would be appointed
in accordance with the terms of the applicable Pass Through Trust Agreement.
State Street Bank and Trust Company of Connecticut, National Association, will
be the initial Trustee under each Trust.
Upon the occurrence and continuation of an Indenture Event of Default under
any Indenture, the Controlling Party will direct the Loan Trustee under such
Indenture in the exercise of remedies and may accelerate the Equipment Notes
issued under such Indenture and sell all (but not less than all) of such
Equipment Notes or the related Aircraft to any person, subject to certain
limitations. See "Description of the Intercreditor Agreement -- Intercreditor
Rights -- Sale of Equipment Notes or Aircraft." The proceeds of such sale will
be distributed pursuant to the provisions of the Intercreditor Agreement. Any
proceeds so distributed to any Trustee upon any such sale will be deposited in
the applicable Special Payments Account
36
and will be distributed to the Certificateholders of the applicable Trust on a
Special Distribution Date. (Sections 4.01 and 4.02) The market for Equipment
Notes at the time of the existence of an Indenture Event of Default may be very
limited, and there can be no assurance whether they could be sold or as to the
price at which they could be sold. If a Loan Trustee sells any such Equipment
Notes for less than their outstanding principal amount, certain
Certificateholders will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall against American, any
Liquidity Provider or any Trustee. Neither such Trustee nor the
Certificateholders of such Trust, furthermore, could take action with respect to
any remaining Equipment Notes held in such Trust as long as no Indenture Events
of Default existed with respect thereto.
Any amount, other than Scheduled Payments received on a Regular
Distribution Date or within five days thereafter, distributed to the Trustee of
any Trust by the Subordination Agent on account of the Equipment Notes or other
Trust Property held in such Trust following an Indenture Event of Default under
any Indenture will be deposited in the Special Payments Account for such Trust
and will be distributed to the Certificateholders of such Trust on a Special
Distribution Date. (Sections 4.01 and 4.02)
Any funds representing payments received with respect to any defaulted
Equipment Notes held in a Trust, or the proceeds from the sale of any Equipment
Notes, held by the Trustee in the Special Payments Account for such Trust will,
to the extent practicable, be invested and reinvested by such Trustee in certain
Permitted Investments pending the distribution of such funds on a Special
Distribution Date. (Section 4.04) "Permitted Investments" are defined as
obligations of the United States or agencies or instrumentalities thereof the
payment of which is backed by the full faith and credit of the United States and
which mature in not more than 60 days or such lesser time as is required for the
distribution of any such funds on a Special Distribution Date. (Section 1.01)
Each Pass Through Trust Agreement provides that the Trustee of the related
Trust will, within 90 days after the occurrence of a default (as defined below)
known to it, give to the Certificateholders of such Trust notice, transmitted by
mail, of such default, unless such default shall have been cured or waived;
provided that, (i) in the case of defaults not relating to the payment of money,
the Trustee shall not give such notice until the earlier of the time at which
such default becomes an "event of default" and the expiration of 60 days from
the occurrence of such default and (ii) except in the case of default in a
payment of principal, Make-Whole Amount, if any, or interest on any of the
Equipment Notes held in such Trust, the applicable Trustee will be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interests of such Certificateholders. (Section 7.02) The
term "default" with respect to a Trust, for the purpose of the provision
described in this paragraph only, means an event that is, or after notice or
lapse of time or both would become, an event of default or a Triggering Event
with respect to such Trust. The term "event of default" with respect to a Trust
means an Indenture Event of Default under any Indenture pursuant to which
Equipment Notes held by such Trust were issued.
Subject to certain qualifications set forth in each Pass Through Trust
Agreement and to the Intercreditor Agreement, the Certificateholders of each
Trust holding Certificates evidencing fractional undivided interests aggregating
not less than a majority in interest in such Trust will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee with respect to such Trust or pursuant to the terms of the
Intercreditor Agreement, or exercising any trust or power conferred on such
Trustee under such Pass Through Trust Agreement or the Intercreditor Agreement,
including any right of such Trustee as Controlling Party under the Intercreditor
Agreement or as holder of the Equipment Notes (the "Note Holder"). (Section
6.04)
Subject to the Intercreditor Agreement, the holders of the Certificates of
a Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust may on behalf of the holders of all the
Certificates of such Trust waive any past "default" or "event of default" under
the related Pass Through Trust Agreement and its consequences or, if the Trustee
of such Trust is the Controlling Party, may direct the Trustee to instruct the
applicable Loan Trustee to waive any past Indenture Event of Default and its
consequences; provided, however, the consent of each holder of a Certificate of
a Trust is required to waive (i) a default in the deposit of any Scheduled
Payment or Special Payment or in the distribution thereof, (ii) a
37
default in payment of the principal, Make-Whole Amount, if any, or interest with
respect to any of the Equipment Notes held in such Trust and (iii) a default in
respect of any covenant or provision of the related Pass Through Trust Agreement
that cannot be modified or amended without the consent of each Certificateholder
of such Trust affected thereby. (Section 6.05) Each Indenture provides that,
with certain exceptions, the holders of the majority in aggregate unpaid
principal amount of the Equipment Notes issued thereunder may on behalf of all
such Note Holders waive any past default or Indenture Event of Default
thereunder. Notwithstanding the foregoing provisions of this paragraph, however,
pursuant to the Intercreditor Agreement only the Controlling Party is entitled
to waive any such past default or Indenture Event of Default.
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
After the occurrence and during the continuation of a Triggering Event,
with ten days' prior written notice to the Trustee and each Certificateholder of
the same Class:
- if either the Class A-1 or Class A-2 Certificateholders are then
represented by the Controlling Party, the Certificateholders of such
Class that is not so represented will have the right to purchase all, but
not less than all, of the Certificates of such Class that is so
represented;
- the Class B Certificateholders will have the right to purchase all, but
not less than all, of the Class A-1 and Class A-2 Certificates;
- the Class C Certificateholders will have the right to purchase all, but
not less than all, of the Class A-1, Class A-2 and Class B Certificates;
- the Class D Certificateholders will have the right to purchase all, but
not less than all, of the Class A-1, Class A-2, Class B and Class C
Certificates; and
- if the Class E Certificates are issued as described under "-- Possible
Issuance of Series E Equipment Notes," the Class E Certificateholders
will have the right to purchase all, but not less than all, of the Class
A-1, Class A-2, Class B, Class C and Class D Certificates.
In each case the purchase price for a Class of Certificates will be equal
to the Pool Balance of such Class plus accrued and undistributed interest
thereon to the date of purchase, without Make-Whole Amount but including any
other amounts then due and payable to the Certificateholders of such Class. Such
purchase right may be exercised by any Certificateholder of the Class or Classes
entitled to such right. In each case, if prior to the end of the ten-day notice
period, any other Certificateholder of the same Class notifies the purchasing
Certificateholder that the other Certificateholder wants to participate in such
purchase, then such other Certificateholder may join with the purchasing
Certificateholder to purchase the Certificates pro rata based on the interest in
the Trust held by each Certificateholder. (Trust Supplements, Section 4.01)
PTC EVENT OF DEFAULT
A "PTC Event of Default" with respect to any Class of Certificates means
the failure to distribute within ten Business Days after the applicable
Distribution Date either:
- the outstanding Pool Balance of such Class of Certificates on the Final
Legal Distribution Date for such Class; or
- interest scheduled for distribution on such Class of Certificates on any
Distribution Date (unless in the case of the Class A-1, Class A-2, Class
B or Class C Certificates the Subordination Agent has made an Interest
Drawing, or a withdrawal from the Cash Collateral Account for such Class
of Certificates, in an amount sufficient to pay such interest and has
distributed such amount to the Trustee entitled thereto).
Any failure to make expected principal distributions with respect to any
Class of Certificates on any Regular Distribution Date (other than the Final
Legal Distribution Date) will not constitute a PTC Event of Default with respect
to such Certificates.
38
A PTC Event of Default with respect to the most senior outstanding Class of
Certificates resulting from an Indenture Event of Default under all Indentures
will constitute a Triggering Event. For a discussion of the consequences of the
occurrence of a Triggering Event, see "Description of the Intercreditor
Agreement -- Priority of Distributions."
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
American is prohibited from consolidating with or merging into any other
entity or transferring substantially all of its assets as an entirety to any
other entity unless:
- the surviving successor or transferee entity shall, if and to the extent
required under Section 1110 of the United States Bankruptcy Code (the
"Bankruptcy Code") in order that the Loan Trustee shall continue to be
entitled to any benefits of Section 1110 with respect to an Aircraft,
hold an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States
Code relating to aviation (the "Transportation Code");
- the surviving successor or transferee entity expressly assumes all of the
obligations of American contained in the operative documents to which
American is a party; and
- American has delivered a certificate and an opinion or opinions of
counsel indicating that such transaction, in effect, complies with such
conditions.
In addition, after giving effect to such transaction, no Indenture Event of
Default shall have occurred and be continuing. (Section 5.02; Participation
Agreements, Section 6.02)
MODIFICATION OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
Each Pass Through Trust Agreement contains provisions permitting American
and the Trustee to enter into a supplement to such Pass Through Trust Agreement
or, if applicable, to the Intercreditor Agreement, the Participation Agreements
or any Liquidity Facility, without the consent of the holders of any of the
Certificates of such Trust to, among other things:
- evidence the succession of another corporation or entity to American and
the assumption by such corporation or entity of American's obligations
under such Pass Through Trust Agreement, Participation Agreements or
Liquidity Facilities;
- add to the covenants of American for the benefit of holders of such
Certificates or surrender any right or power conferred upon American in
such Pass Through Trust Agreement, Intercreditor Agreement, Participation
Agreements or Liquidity Facilities;
- cure any ambiguity or correct any mistake or inconsistency contained in
such Pass Through Trust Agreement, Intercreditor Agreement or Liquidity
Facilities;
- make or modify any other provision with respect to matters or questions
arising under such Pass Through Trust Agreement, Intercreditor Agreement
or Liquidity Facilities as American may deem necessary or desirable and
that will not materially adversely affect the interests of the holders of
such Certificates;
- comply with any requirement of the Commission, any applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or of any regulatory body;
- modify, eliminate or add to the provisions of such Pass Through Trust
Agreement, Intercreditor Agreement or Liquidity Facilities to the extent
necessary to continue the qualification of such Pass Through Trust
Agreement (including any supplemental agreement), Intercreditor Agreement
or Liquidity Facilities under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act") and add to such Pass Through Trust Agreement,
Intercreditor Agreement or Liquidity Facilities such other provisions as
may be expressly permitted by the Trust Indenture Act;
39
- provide for a successor Trustee under such Pass Through Trust Agreement
and add to or change any of the provisions of such Pass Through Trust
Agreement, Intercreditor Agreement or Liquidity Facilities as necessary
to facilitate the administration of the Trusts under such Pass Through
Trust Agreement by more than one Trustee or, as provided in the
Intercreditor Agreement, to provide for multiple Liquidity Facilities for
such Trust;
- provide certain information to the Trustee as required in such Pass
Through Trust Agreement;
- add to or change the Basic Agreement and any Trust Supplement to
facilitate the issuance of any Certificates in bearer form or to
facilitate or provide for the issuance of any Certificates in global form
in addition to or in place of Certificates in certificated form;
- provide for the delivery of Certificates or any supplement to such Pass
Through Trust Agreement in or by means of any computerized, electronic or
other medium, including computer diskette;
- correct or supplement the description of any property of any Trust; and
- modify, eliminate or add to the provisions of such Pass Through Trust
Agreement to reflect the substitution of a substitute aircraft for any
Aircraft;
provided, however, that, unless there shall have been obtained from each Rating
Agency written confirmation that such supplement would not result in a reduction
of the then current rating for Certificates of the relevant Trust or a
withdrawal or suspension of the rating of any Class of Certificates, American
shall provide the Trustee of the relevant Trust with an opinion of counsel to
the effect that such supplement will not cause such Trust to be treated as other
than a grantor trust for U.S. federal income tax purposes, unless a PTC Event of
Default shall have occurred and be continuing, in which case such opinion shall
be to the effect that such supplement will not cause such Trust to become an
association taxable as a corporation for U.S. federal income tax purposes.
(Section 9.01)
Each Pass Through Trust Agreement also contains provisions permitting
American and the Trustee, with the consent of the holders of the Certificates of
the related Trust evidencing fractional undivided interests aggregating not less
than a majority in interest of such Trust, to enter into supplemental agreements
adding any provisions to or changing or eliminating any of the provisions of
such Pass Through Trust Agreement, Intercreditor Agreement or Liquidity
Facilities or modifying the rights of the Certificateholders of such Trust,
except that no such supplemental agreement may, without the consent of the
holder of each Certificate affected thereby:
- reduce in any manner the amount of, or delay the timing of, any receipt
by the Trustee of payments on the Equipment Notes held in such Trust, or
distributions in respect of any Certificate of such Trust, or change the
date or place of any payment or change the coin or currency in which such
Certificate is payable, or impair the right of any Certificateholder of
such Trust to institute suit for the enforcement of any such payment when
due;
- permit the disposition of any Equipment Note held in such Trust, except
as provided in such Pass Through Trust Agreement, the Intercreditor
Agreement or any Liquidity Facility;
- alter the priority of distributions specified in the Intercreditor
Agreement in a manner materially adverse to such Certificateholders;
- reduce the percentage of the aggregate fractional undivided interests of
the Trust provided for in such Pass Through Trust Agreement, the consent
of the holders of which is required for any such supplemental agreement
or for any waiver or modification provided for in such Pass Through Trust
Agreement; or
- cause such Trust to become an association taxable as a corporation for
U.S. Federal income tax purposes.
If a Trustee, as holder (or beneficial owner through the Subordination
Agent) of any Equipment Note in trust for the benefit of the Certificateholders
of the relevant Trust or as Controlling Party under the
40
Intercreditor Agreement, receives (directly or indirectly through the
Subordination Agent) a request for a consent to any amendment, modification,
waiver or supplement under any Indenture, any Participation Agreement, any
Equipment Note or any other related document, the Trustee will forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder of the relevant Trust registered on the register of such Trust
as of the date of such notice. The Trustee will request from the
Certificateholders a direction as to:
- whether or not to take or refrain from taking (or direct the
Subordination Agent to take or refrain from taking) any action that a
Note Holder or the Controlling Party has the option to take or direct;
- whether or not to give or execute (or direct the Subordination Agent to
give or execute) any waivers, consents, amendments, modifications or
supplements as a Note Holder or as Controlling Party; and
- how to vote (or direct the Subordination Agent to vote) any Equipment
Note if a vote has been called for with respect thereto.
(Section 10.01; Intercreditor Agreement, Section 8.01(b))
Provided such a request for Certificateholder direction has been made, in
directing any action or casting any vote or giving any consent as the holder of
any Equipment Note (or in directing the Subordination Agent in any of the
foregoing):
- other than as the Controlling Party, the Trustee will vote for or give
consent to any such action with respect to such Equipment Note in the
same proportion as that of (x) the aggregate face amount of all
Certificates actually voted in favor of or for giving consent to such
action by such direction of Certificateholders to (y) the aggregate face
amount of all outstanding Certificates of the relevant Trust; and
- as the Controlling Party, the Trustee will vote as directed in such
Certificateholder direction by the Certificateholders evidencing
fractional undivided interests aggregating not less than a majority in
interest in the relevant Trust.
(Section 10.01)
For purposes of the preceding paragraph, a Certificate is deemed "actually
voted" if the Certificateholder has delivered to the Trustee an instrument
evidencing such Certificateholder's consent to such direction prior to one
Business Day before the Trustee directs such action or casts such vote or gives
such consent. Notwithstanding the foregoing, but subject to certain rights of
the Certificateholders under the relevant Pass Through Trust Agreement and
subject to the Intercreditor Agreement, the Trustee may, in its own discretion
and at its own direction, consent and notify the relevant Loan Trustee of such
consent (or direct the Subordination Agent to consent and notify the relevant
Loan Trustee of such consent) to any amendment, modification, waiver or
supplement under the relevant Indenture, Participation Agreement, Equipment Note
or any other related document, if an Indenture Event of Default under any
Indenture has occurred and is continuing, or if such amendment, modification,
waiver or supplement will not materially adversely affect the interests of the
Certificateholders. (Section 10.01)
POSSIBLE ISSUANCE OF SERIES E EQUIPMENT NOTES
American may elect to issue Series E Equipment Notes in connection with
some or all of the Aircraft, which would be funded from sources other than the
original placement of the Certificates. American may elect to fund the sale of
the Series E Equipment Notes through the sale of Pass Through Certificates (the
"Class E Certificates") issued by a Class E American Airlines 2001-2 Pass
Through Trust (the "Class E Trust"). The ability to issue any Series E Equipment
Notes is contingent upon obtaining written confirmation from each Rating Agency
that the issuance of such Series E Equipment Notes would not result in a
withdrawal or downgrading of the rating of any rated Class of Certificates. If
the Class E Certificates are issued, the trustee under the Class E Trust (the
"Class E Trustee") will become a party to the Intercreditor Agreement, and the
Class E Certificates would be subordinated in right of distribution to the Class
A-1, Class A-2, Class B, Class C and Class D Certificates. See "Description of
the Intercreditor Agreement." In
41
addition, after the occurrence and during the continuance of a Triggering Event,
the Class E Certificateholders would have certain rights to purchase the Class
A-1, Class A-2, Class B, Class C and Class D Certificates. See "-- Purchase
Rights of Certificateholders." If Series E Equipment Notes are issued to any
person or entity other than the Class E Trust, such Series E Equipment Notes
will nevertheless be subject to the provisions of the Intercreditor Agreement
that allow the Controlling Party, during the continuance of an Indenture Event
of Default, to direct the Loan Trustee in taking action under the applicable
Indenture. (Intercreditor Agreement, Section 8.01(c))
TERMINATION OF THE TRUSTS
The obligations of American and the applicable Trustee with respect to a
Trust will terminate upon the distribution to Certificateholders of such Trust
of all amounts required to be distributed to them pursuant to the applicable
Pass Through Trust Agreement and the disposition of all property held in such
Trust. The applicable Trustee will mail to each Certificateholder of record of
such Trust notice of the termination of such Trust, the amount of the proposed
final payment and the proposed date for the distribution of such final payment
for such Trust. The Final Distribution to any Certificateholder of such Trust
will be made only upon surrender of such Certificateholder's Certificates at the
office or agency of the applicable Trustee specified in such notice of
termination. (Section 11.01)
THE TRUSTEES
The Trustee for each Trust initially is State Street Bank and Trust Company
of Connecticut, National Association. The Trustee's address is State Street Bank
and Trust Company of Connecticut, National Association, 225 Asylum Street,
Goodwin Square, Hartford, Connecticut 06103, Attention: Corporate Trust
Division.
With certain exceptions, the Trustee makes no representations as to the
validity or sufficiency of the Basic Agreement, the Trust Supplements, the
Certificates, the Equipment Notes, the Indentures, the Intercreditor Agreement,
the Participation Agreements, any Liquidity Facility or other related documents.
(Sections 7.04 and 7.15) The Trustee of any Trust will not be liable to the
Certificateholders of such Trust for any action taken or omitted to be taken by
it in good faith in accordance with the direction of the holders of a majority
in face amount of outstanding Certificates of such Trust. Subject to certain
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under any Pass Through Trust Agreement at the request of any
holders of Certificates issued thereunder unless there has been offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by such Trustee in exercising such rights or
powers. (Section 7.03(e)) Each Pass Through Trust Agreement provides that the
applicable Trustee in its individual or any other capacity may acquire and hold
Certificates issued thereunder and, subject to certain conditions, may otherwise
deal with American with the same rights it would have if it were not the
Trustee. (Section 7.05)
BOOK-ENTRY REGISTRATION; DELIVERY AND FORM
Each Class of New Certificates will be represented by one or more fully
registered global certificates. Each global certificate will be deposited with
the Trustee of the relevant Trust as custodian for The Depository Trust Company
("DTC") and registered in the name of Cede & Co. ("Cede"), the nominee of DTC.
No person acquiring an interest in such Certificates (a "Certificate Owner")
will be entitled to receive a certificate representing such person's interest in
such Certificates, except as set forth below under "-- Definitive Certificates."
Unless and until Definitive Certificates are issued under the limited
circumstances described herein, all references in this Prospectus to actions by
Certificateholders will refer to actions taken by DTC upon instructions from DTC
Participants, and all references to distributions, notices, reports and
statements to Certificateholders will refer, as the case may be, to
distributions, notices, reports and statements to DTC or Cede, as the registered
holder of such Certificates, or to DTC Participants for distribution to
Certificate Owners in accordance with DTC procedures.
42
DTC has informed American as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants ("DTC Participants") and to facilitate the
clearance and settlement of securities transactions between DTC Participants
through electronic book-entry changes in accounts of DTC Participants, thereby
eliminating the need for physical movement of certificates. DTC Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and certain other organizations. Indirect access to the DTC system
is available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a DTC Participant,
either directly or indirectly ("indirect participants").
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Certificates among DTC Participants on whose behalf it acts with respect to the
Certificates. Certificate Owners that are not DTC Participants but that desire
to purchase, sell or otherwise transfer ownership of, or other interests in,
Certificates may do so only through DTC Participants. DTC Participants and
indirect participants with which Certificate Owners have accounts with respect
to the Certificates, however, are required to make book-entry transfers on
behalf of their respective customers. In addition, under the Rules, DTC is
required to receive and transmit to the DTC Participants distributions of
principal of, premium, if any, and interest with respect to the Certificates.
Certificate Owners thus will receive all distributions of principal, premium, if
any, and interest from the Trustee through DTC Participants or indirect
participants, as the case may be. Under this book-entry system, Certificate
Owners may experience some delay in their receipt of payments because such
payments will be forwarded by the Trustee to Cede, as nominee for DTC, and DTC
in turn will forward the payments to the appropriate DTC Participants in amounts
proportionate to the principal amount of such DTC Participants' respective
holdings of beneficial interests in the Certificates, as shown on the records of
DTC or its nominee. Distributions by DTC Participants to indirect participants
or Certificate Owners, as the case may be, will be the responsibility of such
DTC Participants.
Unless and until Definitive Certificates are issued under the limited
circumstances described herein, the only "Certificateholder" under the Basic
Agreement will be Cede, as nominee of DTC. Certificate Owners therefore will not
be recognized by the Trustee as Certificateholders, as such term is used in the
Basic Agreement, and Certificate Owners will be permitted to exercise the rights
of Certificateholders only indirectly through DTC and DTC Participants. DTC has
advised American that it will take any action permitted to be taken by
Certificateholders under the Basic Agreement only at the direction of one or
more DTC Participants to whose accounts with DTC the Certificates are credited.
Additionally, DTC has advised American that in the event any action requires
approval by Certificateholders of a certain percentage of beneficial interest in
each Trust, DTC will take such action only at the direction of and on behalf of
DTC Participants whose holdings include undivided interests that satisfy any
such percentage. DTC may take conflicting actions with respect to other
undivided interests to the extent that such actions are taken on behalf of DTC
Participants whose holdings include such undivided interests. Conveyance of
notices and other communications by DTC to DTC Participants and by DTC
Participants to indirect participants and to Certificate Owners will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of indirect participants, the ability of a Certificate Owner to pledge
Certificates to persons or entities that do not participate in the DTC system,
or to otherwise act with respect to such Certificates, may be limited due to the
lack of a physical certificate for such Certificates.
Neither American nor the Trustee nor any agent of American or the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the
Certificates held by Cede, as nominee for DTC; for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests; or for
the performance by DTC, any DTC Participant
43
or any indirect participant of their respective obligations under the Rules or
any other statutory, regulatory, contractual or customary procedures governing
their obligations.
The information contained in this Prospectus concerning DTC and its
book-entry system has been obtained from sources American believes to be
reliable, but American has not verified such information and takes no
responsibility for the accuracy thereof.
SAME-DAY SETTLEMENT AND PAYMENT
As long as Certificates are registered in the name of DTC or its nominee,
all payments made by American to the Loan Trustee under any Indenture will be in
immediately available funds. Such payments, including the final distribution of
principal with respect to the Certificates of any Trust, will be passed through
to DTC in immediately available funds.
Any Certificates registered in the name of DTC or its nominee will trade in
DTC's Same-Day Funds Settlement System until maturity, and secondary market
trading activity in the Certificates will therefore be required by DTC to settle
in immediately available funds. No assurance can be given as the effect, if any,
of settlement in same day funds on trading activity in the Certificates.
DEFINITIVE CERTIFICATES
Certificates will be issued in certificated form ("Definitive
Certificates") to Certificateholders or their nominees, rather than to DTC or
its nominee, only if (i) American advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and American or the Trustee is unable to
locate a qualified successor; (ii) American elects to terminate the book-entry
system through DTC; or (iii) after the occurrence of certain events of default
or other events specified in the Pass Through Trust Agreement,
Certificateholders with fractional undivided interests aggregating not less than
a majority in interest in the related Trust advise the Trustee, American and DTC
through DTC Participants in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the Certificateholders'
best interests.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify all Certificateholders through
DTC of the availability of Definitive Certificates. Upon surrender by DTC of the
global certificates representing the Certificates and receipt of instructions
for reregistration, the Trustee will reissue the Certificates as Definitive
Certificates to Certificateholders.
Distributions of principal, Make-Whole Amount (if any) and interest with
respect to Certificates will thereafter be made by the Trustee directly in
accordance with the procedures set forth in the Pass Through Trust Agreement, to
holders in whose names the Definitive Certificates were registered at the close
of business on the applicable Record Date. Such distributions will be made by
check mailed to the address of such holder as it appears on the register
maintained by the Trustee. The final payment on any Certificate, however, will
be made only upon presentation and surrender of such Certificate at the office
or agency specified in the notice of final distribution to Certificateholders.
DESCRIPTION OF THE LIQUIDITY FACILITIES
The following summary describes material terms of the Liquidity Facilities
and certain provisions of the Intercreditor Agreement relating to the Liquidity
Facilities. This summary does not purport to be complete and is qualified in its
entirety by reference to all of the provisions of the Liquidity Facilities and
the Intercreditor Agreement, which have been filed as exhibits to the
Registration Statement. Copies are available as set forth under "Where You Can
Find More Information." The provisions of the Liquidity Facilities are
substantially identical except as otherwise indicated.
44
GENERAL
There is no liquidity facility available with respect to the Class D
Certificates. The liquidity provider (the "Liquidity Provider") for each of the
Class A-1, Class A-2, Class B and Class C Trusts entered into a separate
revolving credit agreement (each, a "Liquidity Facility") with the Subordination
Agent with respect to such Trust. Under each Liquidity Facility, the Liquidity
Provider will, if necessary, make one or more advances ("Interest Drawings") to
the Subordination Agent in an aggregate amount (the "Required Amount")
sufficient to pay interest on the Pool Balance of the related Certificates on up
to three consecutive semiannual Regular Distribution Dates at the annual
interest rates for such Certificates shown on the cover page of this Prospectus
(the "Stated Interest Rates"). If interest payment defaults occur that exceed
the amount covered by or available under the Liquidity Facility for any Trust,
the Certificateholders of such Trust will bear their allocable share of the
deficiencies to the extent that there are no other sources of funds. The initial
Liquidity Provider with respect to each Trust may be replaced by one or more
other entities with respect to any of such Trusts under certain circumstances.
Therefore, the Liquidity Provider for the Trusts may differ.
DRAWINGS
The initial amount available under the Liquidity Facility for each Trust on
the respective dates of issuance of the Old Certificates, was as follows:
AVAILABLE
TRUST AMOUNT
----- -----------
Class A-1................................................... $33,746,027
Class A-2................................................... 97,686,059
Class B..................................................... 23,252,833
Class C..................................................... 32,881,446
Except as otherwise provided below, the Liquidity Facility for each of the
Class A-1, Class A-2, Class B and Class C Trusts will enable the Subordination
Agent to make Interest Drawings thereunder on any Regular Distribution Date in
order to make interest distributions then scheduled for the Certificates of such
Trust at the Stated Interest Rate for such Trust to the extent that the amount,
if any, available to the Subordination Agent on such Regular Distribution Date
is not sufficient to pay such interest. The maximum amount available to be drawn
under a Liquidity Facility with respect to any Trust on any Regular Distribution
Date to fund any shortfall of interest on Certificates of such Trust will not
exceed the then Maximum Available Commitment under such Liquidity Facility. The
"Maximum Available Commitment" at any time under each Liquidity Facility is an
amount equal to the then Required Amount of such Liquidity Facility less the
aggregate amount of each Interest Drawing then outstanding under such Liquidity
Facility at such time, provided that following a Downgrade Drawing, a Final
Drawing or a Non-Extension Drawing under a Liquidity Facility, the Maximum
Available Commitment under such Liquidity Facility shall be zero.
The Liquidity Facility for any Class of Certificates does not provide for
drawings thereunder to pay for principal of or Make-Whole Amount on the
Certificates of such Class or any interest with respect to the Certificates of
such Class in excess of the Stated Interest Rate for such Class or any interest
in an aggregate amount in excess of three semiannual installments of interest or
to pay principal of or interest or Make-Whole Amount with respect to the
Certificates of any other Class. (Liquidity Facilities, Section 2.02;
Intercreditor Agreement, Section 3.06)
Each payment by the Liquidity Provider will reduce by the same amount the
Maximum Available Commitment under the related Liquidity Facility, subject to
reinstatement as hereinafter described. With respect to any Interest Drawings,
upon reimbursement of the Liquidity Provider in full or in part for the amount
of such Interest Drawings plus accrued interest thereon, the Maximum Available
Commitment under such Liquidity Facility will be reinstated by the amount
reimbursed but not to exceed the then Required Amount of such Liquidity
Facility; provided, however, such Liquidity Facility will not be so reinstated
at any time if (i) a Liquidity Event of Default has occurred and is continuing
and (ii) less than 65% of the then aggregate outstanding principal amount of all
Equipment Notes are Performing Equipment Notes. With
45
respect to any other drawings under such Liquidity Facility, amounts available
to be drawn thereunder are not subject to reinstatement. (Liquidity Facilities,
Section 2.02(a); Intercreditor Agreement, Section 3.06(g)) Following each
reduction of the Pool Balance for the applicable Trust, the Required Amount of
the Liquidity Facility for any Trust will be reduced automatically to an amount
sufficient to pay interest on the relevant Pool Balance thereof on the next
three successive semiannual Regular Distribution Dates (without regard to
expected future distributions of principal of such Certificates) at the Stated
Interest Rate for such Trust. (Liquidity Facilities, Section 2.04)
"Performing Equipment Note" means an Equipment Note issued pursuant to an
Indenture with respect to which no payment default has occurred and is
continuing (without giving effect to any acceleration); provided that in the
event of a bankruptcy proceeding involving American under the Bankruptcy Code,
(i) any payment default occurring before the date of the order of relief in such
proceeding will not be taken into consideration during the 60-day period under
Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer period as may apply
under Section 1110(b) of the Bankruptcy Code) (the "Section 1110 Period"), (ii)
any payment default occurring after the date of the order of relief in such
proceedings will not be taken into consideration if such payment default is
cured under Section 1110(a)(2)(B) of the Bankruptcy Code before the later of 30
days after the date of such default or the expiration of the Section 1110 Period
and (iii) any payment default occurring after the Section 1110 Period will not
be taken into consideration if such payment default is cured before the end of
the grace period, if any, set forth in the related Indenture. (Intercreditor
Agreement, Section 1.01)
REPLACEMENT OF LIQUIDITY FACILITIES
If at any time (i) the short-term unsecured debt rating of the Liquidity
Provider for any of the Class A-1, Class A-2, Class B or Class C Trusts issued
by either Rating Agency (or if such Liquidity Provider does not have a
short-term unsecured debt rating issued by a given Rating Agency, the long-term
unsecured debt rating of such Liquidity Provider issued by such Rating Agency)
or, if applicable, the short-term unsecured debt rating of any guarantor of the
obligations of the Liquidity Provider issued by either Rating Agency is lower
than the Threshold Rating applicable to such Trust or (ii) any guarantee of the
Liquidity Provider's obligations under the relevant Liquidity Facility becomes
invalid or unenforceable, the Liquidity Facility for such Class may be replaced
by a Replacement Facility subject to receipt of the Rating Agencies' written
confirmation of their respective ratings then in effect of the Certificates with
respect to which such Liquidity Facility was issued (before downgrading of such
ratings, if any, as a result of downgrading of the Liquidity Provider or, if
applicable, the downgrading of any guarantor of the obligations of the Liquidity
Provider or any such guarantee becoming invalid or unenforceable). If such
Liquidity Facility is not replaced with a Replacement Facility within 10 days
after the date of the downgrading (or within 45 days after the date of the
downgrading solely in the event of a downgrading of such Liquidity Provider's
short-term unsecured debt rating by Standard & Poor's from A-1+ to A-1) or such
guarantee becomes invalid or unenforceable, the Subordination Agent will draw
the then Maximum Available Commitment under such Liquidity Facility (the
"Downgrade Drawing"). The Subordination Agent will deposit the proceeds of any
Downgrade Drawing into a cash collateral account (the "Cash Collateral Account")
for such Class of Certificates and will use these proceeds for the same purposes
and under the same circumstances and subject to the same conditions as cash
payments of Interest Drawings under such Liquidity Facility would be used.
(Liquidity Facilities, Section 2.02(c); Intercreditor Agreement, Sections
3.06(c) and 3.06(f))
A "Replacement Facility" for any Liquidity Facility will mean an
irrevocable revolving credit agreement (or agreements) in substantially the form
of the replaced Liquidity Facility, including reinstatement provisions, or in
such other form (which may include a letter of credit, surety bond, financial
insurance policy or guaranty) as will permit the Rating Agencies to confirm in
writing their respective ratings then in effect for the Certificates with
respect to which such Liquidity Facility was issued (before downgrading of such
ratings, if any, as a result of the downgrading of the Liquidity Provider or, if
applicable, the downgrading of any guarantor of the obligations of the Liquidity
Provider or any such guarantee becoming invalid or unenforceable), in a face
amount (or in an aggregate face amount) equal to the amount sufficient to pay
interest on the Pool Balance of the Certificates of such Trust (at the Stated
Interest Rate for such Certificates, and without
46
regard to expected future principal distributions) on the three Regular
Distribution Dates following the date of replacement of such Liquidity Facility,
or, if such date is a Regular Distribution Date, on such day and the two Regular
Distribution Dates following such day, and issued by a person (or persons)
having debt ratings (or whose guarantor, if applicable, has debt ratings) issued
by both Rating Agencies that are equal to or higher than the Threshold Rating
for the relevant Class. (Intercreditor Agreement, Section 1.01) The provider of
any Replacement Facility will have the same rights (including, without
limitation, priority distribution rights and rights as Controlling Party) under
the Intercreditor Agreement as the replaced Liquidity Provider.
"Threshold Rating" means (i) with respect to the Class A-1 Liquidity
Provider, the Class A-2 Liquidity Provider and the Class B Liquidity Provider, a
short-term unsecured debt rating of P-1 in the case of Moody's and A-1+ in the
case of Standard & Poor's, and with respect to the Class C Liquidity Provider, a
short-term unsecured debt rating of P-1 in the case of Moody's and A-1 in the
case of Standard & Poor's and (ii) in the case of any person who does not have a
short-term unsecured debt rating from either or both such Rating Agencies, then
in lieu of such short-term unsecured debt rating from such Rating Agency or
Rating Agencies, with respect to the Class A-1 Liquidity Provider, Class A-2
Liquidity Provider and the Class B Liquidity Provider, a long-term unsecured
debt rating of Aa3 in the case of Moody's and AA- in the case of Standard &
Poor's, and with respect to the Class C Liquidity Provider, a long-term
unsecured debt rating of A1 in the case of Moody's and A in the case of Standard
& Poor's.
The Liquidity Facility for each of the Class A-1, Class A-2, Class B and
Class C Trusts provides that the Liquidity Provider's obligations thereunder
will expire on the earliest of:
- 364 days after the date of original issuance of the Class A-1, Class A-2
and Class B Certificates (counting from, and including, such issuance
date);
- the date on which the Subordination Agent delivers to such Liquidity
Provider a certification that Final Distributions on all of the
Certificates of such Trust have been paid in full or provision has been
made for such payment;
- the date on which the Subordination Agent delivers to such Liquidity
Provider a certification that a Replacement Facility has been substituted
for such Liquidity Facility;
- the fifth Business Day following receipt by the Subordination Agent of a
Termination Notice from such Liquidity Provider (see "-- Liquidity Events
of Default"); and
- the date on which no amount is or may (including by reason of
reinstatement) become available for drawing under such Liquidity
Facility.
Each Liquidity Facility provides that it may be extended for 364-day
periods by mutual agreement of the relevant Liquidity Provider and the
Subordination Agent.
The Intercreditor Agreement provides for the replacement of the Liquidity
Facility for any Trust if such Liquidity Facility is scheduled to expire earlier
than 15 days after the Final Legal Distribution Date for the Certificates of
such Trust and such Liquidity Facility is not extended at least 25 days prior to
its then scheduled expiration date. If such Liquidity Facility is not so
extended or replaced by the 25th day prior to its then scheduled expiration
date, the Subordination Agent shall request a drawing in full up to the then
Maximum Available Commitment under such Liquidity Facility (the "Non-Extension
Drawing"). The Subordination Agent will hold the proceeds of the Non-Extension
Drawing in the Cash Collateral Account for the related Trust as cash collateral
to be used for the same purposes and under the same circumstances, and subject
to the same conditions, as cash payments of Interest Drawings under such
Liquidity Facility would be used. (Liquidity Facilities, Section 2.02(b);
Intercreditor Agreement, Sections 3.06(d) and 3.06(f))
Subject to certain limitations, American may, at its option, arrange for a
Replacement Facility at any time to replace the Liquidity Facility for any Trust
(including without limitation any Replacement Facility described in the
following sentence). In addition, if any Liquidity Provider determines not to
extend any Liquidity Facility, then such Liquidity Provider may, at its option,
arrange for a Replacement Facility acceptable to American to replace such
Liquidity Facility during the period no earlier than 40 days and no later than
25 days prior to the then scheduled expiration date of such Liquidity Facility.
If a Replacement
47
Facility is provided at any time after a Downgrade Drawing or a Non-Extension
Drawing under any Liquidity Facility, the funds with respect to such Liquidity
Facility on deposit in the Cash Collateral Account for such Trust will be
returned to the Liquidity Provider being replaced. (Intercreditor Agreement,
Section 3.06(e))
Upon receipt by the Subordination Agent of a Termination Notice with
respect to any Liquidity Facility from the relevant Liquidity Provider, the
Subordination Agent shall request a final drawing (a "Final Drawing") under such
Liquidity Facility in an amount equal to the then Maximum Available Commitment
thereunder. The Subordination Agent will hold the proceeds of the Final Drawing
in the Cash Collateral Account for the related Trust as cash collateral to be
used for the same purposes and under the same circumstances, and subject to the
same conditions, as cash payments of Interest Drawings under such Liquidity
Facility would be used. (Liquidity Facilities, Section 2.02(d); Intercreditor
Agreement, Sections 3.06(f) and 3.06(i))
Drawings under any Liquidity Facility will be made by delivery by the
Subordination Agent of a certificate in the form required by such Liquidity
Facility. Upon receipt of such a certificate, the relevant Liquidity Provider is
obligated to make payment of the drawing requested thereby in immediately
available funds. Upon payment by the relevant Liquidity Provider of the amount
specified in any drawing under any Liquidity Facility, such Liquidity Provider
will be fully discharged of its obligations under such Liquidity Facility with
respect to such drawing and will not thereafter be obligated to make any further
payments under such Liquidity Facility in respect of such drawing to the
Subordination Agent or any other person.
REIMBURSEMENT OF DRAWINGS
The Subordination Agent must reimburse amounts drawn under any Liquidity
Facility by reason of an Interest Drawing, Final Drawing, Downgrade Drawing or
Non-Extension Drawing and interest thereon, but only to the extent that the
Subordination Agent has funds available therefor.
INTEREST DRAWINGS AND FINAL DRAWINGS
Amounts drawn under any Liquidity Facility by reason of an Interest Drawing
or Final Drawing (each, a "Drawing") will be immediately due and payable,
together with interest on the amount of such drawing. From the date of such
drawing to (but excluding) the third business day following the Liquidity
Provider's receipt of the notice of such Interest Drawing, interest will accrue
at the Base Rate plus 1.75% per annum. Thereafter, interest will accrue at LIBOR
for the applicable interest period plus 1.75% per annum. In the case of a Final
Drawing, however, the Subordination Agent may convert the Final Drawing into a
drawing bearing interest at the Base Rate plus 1.75% per annum on the last day
of an interest period for such Drawing.
"Base Rate" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for each
day of the period for which the Base Rate is to be determined (or, if such day
is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day for such
transactions received by the applicable Liquidity Provider from three Federal
funds brokers of recognized standing selected by it (and reasonably satisfactory
to American) plus one quarter of one percent (0.25%).
"LIBOR" means, with respect to any interest period, the rate per annum
appearing on display page 3750 (British Bankers Association -- LIBOR) of the Dow
Jones Markets Service (or any successor or substitute therefor) at approximately
11:00 A.M. (London time) two London business days before the first day of such
interest period as the rate for dollar deposits with a maturity comparable to
such interest period, or if such rate is not available, a rate per annum
determined by certain alternative methods.
48
DOWNGRADE DRAWINGS AND NON-EXTENSION DRAWINGS
The amount drawn under any Liquidity Facility by reason of a Downgrade
Drawing or a Non-Extension Drawing and deposited in a Cash Collateral Account
will be treated as follows:
- such amount will be released on any Distribution Date to the Liquidity
Provider to pay any obligations to the Liquidity Provider to the extent
such amount exceeds the Required Amount;
- any portion of such amount withdrawn from the Cash Collateral Account for
such Certificates to pay interest distributions on such Certificates will
be treated in the same way as Interest Drawings; and
- the balance of such amount will be invested in certain specified eligible
investments.
Any Downgrade Drawing or Non-Extension Drawing under any of the Liquidity
Facilities, other than any portion thereof applied to the payment of interest
distributions on the Certificates, will bear interest (x) subject to clause (y)
below, in an amount equal to the investment earnings on amounts deposited in the
Cash Collateral Account attributable to such Liquidity Facility (and will
continue to be subject to payment of a commitment fee on the amount of such
Downgrade Drawing or Non-Extension Drawing) and (y) from and after the date, if
any, on which it is converted into a Final Drawing as described below under
"-- Liquidity Events of Default," at a rate equal to LIBOR for the applicable
interest period (or, as described in the first paragraph under "-- Interest
Drawings and Final Drawings," the Base Rate) plus 1.75% per annum.
LIQUIDITY EVENTS OF DEFAULT
Events of default under each Liquidity Facility (each, a "Liquidity Event
of Default") consist of:
- the acceleration of all the Equipment Notes; or
- certain bankruptcy or similar events involving American. (Liquidity
Facilities, Section 1.01)
If (i) any Liquidity Event of Default under any Liquidity Facility has
occurred and is continuing and (ii) less than 65% of the aggregate outstanding
principal amount of all Equipment Notes are Performing Equipment Notes, the
applicable Liquidity Provider may, in its discretion, give a notice of
termination of such Liquidity Facility (a "Termination Notice"). The Termination
Notice will have the following consequences:
- the related Liquidity Facility will expire on the fifth Business Day
after the date on which such Termination Notice is received by the
Subordination Agent;
- the Subordination Agent will request promptly, and the Liquidity Provider
will honor, a Final Drawing thereunder in an amount equal to the then
Maximum Available Commitment thereunder;
- any Drawing remaining unreimbursed as of the date of termination will be
converted automatically into a Final Drawing under such Liquidity
Facility; and
- all amounts owing to the Liquidity Provider will become immediately due
and payable.
Notwithstanding the foregoing, the Subordination Agent is obligated to pay
amounts owing to the applicable Liquidity Provider only to the extent of funds
available therefor after giving effect to the payments in accordance with the
provisions set forth under "Description of the Intercreditor
Agreement -- Priority of Distributions." (Liquidity Facilities, Section 6.01)
Upon the circumstances described under "Description of the Intercreditor
Agreement -- Intercreditor Rights," a Liquidity Provider may become the
Controlling Party with respect to the exercise of remedies under the Indentures.
(Intercreditor Agreement, Section 2.06(c))
LIQUIDITY PROVIDER
The initial Liquidity Provider for each of the Class A-1, Class A-2, Class
B and Class C Trusts is Westdeutsche Landesbank Girozentrale ("West LB"), New
York Branch (the "Branch"). WestLB, a German universal bank, provides commercial
and investment banking services regionally, nationally and internationally, to
public, corporate and bank customers. WestLB has short-term unsecured debt
ratings of
49
P-1 from Moody's and A-1+ from Standard & Poor's. A copy of WestLB's 2000 Annual
Report may be obtained from the Branch by delivery of a written request to the
attention of Branch Management.
DESCRIPTION OF THE INTERCREDITOR AGREEMENT
The following summary describes material provisions of the Intercreditor
Agreement (the "Intercreditor Agreement") among the Trustees, the Liquidity
Provider and State Street Bank and Trust Company of Connecticut, National
Association, as subordination agent (the "Subordination Agent"). This summary
does not purport to be complete and is qualified in its entirety by reference to
all of the provisions of the Intercreditor Agreement, which was filed as an
exhibit to the Registration Statement. Copies are available as set forth under
"Where You Can Find More Information."
INTERCREDITOR RIGHTS
GENERAL
The Equipment Notes relating to each Trust were issued to and registered in
the name of the Subordination Agent as agent and trustee for the Trustee of such
Trust.
CONTROLLING PARTY
With respect to any Indenture at any given time, the Loan Trustee under
such Indenture will be directed in taking, or refraining from taking, any action
thereunder or with respect to the Equipment Notes issued under such Indenture by
the holders of at least a majority of the outstanding principal amount of the
Equipment Notes issued under such Indenture, so long as no Indenture Event of
Default shall have occurred and be continuing thereunder. For so long as the
Subordination Agent is the registered holder of the Equipment Notes, the
Subordination Agent will act with respect to the preceding sentence in
accordance with the directions of the Trustees of the Trusts in the Trust
Property of which are Equipment Notes constituting, in the aggregate, the
required principal amount of Equipment Notes. (Intercreditor Agreement, Section
2.06)
At any time after an Indenture Event of Default has occurred and is
continuing under an Indenture, the Loan Trustee under such Indenture will be
directed in taking, or refraining from taking, any action thereunder or with
respect to the Equipment Notes issued under such Indenture, including
acceleration of such Equipment Notes or foreclosing the lien on the related
Aircraft, by the Controlling Party, subject to the limitations described below.
(Intercreditor Agreement, Section 2.06) See "Description of the Certificates --
Indenture Events of Default and Certain Rights upon an Indenture Event of
Default" for a description of the rights of the Certificateholders of each Trust
to direct the respective Trustees.
The "Controlling Party" will be:
- initially, the Class A-1 Trustee or Class A-2 Trustee, whichever
represents the Class with the larger Pool Balance of Certificates
outstanding at the time that the Indenture Event of Default occurs;
- upon payment of Final Distributions to the holders of such larger Class
of Certificates, the other of the Class A-1 Trustee or Class A-2 Trustee;
- upon payment of Final Distributions to the holders of Class A-1 and Class
A-2 Certificates, the Class B Trustee;
- upon payment of Final Distributions to the holders of Class B
Certificates, the Class C Trustee;
- upon payment of Final Distributions to the holders of Class C
Certificates, the Class D Trustee; and
- under certain circumstances, and notwithstanding the foregoing, the
Liquidity Provider with the greatest amount owed to it, as discussed in
the next paragraph.
At any time after 18 months from the earliest to occur of (x) the date on
which the entire available amount under any Liquidity Facility has been drawn
(for any reason other than a Downgrade Drawing or a Non-Extension Drawing) and
remains unreimbursed, (y) the date on which the entire amount of any
50
Downgrade Drawing or Non-Extension Drawing has been withdrawn from the relevant
Cash Collateral Account to pay interest on the relevant Class of Certificates
and remains unreimbursed and (z) the date on which all Equipment Notes have been
accelerated, the Liquidity Provider with the greatest amount of Liquidity
Obligations will have the right to become the Controlling Party with respect to
any Indenture. (Intercreditor Agreement, Section 2.06)
For purposes of giving effect to the rights of the Controlling Party, the
Trustees (other than the Controlling Party) irrevocably agreed, and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) will be deemed to have agreed by virtue of their purchase of
Certificates, that the Subordination Agent, as record Note Holder, will exercise
its voting rights in respect of the Equipment Notes as directed by the
Controlling Party. (Intercreditor Agreement, Sections 2.06 and 8.01(b)) For a
description of certain limitations on the Controlling Party's rights to exercise
remedies, see "-- Sale of Equipment Notes or Aircraft" and "Description of the
Equipment Notes -- Remedies."
"Final Distributions" means, with respect to the Certificates of any Trust
on any Distribution Date, the sum of (x) the aggregate amount of all accrued and
unpaid interest in respect of such Certificates and (y) the Pool Balance of such
Certificates as of the immediately preceding Distribution Date. For purposes of
calculating Final Distributions with respect to the Certificates of any Trust,
any Make-Whole Amount paid on the Equipment Notes held in such Trust that has
not been distributed to the Certificateholders of such Trust (other than such
Make-Whole Amount or a portion thereof applied to the distributions of interest
on the Certificates of such Trust or the reduction of the Pool Balance of such
Trust) shall be added to the amount of such Final Distributions. (Intercreditor
Agreement, Section 1.01)
SALE OF EQUIPMENT NOTES OR AIRCRAFT
Following the occurrence and during the continuation of any Indenture Event
of Default under any Indenture, the Controlling Party may direct the
Subordination Agent to accelerate the Equipment Notes issued under such
Indenture and, subject to the provisions of the immediately following sentence,
sell all (but not less than all) of such Equipment Notes or the related Aircraft
to any person. So long as any Certificates are outstanding, during the nine
months after the earlier of (x) the acceleration of the Equipment Notes issued
under any Indenture and (y) the bankruptcy or insolvency of American, no
Aircraft subject to the lien of such Indenture or such Equipment Notes may be
sold, without the consent of each Trustee (other than the Trustee of any Trust
all of the Certificates of which are held or beneficially owned by American
and/or its affiliates), if the net proceeds from such sale would be less than
the Minimum Sale Price for such Aircraft or such Equipment Notes.
"Minimum Sale Price" means, with respect to any Aircraft or the Equipment
Notes issued in respect of such Aircraft, at any time, the lesser of (i) 75% of
the Appraised Current Market Value of such Aircraft and (ii) the aggregate
outstanding principal amount of such Equipment Notes, plus accrued and unpaid
interest thereon.
PRIORITY OF DISTRIBUTIONS
The subordination terms applicable to the Certificates vary depending upon
whether a Triggering Event has occurred. "Triggering Event" means (i) the
occurrence of an Indenture Event of Default under all Indentures resulting in a
PTC Event of Default with respect to the most senior Class of Certificates then
outstanding, (ii) the acceleration of all of the outstanding Equipment Notes or
(iii) certain bankruptcy or insolvency events involving American.
51
BEFORE A TRIGGERING EVENT
So long as no Triggering Event has occurred (whether or not continuing),
all payments made in respect of the Equipment Notes and certain other payments
received on any Distribution Date will be distributed promptly by the
Subordination Agent on such Distribution Date in the following order of
priority:
- to the Liquidity Provider to the extent required to pay accrued and
unpaid Liquidity Expenses;
- to the Liquidity Provider to the extent required to pay accrued and
unpaid interest on the Liquidity Obligations;
- to the Liquidity Provider to the extent required to pay or reimburse the
Liquidity Provider for certain Liquidity Obligations (other than amounts
payable pursuant to the two preceding clauses) and/or, if applicable, to
replenish each Cash Collateral Account up to the Required Amount;
- to the Class A-1 Trustee and the Class A-2 Trustee to the extent required
to pay Expected Distributions on the Class A-1 Certificates and the Class
A-2 Certificates, except that if available funds are insufficient to pay
Expected Distributions to each such Class in full, available funds will
be distributed to each of the Class A-1 Trustee and the Class A-2 Trustee
in the same proportion as such Trustee's proportionate share of the
aggregate amount of such Expected Distributions;
- to the Class B Trustee to the extent required to pay Expected
Distributions on the Class B Certificates;
- to the Class C Trustee to the extent required to pay Expected
Distributions on the Class C Certificates;
- to the Class D Trustee to the extent required to pay Expected
Distributions on the Class D Certificates;
- if the Class E Certificates have been issued, to the Class E Trustee to
the extent required to pay Expected Distributions on the Class E
Certificates; and
- to the Subordination Agent and each Trustee for the payment of certain
fees and expenses.
"Liquidity Expenses" means the Liquidity Obligations other than (i) the
principal amount of any drawing under the Liquidity Facilities and (ii) any
interest accrued on any Liquidity Obligations.
"Liquidity Obligations" means all principal, interest, fees and other
amounts owing to the Liquidity Provider under each Liquidity Facility or certain
other agreements.
"Expected Distributions" means, with respect to the Certificates of any
Trust on any Distribution Date (the "Current Distribution Date"), the sum of (1)
accrued and unpaid interest in respect of such Certificates and (2) the
difference between:
(A) the Pool Balance of such Certificates as of the immediately
preceding Distribution Date (or, if the Current Distribution Date is the
first Distribution Date, the original aggregate face amount of the
Certificates of such Trust); and
(B) the Pool Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i) the principal of the
Equipment Notes held in such Trust has been paid when due (whether at
stated maturity, upon redemption, prepayment, purchase, acceleration or
otherwise) and such payments have been distributed to the holders of such
Certificates and (ii) the principal of any Equipment Notes formerly held in
such Trust that have been sold pursuant to the Intercreditor Agreement has
been paid in full and such payments have been distributed to the holders of
such Certificates. (Intercreditor Agreement, Section 1.01)
For purposes of calculating Expected Distributions with respect to the
Certificates of any Trust, any Make-Whole Amount paid on the Equipment Notes
held in such Trust that has not been distributed to the Certificateholders of
such Trust (other than such Make-Whole Amount or a portion thereof applied to
distributions of interest on the Certificates of such Trust or the reduction of
the Pool Balance of such Trust) will be added to the amount of Expected
Distributions.
52
For purposes of determining the priority of distributions on account of the
redemption or prepayment of Equipment Notes issued pursuant to an Indenture,
clause (1) of the definition of Expected Distributions set forth above shall be
deemed to read as follows: "(1) accrued, due and unpaid interest on such
Certificates together with (without duplication) accrued and unpaid interest on
a portion of such Certificates equal to the outstanding principal amount of the
Equipment Notes being redeemed or prepaid (immediately prior to such redemption
or prepayment)."
AFTER A TRIGGERING EVENT
Subject to the terms of the Intercreditor Agreement, upon the occurrence of
a Triggering Event and at all times thereafter, all funds received by the
Subordination Agent in respect of the Equipment Notes and certain other payments
received by the Subordination Agent will be distributed promptly by the
Subordination Agent in the following order of priority:
- to the Subordination Agent and any Trustee, to the extent required to pay
certain out-of-pocket costs and expenses actually incurred by the
Subordination Agent or such Trustee in protection of, or realization of
the value of, the Equipment Notes or any Collateral under (and as defined
in) any Indenture, or to any Certificateholder or the Liquidity Provider
for payments made to the Subordination Agent or any Trustee in respect of
such amounts;
- to the Liquidity Provider to the extent required to pay accrued and
unpaid Liquidity Expenses;
- to the Liquidity Provider to the extent required to pay accrued and
unpaid interest on the Liquidity Obligations;
- (i) to the Liquidity Provider to the extent required to pay all Liquidity
Obligations and/or, (ii) if applicable with respect to any particular
Liquidity Facility (unless (x) less than 65% of the aggregate outstanding
principal amount of all Equipment Notes are Performing Equipment Notes
and a Liquidity Event of Default has occurred and is continuing under
such Liquidity Facility or (y) a Final Drawing has occurred under such
Liquidity Facility), to replenish the Cash Collateral Account with
respect to such Liquidity Facility up to the Required Amount for the
related Class of Certificates (less the amount of any repayments of
Interest Drawings under such Liquidity Facility while subclause (x) of
this clause is applicable);
- to the Subordination Agent and any Trustee to the extent required to pay
certain fees, taxes, charges and other amounts payable or to any
Certificateholder for payments made to the Subordination Agent or any
Trustee in respect of such amounts;
- to the Class A-1 Trustee and the Class A-2 Trustee to the extent required
to pay Adjusted Expected Distributions on the Class A-1 Certificates and
the Class A-2 Certificates, except that if available funds are
insufficient to pay Adjusted Expected Distributions to each such Class in
full, available funds will be distributed to each of the Class A-1
Trustee and the Class A-2 Trustee in the same proportion as such
Trustee's proportionate share of the aggregate amount of such Adjusted
Expected Distributions;
- to the Class B Trustee to the extent required to pay Adjusted Expected
Distributions on the Class B Certificates;
- to the Class C Trustee to the extent required to pay Adjusted Expected
Distributions on the Class C Certificates;
- to the Class D Trustee to the extent required to pay Adjusted Expected
Distributions on the Class D Certificates;
- if the Class E Certificates have been issued, to the Class E Trustee to
the extent required to pay Adjusted Expected Distributions on the Class E
Certificates;
- the Class A-1 Trustee and the Class A-2 Trustee to the extent required to
pay Final Distributions on the Class A-1 Certificates and the Class A-2
Certificates in full, except that if available funds are
53
insufficient so to pay each such Class in full, available funds will be
distributed to each of the Class A-1 Trustee and the Class A-2 Trustee in
the same proportion as such Trustee's proportionate share of such amount;
- to the Class B Trustee to the extent required to pay Final Distributions
on the Class B Certificates in full;
- to the Class C Trustee to the extent required to pay Final Distributions
on the Class C Certificates in full;
- to the Class D Trustee to the extent required to pay Final Distributions
on the Class D Certificates in full; and
- if the Class E Certificates have been issued, to the Class E Trustee to
the extent required to pay Final Distributions on the Class E
Certificates in full.
"Adjusted Expected Distributions" means, with respect to the Certificates
of any Trust on any Current Distribution Date, the sum of (1) accrued and unpaid
interest in respect of such Certificates and (2) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) and (y) the Pool Balance of
such Certificates as of the Current Distribution Date calculated on the
basis that (i) the principal of the Equipment Notes other than Performing
Equipment Notes (the "Non-Performing Equipment Notes") held in such Trust
has been paid in full and such payments have been distributed to the
holders of such Certificates, (ii) the principal of the Performing
Equipment Notes held in such Trust has been paid when due (but without
giving effect to any acceleration of Performing Equipment Notes) and such
payments have been distributed to the holders of such Certificates and
(iii) the principal of any Equipment Notes formerly held in such Trust that
have been sold pursuant to the Intercreditor Agreement has been paid in
full and such payments have been distributed to the holders of such
Certificates; and
(B) the amount of the excess, if any, of (i) the Pool Balance of such
Class of Certificates as of the immediately preceding Distribution Date
(or, if the Current Distribution Date is the first Distribution Date, the
original aggregate face amount of the Certificates of such Trust), over
(ii) the Aggregate LTV Collateral Amount for such Class of Certificates for
the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals for all of the
Aircraft, clause (B) shall not apply.
For purposes of calculating Adjusted Expected Distributions with respect to
the Certificates of any Trust, any Make-Whole Amount paid on the Equipment Notes
held in such Trust that has not been distributed to the Certificateholders of
such Trust (other than such Make-Whole Amount or a portion thereof applied to
distributions of interest on the Certificates of such Trust or the reduction of
the Pool Balance of such Trust) will be added to the amount of Adjusted Expected
Distributions.
"Aggregate LTV Collateral Amount" for any Class of Certificates for any
Distribution Date means an amount, not less than zero, equal to the product of
(i) the sum of the applicable LTV Collateral Amounts for such Class of
Certificates for all Aircraft, minus the Pool Balance for each Class of
Certificates, if any, senior to such Class, after giving effect to any
distribution of principal on such Distribution Date with respect to such senior
Class or Classes multiplied by (ii) (a) in the case of Class A-1 Certificates or
Class A-2 Certificates, a fraction the numerator of which equals the Pool
Balance for the Class A-1 Certificates or Class A-2 Certificates, as the case
may be, and the denominator of which equals the aggregate Pool Balances for the
Class A-1 Certificates and the Class A-2 Certificates, in each case prior to
giving effect to any distribution of principal on such Distribution Date with
respect to either such Class of Certificates, and (b) in the case of the Class
B, Class C and Class D Certificates, 1.0.
"LTV Collateral Amount" of any Aircraft for any Class of Certificates
means, as of any Distribution Date, the lesser of (i) the LTV Ratio for such
Class of Certificates multiplied by the Appraised Current
54
Market Value of such Aircraft (or with respect to any such Aircraft that has
suffered an Event of Loss under and as defined in the relevant Indenture, the
amount of the insurance proceeds paid to the related Loan Trustee in respect
thereof to the extent then held by such Loan Trustee (and/or on deposit in the
Special Payments Account) or payable to such Loan Trustee in respect thereof or
with respect to any such Aircraft that has been released from the related
Indenture pursuant to the defeasance provisions thereof, the amount of money and
U.S. Government Obligations deposited with the Loan Trustee pursuant thereto as
of such Distribution Date) and (ii) the outstanding principal amount of the
Equipment Notes secured by such Aircraft after giving effect to any principal
payments of such Equipment Notes on or before such Distribution Date.
"LTV Ratio" means for the Class A-1 Certificates and the Class A-2
Certificates 43%, for the Class B Certificates 51%, for the Class C Certificates
61% and for the Class D Certificates 72%.
"Appraised Current Market Value" of any Aircraft means the lower of the
average and the median of the three most recent LTV Appraisals of such Aircraft.
After a Triggering Event occurs and any Equipment Note becomes a
Non-Performing Equipment Note, the Subordination Agent will obtain LTV
Appraisals of all of the Aircraft as soon as practicable and additional LTV
Appraisals on or prior to each anniversary of the date of such initial LTV
Appraisals; provided that if the Controlling Party reasonably objects to the
appraised value of the Aircraft shown in such LTV Appraisals, the Controlling
Party shall have the right to obtain or cause to be obtained substitute LTV
Appraisals (including LTV Appraisals based upon physical inspection of such
Aircraft).
"LTV Appraisal" means a current fair market value appraisal (which may be a
"desk-top" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell and both having knowledge of all
relevant facts.
Interest Drawings under the Liquidity Facility and withdrawals from the
Cash Collateral Account, in each case in respect of interest distributable on
the Certificates of any Trust, will be distributed to the Trustee for such
Trust, notwithstanding the priority of distributions set forth in the
Intercreditor Agreement and otherwise described herein.
ADDITION OF TRUSTEE FOR CLASS E CERTIFICATES
If the Class E Certificates are issued, the Class E Trustee will become a
party to the Intercreditor Agreement and the Intercreditor Agreement will be
appropriately amended. (Intercreditor Agreement, Section 8.01(c)).
THE SUBORDINATION AGENT
State Street Bank and Trust Company of Connecticut, National Association,
initially is the Subordination Agent under the Intercreditor Agreement. American
and its affiliates may from time to time enter into banking and trustee
relationships with the Subordination Agent and its affiliates. The Subordination
Agent's address is State Street Bank and Trust Company of Connecticut, National
Association, 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103,
Attention: Corporate Trust Division.
The Subordination Agent may resign at any time, in which event a successor
Subordination Agent will be appointed in consultation with American as provided
in the Intercreditor Agreement. American or the Controlling Party may at any
time remove the Subordination Agent as provided in the Intercreditor Agreement.
In such circumstances, a successor Subordination Agent will be appointed in
consultation with American as provided in the Intercreditor Agreement. Any
resignation or removal of the Subordination Agent and appointment of a successor
Subordination Agent does not become effective until acceptance of the
appointment by the successor Subordination Agent. (Intercreditor Agreement,
Section 7.01)
55
DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
THE AIRCRAFT
The Aircraft consist of two Boeing 737-823 aircraft, ten Boeing 757-223ER
aircraft, six Boeing 757-223 aircraft and 13 Boeing 777-223ER aircraft (the
"Aircraft"). All of the Aircraft were delivered new to American from January
2001 to December 2001. The Aircraft have been designed to be in compliance with
Stage 3 noise level standards, which are the most restrictive regulatory
standards currently in effect in the United States for aircraft noise abatement.
The Boeing 737-823 is a narrowbody commercial jet aircraft. Seating
capacity in American's two-class configuration is 134 for the 737-823. The
737-823 is powered by two CFM56-7B26 model commercial jet engines manufactured
by CFM International, Inc.
The Boeing 757-223 and 757-223ER are narrowbody commercial jet aircraft.
Seating capacity in American's two-class configuration is 176 for the 757-223
and 757-223ER. The 757-223 and 757-223ER are powered by two Rolls Royce
RB211-535E4B model commercial jet engines manufactured by Rolls Royce Ltd.
The Boeing 777-223ER is a widebody commercial jet aircraft. Seating
capacity in the current configuration of these 777-223ER aircraft is 223 to 252.
The 777-223ER is powered by two TRENT-892-17 model commercial jet engines
manufactured by Rolls Royce Ltd.
THE APPRAISALS
The table below sets forth the appraised base values of the Aircraft as of
the issuance date of the Class D Certificates as determined by Aircraft
Information Systems, Inc. ("AISI"), Aviation Solutions, Inc. ("AvSolutions") and
Morten Beyer & Agnew, Inc. ("MBA," and together with AISI and AvSolutions, the
"Appraisers"), independent aircraft appraisal and consulting firms, and certain
additional information regarding the Aircraft.
U.S. APPRAISERS' VALUATIONS APPRAISED
REGISTRATION MONTH ------------------------------------------ BASE
AIRCRAFT TYPE NUMBER DELIVERED AISI AVSOLUTIONS MBA VALUE(1)
------------- ------------ ------------- ------------ ------------ ------------ ------------
Boeing 737-823.......... N965AN June 2001 $ 50,070,000 $ 48,270,000 $ 44,940,000 $ 47,760,000
Boeing 737-823.......... N966AN June 2001 50,090,000 48,270,000 44,940,000 47,766,667
Boeing 757-223ER........ N185AN May 2001 60,320,000 57,970,000 55,380,000 57,890,000
Boeing 757-223ER........ N186AN May 2001 60,330,000 57,970,000 55,380,000 57,893,333
Boeing 757-223ER........ N187AN May 2001 60,350,000 57,970,000 55,380,000 57,900,000
Boeing 757-223ER........ N188AN June 2001 60,650,000 58,210,000 55,490,000 58,116,667
Boeing 757-223ER........ N189AN July 2001 60,940,000 58,450,000 55,610,000 58,333,333
Boeing 757-223ER........ N190AA July 2001 60,940,000 58,450,000 55,610,000 58,333,333
Boeing 757-223ER........ N191AN August 2001 61,230,000 58,690,000 55,720,000 58,546,667
Boeing 757-223ER........ N192AN August 2001 61,270,000 58,690,000 55,720,000 58,560,000
Boeing 757-223ER........ N193AN November 2001 61,650,000 59,170,000 55,940,000 58,920,000(2)
Boeing 757-223ER........ N194AA November 2001 61,650,000 59,170,000 55,940,000 58,920,000(2)
Boeing 757-223.......... N195AN November 2001 60,900,000 56,120,000 55,940,000 56,120,000(2)
Boeing 757-223.......... N196AA November 2001 60,900,000 56,120,000 55,940,000 56,120,000(2)
Boeing 757-223.......... N197AN November 2001 61,090,000 56,310,000 56,050,000 56,310,000
Boeing 757-223.......... N198AA December 2001 61,090,000 56,310,000 56,050,000 56,310,000(2)
Boeing 757-223.......... N199AN December 2001 61,280,000 56,490,000 56,160,000 56,490,000
Boeing 757-223.......... N175AN December 2001 61,280,000 56,490,000 56,160,000 56,490,000
Boeing 777-223ER........ N797AN January 2001 135,300,000 133,800,000 129,970,000 133,023,333
Boeing 777-223ER........ N798AN February 2001 135,850,000 134,040,000 130,240,000 133,376,667
56
U.S. APPRAISERS' VALUATIONS APPRAISED
REGISTRATION MONTH ------------------------------------------ BASE
AIRCRAFT TYPE NUMBER DELIVERED AISI AVSOLUTIONS MBA VALUE(1)
------------- ------------ ------------- ------------ ------------ ------------ ------------
Boeing 777-223ER........ N799AN March 2001 136,440,000 134,250,000 130,500,000 133,730,000
Boeing 777-223ER........ N750AN March 2001 136,500,000 134,250,000 130,500,000 133,750,000
Boeing 777-223ER........ N751AN April 2001 136,980,000 134,470,000 130,760,000 134,070,000
Boeing 777-223ER........ N752AN May 2001 137,630,000 134,690,000 131,020,000 134,446,667
Boeing 777-223ER........ N753AN May 2001 137,680,000 134,920,000 131,020,000 134,540,000
Boeing 777-223ER........ N754AN June 2001 138,250,000 134,920,000 131,280,000 134,816,667
Boeing 777-223ER........ N755AN July 2001 138,890,000 135,140,000 131,540,000 135,140,000
Boeing 777-223ER........ N756AM August 2001 139,470,000 135,370,000 131,810,000 135,370,000
Boeing 777-223ER........ N757AN November 2001 140,350,000 135,820,000 132,330,000 135,820,000(2)
Boeing 777-223ER........ N758AN November 2001 140,790,000 136,050,000 132,590,000 136,050,000
Boeing 777-223ER........ N759AN December 2001 141,240,000 136,270,000 132,850,000 136,270,000
---------------
(1) The appraised base value of each Aircraft is the lesser of the average and
median base values of such Aircraft as set forth by the three Appraisers.
(2) The appraised base values of two Boeing 757-223ER aircraft, three Boeing
757-223 aircraft and one Boeing 777-223ER aircraft are based on the
appraisals described above, which were prepared based on the scheduled
delivery months of such Aircraft. However, delivery of each such Aircraft
actually occurred in the next following month.
According to the International Society of Transport Aircraft Trading,
"appraised base value" is defined as each Appraiser's opinion of the underlying
economic value of an Aircraft in an open, unrestricted, stable market
environment with a reasonable balance of supply and demand, and assumes full
consideration of its "highest and best use." An Aircraft's appraised base value
is founded in the historical trend of values and in the projection of value
trends and presumes an arm's length, cash transaction between willing, able and
knowledgeable parties, acting prudently, with an absence of duress and with a
reasonable period of time available for marketing.
Each Appraiser was asked to provide its opinion as to the appraised base
value of each Aircraft. All three Appraisers performed "desk-top" appraisals
without any physical inspection of the Aircraft. The Appraisals are based on
various assumptions and methodologies which vary among the Appraisals and may
not reflect current market conditions. Appraisals that are based on different
assumptions and methodologies may result in valuations that are materially
different from those contained in the Appraisals. In addition, the appraisals of
two Boeing 757-223ER aircraft, three Boeing 757-223 aircraft and one Boeing
777-223ER aircraft were prepared based on the scheduled delivery months of such
Aircraft, which months are the month prior to the month each such Aircraft was
actually delivered. The Appraisers have delivered letters setting forth their
respective Appraisals, copies of which are annexed to this Prospectus as
Appendix II. For a discussion of the assumptions and methodologies used in each
of the Appraisals, you should read such letters.
An appraisal is only an estimate of value. It does not necessarily indicate
the price at which an aircraft may be purchased from the manufacturer or any
other seller. Nor should it be relied upon as a measure of realizable value. The
proceeds realized upon a sale of any Aircraft may be less than its appraised
value. In addition, the value of the Aircraft in the event of the exercise of
remedies under the applicable Indenture will depend on market and economic
conditions at the time, the availability of buyers, the condition of the
Aircraft, whether the Aircraft are sold separately or in one or more groups and
other factors. Although each of the appraisals is dated after September 11,
2001, each appraisal contains a disclaimer as to the effect of the events of
that day on aircraft values. See "Risk Factors -- Risk Factors Relating to the
Certificates and the Exchange Offer -- Appraisals and Realizable Value of
Aircraft." Accordingly, there can be no assurance that the proceeds realized
upon any such exercise of remedies with respect to the Aircraft pursuant to the
applicable Indenture would equal the appraised value of such Aircraft or be
sufficient to satisfy in full payments due on the Equipment Notes relating to
such Aircraft or the Certificates.
57
DESCRIPTION OF THE EQUIPMENT NOTES
The following summary describes material terms of the Equipment Notes, the
Indentures and the Participation Agreements. These summaries do not purport to
be complete and make use of terms defined in and are qualified in their entirety
by reference to all of the provisions of the Equipment Notes, the Indentures and
the Participation Agreements, which have been filed as exhibits to the
Registration Statement. Copies are available as set forth under "Where You Can
Find More Information." Except as otherwise indicated, the following summaries
relate to the Equipment Notes, the Indenture and the Participation Agreement
applicable to each Aircraft.
GENERAL
With respect to each Aircraft, pursuant to the terms of a participation
agreement with respect to each such Aircraft (each, a "Participation
Agreement"), the Trusts purchased from American the Equipment Notes issued under
the related Indenture.
Equipment Notes have been issued in five series with respect to each
Aircraft: the "Series A-1 Equipment Notes," the "Series A-2 Equipment Notes,"
the "Series B Equipment Notes," the "Series C Equipment Notes" and the "Series D
Equipment Notes" (collectively, the "Equipment Notes"). American may elect to
issue an additional series with respect to some or all of the Aircraft (the
"Series E Equipment Notes"), which would be funded from sources other than the
offering of the Old Certificates. See "Description of the Certificates --
Possible Issuance of Class E Certificates." The Equipment Notes with respect to
each Aircraft were issued under a separate indenture (each, an "Indenture")
between American and State Street Bank and Trust Company of Connecticut,
National Association, as loan trustee thereunder (each, a "Loan Trustee"). The
Equipment Notes are direct, full recourse obligations of American.
SUBORDINATION
The Indentures provide for the following subordination provisions
applicable to the Equipment Notes:
- Series A-1 and Series A-2 Equipment Notes issued in respect of an
Aircraft rank equally in right of payment with each other, and rank
senior in right of payment to other Equipment Notes issued in respect of
such Aircraft;
- Series B Equipment Notes issued in respect of an Aircraft rank junior in
right of payment to the Series A-1 and Series A-2 Equipment Notes issued
in respect of such Aircraft and rank senior in right of payment to the
Series C, Series D and, if issued, Series E Equipment Notes issued in
respect of such Aircraft;
- Series C Equipment Notes issued in respect of an Aircraft rank junior in
right of payment to the Series A-1, Series A-2 and Series B Equipment
Notes issued in respect of such Aircraft and rank senior in right of
payment to the Series D and, if issued, Series E Equipment Notes issued
in respect of such Aircraft;
- Series D Equipment Notes issued in respect of an Aircraft rank junior in
right of payment to the Series A-1, Series A-2, Series B and Series C
Equipment Notes issued in respect of such Aircraft and, if Series E
Equipment Notes are issued with respect to such Aircraft, senior in right
of payment to such Series E Equipment Notes; and
- if Series E Equipment Notes are issued with respect to an Aircraft, they
will be subordinated in right of payment to the Series A-1, Series A-2,
Series B, Series C and Series D Equipment Notes issued with respect to
such Aircraft.
(Indentures, Section 2.13)
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PRINCIPAL AND INTEREST PAYMENTS
Subject to the provisions of the Intercreditor Agreement, scheduled
installments of interest paid on the Equipment Notes held in each Trust will be
passed through to the Certificateholders of such Trust on the dates and at the
rate per annum applicable to the Certificates issued by such Trust until the
final expected Regular Distribution Date for such Trust. Subject to the
provisions of the Intercreditor Agreement, principal paid on the Equipment Notes
held in each Trust will be passed through to the Certificateholders of such
Trust in scheduled amounts on the dates set forth herein until the final
expected Regular Distribution Date for such Trust.
Interest will be payable on the unpaid principal amount of each Equipment
Note at the rate applicable to such Equipment Note on April 1 and October 1 of
each year, commencing on April 1, 2002. Such interest is computed on the basis
of a 360-day year of twelve 30-day months. Overdue amounts of principal, Make-
Whole Amount (if any) and interest on each series of Equipment Notes will, to
the extent permitted by applicable law, bear interest at the interest rate
applicable to such series of Equipment Notes, which interest rate will be equal
to the rate per annum applicable to the Certificates issued by the Trust that
will hold such series of Equipment Notes plus 1%.
Scheduled principal payments on the Series A-1 Equipment Notes will be made
on April 1 and October 1 in certain years, commencing on April 1, 2002 and
ending on April 1, 2011. The entire principal amount of the Series A-2 Equipment
Notes is scheduled to be paid on October 1, 2011, the entire principal amount of
the Series B Equipment Notes is scheduled to be paid on April 1, 2011 and the
entire principal amount of the Series C and Series D Equipment Notes is
scheduled to be paid on October 1, 2006. See "Description of the
Certificates -- Pool Factors" for a discussion of the scheduled payments of
principal of the Equipment Notes and Appendix III for the schedule of payments
of principal of each Equipment Note issued with respect to each Aircraft.
If any date scheduled for a payment of principal, Make-Whole Amount (if
any) or interest with respect to the Equipment Notes is not a Business Day, such
payment will be made on the next succeeding Business Day without any additional
interest.
REDEMPTION
If an Event of Loss occurs with respect to an Aircraft and such Aircraft is
not replaced by American under the related Indenture, the Equipment Notes issued
with respect to such Aircraft will be redeemed in whole. If Equipment Notes are
redeemed following an Event of Loss, the redemption price will equal the
aggregate unpaid principal amount thereof, together with accrued and unpaid
interest thereon to (but excluding) the date of redemption, but without any
Make-Whole Amount. Any amount paid by American in connection with such
redemption will be distributed to the Certificateholders on a Special
Distribution Date. (Indentures, Section 2.10)
All of the Equipment Notes issued with respect to an Aircraft may be
redeemed in whole prior to maturity at any time by American, at a price equal to
the aggregate unpaid principal amount thereof, together with accrued and unpaid
interest thereon to (but excluding) the date of redemption, plus the Make-Whole
Amount for the applicable series of Equipment Notes. (Indentures, Section 2.11)
Notice of any such redemption will be given to each holder of Equipment
Notes not less than 15 nor more than 60 days prior to the applicable redemption
date. A notice of redemption may be revoked at such times and under such
circumstances as are provided in the related Indenture. (Indentures, Sections
2.10 and 2.12)
"Make-Whole Amount" means, with respect to any Equipment Note, the amount
(as determined by an investment bank of national standing selected by American),
if any, by which (a) the present value of the remaining scheduled payments of
principal and interest from the redemption date to maturity of such Equipment
Note computed by discounting each such payment on a semiannual basis from its
respective payment date under the applicable Indenture (assuming a 360-day year
of twelve 30-day months) using a
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discount rate equal to the Treasury Yield exceeds (b) the outstanding principal
amount of such Equipment Note plus accrued but unpaid interest thereon to the
redemption date. (Indentures, Annex A)
For purposes of determining the Make-Whole Amount, "Treasury Yield" means,
at the date of determination with respect to any Equipment Note, the interest
rate (expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities markets either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Equipment Note and (B) the other maturing as close as possible
to, but later than, the Average Life Date of such Equipment Note, in each case
as published in the most recent H.15(519) or, if a weekly average yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such Equipment Note is reported in the most recent H.15(519), such weekly
average yield to maturity as published in such H.15(519). "H.15(519)"means the
weekly statistical release designated as such, or any successor publication,
published by the Board of Governors of the Federal Reserve System, and the "most
recent H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable redemption date. The "date of
determination" of a Make-Whole Amount will be the third Business Day prior to
the applicable redemption date. (Indentures, Annex A)
"Average Life Date" for any Equipment Note means the date that follows the
redemption date by a period equal to the Remaining Weighted Average Life at the
redemption date of such Equipment Note. "Remaining Weighted Average Life" at the
redemption date of such Equipment Note means the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining installment of principal of
such Equipment Note by (ii) the number of days from and including the redemption
date to but excluding the scheduled payment date of such principal installment,
by (b) the then unpaid principal amount of such Equipment Note. (Indentures,
Annex A)
SECURITY
The Equipment Notes issued with respect to each Aircraft are secured by a
security interest in such Aircraft, certain limited rights under the aircraft
purchase agreement between American and Boeing, certain requisition and
insurance proceeds with respect to such Aircraft, and all proceeds of the
foregoing. (Indentures, Granting Clause)
The Equipment Notes are not cross-collateralized and, consequently, the
Equipment Notes issued in respect of any one Aircraft are not secured by any of
the other Aircraft. See "-- Remedies." Accordingly, any excess proceeds from the
exercise of remedies with respect to the Equipment Notes relating to an Aircraft
will not be available to cover any shortfall with respect to the Equipment Notes
relating to any other Aircraft.
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
The tables in Appendix IV set forth aggregate loan to Aircraft value ratios
for the Equipment Notes issued in respect of each Aircraft as of January 1, 2002
and each Regular Distribution Date. The LTVs were obtained by dividing (i) the
outstanding principal amount (assuming no payment default or early redemption)
of such Equipment Notes determined immediately after giving effect to the
payments scheduled to be made on each such Regular Distribution Date by (ii) the
assumed value (the "Assumed Aircraft Value") of the Aircraft securing such
Equipment Notes.
The tables in Appendix IV are based on the assumption (the "Depreciation
Assumption") that the initial appraised base value of the Aircraft set forth
opposite the initial Regular Distribution Date included in each table
depreciates by approximately 3% of the initial appraised base value per year.
Other rates or methods of depreciation would result in materially different
LTVs, and no assurance can be given (i) that the depreciation rate and method
assumed for the purposes of the tables are the ones most likely to occur or (ii)
as to the actual future value of any Aircraft. In addition, the appraisals of
two Boeing 757-223ER aircraft, three
60
Boeing 757-223 aircraft and one Boeing 777-223ER aircraft were prepared based on
the scheduled delivery months of such Aircraft, which months are the month prior
to the month each such Aircraft was actually delivered. Thus the tables should
not be considered a forecast or prediction of expected or likely LTVs, but
simply a mathematical calculation based on one set of assumptions. See "Risk
Factors -- Risk Factors Relating to the Certificates and the Exchange
Offer -- Appraisals and Realizable Value of Aircraft."
DEFEASANCE
Under certain circumstances American may legally release itself from any
payment or other obligations on all, but not less than all, of the Equipment
Notes issued under one or more Indentures (a "full defeasance") if American puts
in place the following arrangements for the benefit of the holders of such
Equipment Notes:
- American must deposit in trust for the benefit of the holders of such
Equipment Notes a combination of money and direct obligations of the
United States (and certain depository receipts representing interests in
such direct obligations) ("U.S. Government Obligations") that will
generate enough money to pay when due the principal of and interest on
the Equipment Notes; and
- American must deliver to the Trustees and the relevant Loan Trustee a
legal opinion stating that there has been a change in the federal tax law
from such law as in effect on September 25, 2001 or that there has been
an IRS ruling, in either case that lets American make the above deposit
without causing the holders of the Certificates to be taxed on their
Certificates any differently than if American did not make the deposit
and simply repaid the Equipment Notes itself.
American may only accomplish full defeasance if it obtains written
confirmation from each Rating Agency that such full defeasance will not result
in a withdrawal or downgrading of the rating of any Class of Certificates. If
American were to accomplish full defeasance, as described above, holders of the
Equipment Notes so defeased would rely solely on the trust deposit for repayment
on such Equipment Notes. Holders of such Equipment Notes could not look to
American for repayment if a shortfall in the payment of principal of or interest
on such Equipment Notes occurred. In addition, the holders of such Equipment
Notes would have no beneficial interest in or other rights with respect to the
related Aircraft or other assets subject to the lien of the related Indenture
and such lien would terminate. (Indentures, Section 10.01)
LIMITATION OF LIABILITY
Except as otherwise provided in the Indentures, each Loan Trustee, in its
individual capacity, is not answerable or accountable under the Indentures or
the Equipment Notes under any circumstances except, among other things, for its
own willful misconduct or negligence.
INDENTURE EVENTS OF DEFAULT, NOTICE AND WAIVER
"Indenture Events of Default" under each Indenture include:
- the failure by American to pay any interest or principal or Make-Whole
Amount, if any, within 15 days after the same has become due on any
Equipment Note;
- the failure by American to pay any amount (other than interest, principal
or Make-Whole Amount, if any) when due under the Indenture, any Equipment
Note or any other operative documents for more than 30 days after
American receives written notice;
- the failure by American to carry and maintain insurance or indemnity on
or with respect to the Aircraft in accordance with the provisions of the
related Indenture; provided that no such failure to carry and maintain
insurance will constitute an Indenture Event of Default until the earlier
of (i) the date such failure has continued unremedied for a period of 30
days after the Loan Trustee receives notice of the cancellation or lapse
of such insurance or (ii) the date such insurance is not in effect as to
the Loan Trustee;
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- the failure by American to perform or observe any other covenant or
condition to be performed or observed by it under any operative document
that continues for a period of 60 days after American receives written
notice thereof; provided that, if such failure is capable of being
remedied, no such failure will constitute an Indenture Event of Default
for a period of one year after such notice is received by American so
long as American is diligently proceeding to remedy such failure;
- any representation or warranty made by American in the related operative
documents proves to have been incorrect in any material respect when
made, and such incorrectness continues to be material to the transactions
contemplated by the Indenture and remains unremedied for a period of 60
days after American receives written notice thereof; provided that, if
such incorrectness is capable of being remedied, no such incorrectness
will constitute an Indenture Event of Default for a period of one year
after such notice is received by American so long as American is
diligently proceeding to remedy such incorrectness; and
- the occurrence of certain events of bankruptcy, reorganization or
insolvency of American.
(Indentures, Section 4.01)
There are no cross-default provisions in the Indentures. Consequently,
events resulting in an Indenture Event of Default under any particular Indenture
may or may not result in an Indenture Event of Default occurring under any other
Indenture. If the Equipment Notes issued with respect to one or more Aircraft
are in default and the Equipment Notes issued with respect to the remaining
Aircraft are not in default, no remedies will be exercisable under the
Indentures with respect to such remaining Aircraft.
The holders of a majority in aggregate unpaid principal amount of the
Equipment Notes outstanding on a given date and issued with respect to any
Aircraft, by written instruction to the Loan Trustee, may on behalf of all the
Note Holders waive any existing default and its consequences under the Indenture
with respect to such Aircraft, except a default in the payment of the principal
of, Make-Whole Amount, if any, or interest due under any such Equipment Notes or
a default in respect of any covenant or provision of such Indenture that cannot
be modified or amended without the consent of each affected Note Holder.
(Indentures, Section 4.05)
REMEDIES
The exercise of remedies under the Indentures is subject to the terms of
the Intercreditor Agreement, and the following description should be read in
conjunction with the description of the Intercreditor Agreement.
If an Indenture Event of Default occurs and is continuing under an
Indenture, the related Loan Trustee may, and upon receipt of written
instructions of the holders of a majority in principal amount of the Equipment
Notes then outstanding under such Indenture will, declare the principal of all
such Equipment Notes issued thereunder immediately due and payable, together
with all accrued but unpaid interest thereon (but without any Make-Whole
Amount). The holders of a majority in principal amount of Equipment Notes
outstanding under an Indenture may rescind any declaration of acceleration of
such Equipment Notes if (i) there has been paid to the related Loan Trustee an
amount sufficient to pay all overdue installments of principal and interest on
any such Equipment Notes, and all other amounts owing under the operative
documents, that have become due otherwise than by such declaration of
acceleration and (ii) all other Indenture Events of Default, other than
nonpayment of principal amount or interest on the Equipment Notes that have
become due solely because of such acceleration, have been cured or waived.
(Indentures, Section 4.02)
Each Indenture provides that if an Indenture Event of Default under such
Indenture has occurred and is continuing, the related Loan Trustee may exercise
certain rights or remedies available to it under such Indenture or under
applicable law. Such remedies include the right to take possession of the
Aircraft and to sell all or any part of the airframe or any engine comprising
the Aircraft subject to such Indenture.
If the Equipment Notes issued in respect of one Aircraft are in default,
the Equipment Notes issued in respect of the other Aircraft may not be in
default, and, if not, no remedies will be exercisable under the applicable
Indentures with respect to such other Aircraft.
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In the case of Chapter 11 bankruptcy proceedings in which an air carrier is
a debtor, Section 1110 of the Bankruptcy Code ("Section 1110") provide special
rights to holders of security interests with respect to "equipment" (as defined
in Section 1110). Under Section 1110, the right of such financing parties to
take possession of such equipment in compliance with the provisions of a
security agreement is not affected by any other provision of the Bankruptcy Code
or any power of the bankruptcy court. Such right to take possession may not be
exercised for 60 days following the date of commencement of the reorganization
proceedings. Thereafter, such right to take possession may be exercised during
such proceedings unless, within the 60-day period or any longer period consented
to by the relevant parties, the debtor agrees to perform its future obligations
and cures all existing and future defaults on a timely basis. Defaults resulting
solely from the financial condition, bankruptcy, insolvency or reorganization of
the debtor need not be cured.
"Equipment" is defined in Section 1110, in part, as an aircraft, aircraft
engine, appliance or spare part (as defined in Section 40102 of Title 49 of the
United States Code) that is subject to a security interest granted by a debtor
that, at the time such transaction is entered into, holds an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
Chapter 447 of Title 49 of the United States Code for aircraft capable of
carrying ten or more individuals or 6,000 pounds or more of cargo.
It was a condition to the Trustee's obligation to purchase the Equipment
Notes with respect to each Aircraft that American's General Counsel provide her
opinion to the Trustees that the Loan Trustee will be entitled to the benefits
of Section 1110 with respect to the airframe and engines comprising the Aircraft
originally subjected to the lien of the relevant Indenture. The opinions of
American's General Counsel did not address the possible replacement of an
Aircraft after an Event of Loss in the future, the consummation of which is
conditioned upon the contemporaneous delivery of an opinion of counsel to the
effect that the related Loan Trustee will be entitled to Section 1110 benefits
with respect to the replacement airframe unless there is a change in law or
court interpretation that results in Section 1110 not being available. See
"-- Certain Provisions of the Indentures -- Events of Loss." The opinions of
American's General Counsel also did not address the availability of Section 1110
with respect to the bankruptcy proceedings of any possible lessee of an Aircraft
if it is leased by American.
In certain circumstances following the bankruptcy or insolvency of an
obligor on Equipment Notes where the obligations of that obligor under any
Indenture exceed the value of the Aircraft or other collateral under such
Indenture, post-petition interest will not accrue on the related Equipment
Notes. In addition, to the extent that distributions are made to any
Certificateholders, whether under the Intercreditor Agreement or from drawings
on the Liquidity Facilities, in respect of amounts that would have been funded
by post-petition interest payments on such Equipment Notes had such payments
been made, there would be a shortfall between the claim allowable against the
obligor on such Equipment Notes after the disposition of the Aircraft and other
collateral securing such Equipment Notes and the remaining balance of the
Certificates. Such shortfall would first reduce some or all of the remaining
claim against the obligor available to the Trustees for the most junior Classes.
If an Indenture Event of Default under any Indenture occurs and is
continuing, any sums held or received by the related Loan Trustee may be applied
to reimburse such Loan Trustee for any tax, expense or other loss incurred by it
and to pay any other amounts due to such Loan Trustee prior to any payments to
holders of the Equipment Notes issued under such Indenture. (Indentures, Section
3.03)
MODIFICATION OF INDENTURES
Without the consent of holders of a majority in principal amount of the
Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and the related Participation Agreement may not be amended or
modified, except to the extent indicated below.
Any Indenture may be amended without the consent of the Note Holders to,
among other things: (i) cure any defect or inconsistency in such Indenture or
the Equipment Notes issued thereunder; (ii) make any other provisions or
amendments with respect to matters or questions arising under such Indenture or
such Equipment Notes, or to amend, modify or supplement any provision thereof,
provided that such action does not adversely affect the interests of any Note
Holder; (iii) cure any ambiguity or correct any mistake;
63
(iv) provide for compliance with applicable law; or (v) provide for the issuance
of Series E Equipment Notes as described in "Description of the
Certificates -- Possible Issuance of Series E Equipment Notes." (Indentures,
Section 9.01)
Without the consent of the holder of each Equipment Note outstanding under
any Indenture affected thereby, no amendment or modification of such Indenture
may, among other things, (i) reduce the principal amount of, or Make-Whole
Amount, if any, or interest payable on, any Equipment Notes issued under such
Indenture or change the date on which any principal, Make-Whole Amount, if any,
or interest is due and payable, (ii) create any lien with respect to the
property subject to the lien of the Indenture prior to or pari passu with the
lien of such Indenture, except as provided in such Indenture, or deprive any
holder of an Equipment Note issued under such Indenture of the benefit of the
lien of such Indenture in the property subject thereto or (iii) reduce the
percentage in principal amount of outstanding Equipment Notes issued under such
Indenture required to take or approve any action under such Indenture.
(Indentures, Section 9.02(a))
INDEMNIFICATION
American is required to indemnify each Loan Trustee, each Liquidity
Provider, the Subordination Agent, and each Trustee, but not the holders of
Certificates, for certain losses, claims and other matters. (Participation
Agreements, Section 4.02)
The Loan Trustee is not required to take any action or refrain from taking
any action (other than notifying the Note Holders if it knows of an Event of
Default or of a default arising from American's failure to pay overdue
principal, interest or Make-Whole Amount, if any, under any Equipment Note),
unless it has received indemnification satisfactory to it against any risks
incurred in connection therewith. (Indentures, Section 5.03)
CERTAIN PROVISIONS OF THE INDENTURES
MAINTENANCE AND OPERATION
Under the terms of each Indenture, American is obligated, among other
things and at its expense, to keep each Aircraft duly registered, and to
maintain, service, repair and overhaul the Aircraft so as to keep it in such
condition as necessary to maintain the airworthiness certificate for the
Aircraft in good standing at all times, other than during temporary periods of
storage or grounding by applicable governmental authorities. (Indentures,
Section 7.02(c) and (e))
American has agreed not to maintain, use or operate any Aircraft in
violation of any law, rule or regulation of any government having jurisdiction
over such Aircraft, or in violation of any airworthiness certificate, license or
registration relating to such Aircraft, except to the extent American (or any
lessee) is contesting in good faith the validity or application of any such law,
rule or regulation in any manner that does not involve any material risk of
sale, forfeiture or loss of the Aircraft. (Indentures, Section 7.02(b))
American must make all alterations, modifications and additions to each
Airframe and Engine necessary to meet the applicable requirements of the FAA or
any other applicable governmental authority of another jurisdiction in which the
Aircraft may then be registered; provided, however, that American (or any
lessee) may in good faith contest the validity or application of any such
requirement in any manner that does not involve, among other things, a material
risk of sale, forfeiture or loss of the Aircraft. American (or any lessee) may
add further parts and make other alterations, modifications and additions to any
Airframe or any Engine as American (or any such lessee) may deem desirable in
the proper conduct of its business, including removal (without replacement) of
parts, so long as such alterations, modifications, additions or removals do not
materially diminish the value or utility of such Airframe or Engine below its
value or utility immediately prior to such alteration, modification, addition or
removal (assuming such Airframe or Engine was maintained in accordance with the
Indenture), except that the value (but not the utility) of any Airframe or
Engine may be reduced from time to time by the value of any such parts which
have been removed that American deems obsolete or no longer suitable or
appropriate for use on such Airframe or Engine. All parts (with certain
64
exceptions) incorporated or installed in or added to such Airframe or Engine as
a result of such alterations, modifications or additions will be subject to the
lien of the Indenture. American (or any lessee) is permitted to remove (without
replacement) parts that are in addition to, and not in replacement of or
substitution for, any part originally incorporated or installed in or attached
to an Airframe or Engine at the time of delivery thereof to American, as well as
any part that is not required to be incorporated or installed in or attached to
any Airframe or Engine pursuant to applicable requirements of the FAA or other
jurisdiction in which the Aircraft may then be registered, or any part that can
be removed without materially diminishing the requisite value or utility of the
Aircraft. (Indentures, Section 7.04(c))
Except as set forth above, American is obligated to replace or cause to be
replaced all parts that are incorporated or installed in or attached to any
Airframe or any Engine and become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use. Any
such replacement parts will become subject to the lien of the related Indenture
in lieu of the part replaced. (Indentures, Section 7.04(a))
REGISTRATION, LEASING AND POSSESSION
Although American has no current intention to do so, American is permitted
to register an Aircraft in certain jurisdictions outside the United States,
subject to certain conditions specified in the related Indenture. These
conditions include a requirement that the laws of the new jurisdiction of
registration will give effect to the lien of and the security interest created
by the related Indenture in the applicable Aircraft. (Indentures, Section
7.02(e)) American also is permitted, subject to certain limitations, to lease
any Aircraft to any United States certificated air carrier or to certain foreign
air carriers. In addition, subject to certain limitations, American is permitted
to transfer possession of any Airframe or any Engine other than by lease,
including transfers of possession by American or any lessee in connection with
certain interchange and pooling arrangements, "wet leases" and transfers in
connection with maintenance or modifications and transfers to the government of
the United States, Canada, France, Germany, Japan, The Netherlands, Sweden,
Switzerland and the United Kingdom or any instrumentality or agency thereof.
(Indentures, Section 7.02(a)) There are no general geographical restrictions on
American's (or any lessee's) ability to operate the Aircraft. The extent to
which the relevant Loan Trustee's lien will be recognized in an Aircraft if such
Aircraft is located in certain countries is uncertain. In addition, any exercise
of the right to repossess an Aircraft may be difficult, expensive and
time-consuming, particularly when such Aircraft is located outside the United
States or has been registered in a foreign jurisdiction or leased to a foreign
operator, and may be subject to the limitations and requirements of applicable
law, including the need to obtain consents or approvals for deregistration or
re-export of the Aircraft, which may be subject to delays and political risk.
When a defaulting lessee or other permitted transferee is the subject of a
bankruptcy, insolvency or similar event such as protective administration,
additional limitations may apply. See "Risk Factors -- Risk Factors Relating to
the Certificates and the Exchange Offer -- Repossession."
In addition, at the time of foreclosing on the lien on the Aircraft under
the related Indenture, an Airframe subject to such Indenture might not be
equipped with Engines subject to the same Indenture. If American fails to
transfer title to engines not owned by American that are attached to repossessed
Aircraft, it could be difficult, expensive and time-consuming to assemble an
Aircraft consisting of an Airframe and Engines subject to the Indenture.
LIENS
American is required to maintain each Aircraft free of any liens, other
than the rights of the relevant Loan Trustee, American, the lien of the
Indenture, any other rights existing pursuant to the other operative documents
and pass through documents related thereto, the rights of others in possession
of the Aircraft in accordance with the terms of the Indenture and liens
attributable to other parties to the operative documents and pass through
documents related thereto and certain other specified liens, including but not
limited to (i) liens for taxes either not yet due or being contested in good
faith by appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any Engine or
the Loan Trustee's interest therein; (ii) materialmen's, mechanics' and other
similar liens arising in the
65
ordinary course of business and securing obligations that either are not overdue
for more than 60 days or are being contested in good faith by appropriate
proceedings so long as such proceedings do not involve any material risk of the
sale, forfeiture or loss of the Airframe or any Engine or the Loan Trustee's
interest therein; (iii) judgment liens so long as such judgment is discharged or
vacated within 60 days or the execution of such judgment is stayed pending
appeal or such judgment is discharged, vacated or reversed within 60 days after
expiration of such stay; (iv) salvage or similar rights of insurers under
insurance policies maintained by American; and (v) any other lien as to which
American has provided a bond or other security adequate in the reasonable
opinion of the Loan Trustee and Liens approved in writing by the Loan Trustee
with the consent of a majority in interest of the Note Holders. (Indentures,
Section 7.01)
INSURANCE
Subject to certain exceptions, American is required to maintain, at its
expense (or at the expense of a lessee), all-risk aircraft hull insurance
covering each Aircraft, at all times in an amount not less than 110% of the
aggregate outstanding principal amount of the Equipment Notes relating to such
Aircraft. However, after giving effect to self-insurance permitted as described
below, the amount payable under such insurance may be less than such amounts
payable with respect to the Equipment Notes. If an Aircraft suffers an Event of
Loss, insurance proceeds up to an amount equal to the outstanding principal
amount of the Equipment Notes, together with accrued but unpaid interest
thereon, plus an amount equal to the interest that will accrue on the
outstanding principal amount of the Equipment Notes during the period commencing
on the date following the date of payment of such insurance proceeds to the Loan
Trustee and ending on the loss payment date (in either case, the "Loan Amount"),
will be paid to the applicable Loan Trustee. If an Aircraft or Engine suffers
loss or damage not constituting an Event of Loss but involving insurance
proceeds in excess of $8,000,000 (in the case of a Boeing 737-823), $16,000,000
(in the case of a Boeing 757-223) or $24,000,000 (in the case of a Boeing
777-223ER), proceeds in excess of such specified amounts up to the Loan Amount
will be payable to the applicable Loan Trustee, and the proceeds up to such
specified amounts and proceeds in excess of the Loan Amount will be payable
directly to American so long as an Indenture Event of Default does not exist
under the related Indenture. So long as the loss does not constitute an Event of
Loss, insurance proceeds will be applied to repair or replace the equipment.
(Indentures, Section 7.06(b))
In addition, American is obligated to maintain aircraft liability insurance
at its expense (or at the expense of a lessee), including, without limitation,
bodily injury, personal injury and property damage liability insurance
(exclusive of manufacturer's product liability insurance) and contractual
liability insurance with respect to each Aircraft. Such liability insurance must
be underwritten by insurers of recognized responsibility. The amount of such
liability insurance coverage may not be less than the amount of aircraft
liability insurance from time to time applicable to similar aircraft in
American's fleet on which American carries insurance. (Indentures, Section
7.06(a))
American also is required to maintain war-risk aircraft hull insurance with
respect to each Aircraft if and to the extent such insurance is maintained by
American (or any lessee) with respect to other aircraft owned or operated by
American (or such lessee) on the same routes on which the Aircraft is operated.
(Indentures, Section 7.06(b))
American may self-insure under a program applicable to all aircraft in its
fleet, but the amount of such self-insurance in the aggregate may not exceed for
any 12-month policy year 1% of the average aggregate insurable value (during the
preceding policy year) of all aircraft on which American carries insurance,
unless an insurance broker of national standing certifies that the standard
among all other major U.S. airlines is a higher level of self-insurance, in
which case American may self-insure the Aircraft to such higher level. In
addition, American may self-insure to the extent of (i) any applicable
deductible per occurrence that is not in excess of the amount customarily
allowed as a deductible in the industry or is required to facilitate claims
handling, or (ii) any applicable mandatory minimum per aircraft (or, if
applicable, per annum or other period) liability insurance or hull insurance
deductibles imposed by the aircraft liability or hull insurers. (Indentures,
Section 7.06(c))
66
In respect of each Aircraft, American is required to name the relevant Loan
Trustee, each Trustee, the Subordination Agent and the Liquidity Provider as
additional insured parties under the liability insurance policy required with
respect to such Aircraft. In addition, the hull and liability insurance policies
will be required to provide that, in respect of the interests of such additional
insured party, the insurance shall not be invalidated or impaired by any action
or inaction of American. (Indentures, Sections 7.06(a) and 7.06(b))
EVENTS OF LOSS
If an Event of Loss occurs with respect to the Airframe or the Airframe and
one or more Engines of an Aircraft, American must elect within 90 days after
such occurrence either to make payment with respect to such Event of Loss or to
replace such Airframe and any such Engines. Depending upon American's election,
not later than the first Business Day after the 120th day following the date of
occurrence of such Event of Loss, American will either (i) redeem the Equipment
Notes under the applicable Indenture by paying to the Loan Trustee the
outstanding unpaid principal amount of such Equipment Notes, together with
accrued interest thereon, but without any Make-Whole Amount or (ii) substitute
an airframe (or airframe and one or more engines, as the case may be) for the
Airframe, or Airframe and Engine(s), that suffered such Event of Loss.
(Indentures, Sections 2.10 and 7.05(a)) See "-- Redemption."
If American elects to replace an Airframe (or Airframe and one or more
Engines, as the case may be) that suffered such Event of Loss, it will do so
with, in the case of the Airframe, an airframe of a comparable or improved model
of the same manufacturer, and, in the case of an Engine, an engine of the same
or another manufacturer of a comparable or an improved model and suitable for
installation and use on the Airframe, with a value and utility at least equal to
the Airframe or Airframe and Engines to be replaced, assuming that such Airframe
and such Engines were in the condition and repair required by the related
Indenture. American is also required to provide to the relevant Loan Trustee
opinions of counsel (i) to the effect that such Loan Trustee will be entitled to
the benefits of Section 1110 with respect to the replacement airframe (unless,
as a result of a change in law or governmental or judicial interpretation, such
benefits were not available to it with respect to the Aircraft immediately prior
to such replacement), and (ii) as to the due registration of the replacement
aircraft and the due recordation of a supplement to the Indenture relating to
such replacement aircraft and the validity and perfection of the security
interest granted to the Loan Trustee in the replacement aircraft. (Indentures,
Section 7.05(a))
If American elects not to replace such Airframe, or Airframe and Engine(s),
then upon payment of the outstanding principal amount of the Equipment Notes
issued with respect to such Aircraft, together with accrued but unpaid interest
thereon but without any Make-Whole Amount, the lien of the Indenture relating to
such Aircraft will terminate with respect to such Aircraft, and the obligation
of American thereafter to make the scheduled interest and principal payments
with respect thereto will cease. The payments made under the Indenture by
American will be deposited with the applicable Loan Trustee. Amounts in excess
of the amounts due and owing under the Equipment Notes issued with respect to
such Aircraft will be distributed by such Loan Trustee to American. (Indentures,
Sections 2.10, 3.02, 7.05(a) and 7.05(c))
If an Event of Loss occurs with respect to an Engine alone, American is
required to replace such Engine within 120 days after the occurrence of such
Event of Loss with another engine, free and clear of all liens (other than
certain permitted liens). Such replacement engine will be the same model as the
Engine to be replaced, or a comparable or improved model of the same or another
manufacturer and suitable for installation and use on the Airframe, and will
have a value and utility at least equal to the Engine to be replaced, assuming
that such Engine was in the condition and repair required by the terms of the
relevant Indenture. (Indentures, Section 7.05(b))
An "Event of Loss" with respect to an Aircraft, Airframe or any Engine
means any of the following events with respect to such property:
- the loss of such property or of the use thereof due to destruction,
damage beyond repair or rendition of such property permanently unfit for
normal use;
67
- any damage to such property that results in an insurance settlement with
respect to such property on the basis of a total loss or a compromised or
constructive total loss;
- any theft or disappearance of such property for a period exceeding 180
days;
- the requisition for use of such property by any government (other than
the government of Canada, France, Germany, Japan, The Netherlands,
Sweden, Switzerland, the United Kingdom or the United States or the
government of the country of registry of the Aircraft) that results in
the loss of possession of such property for a period exceeding 12
consecutive months;
- the operation or location of the Aircraft, while under requisition for
use by any government, in an area excluded from coverage by any insurance
policy required by the terms of the Indenture, unless American has
obtained indemnity or insurance in lieu thereof from such government;
- any requisition of title or other compulsory acquisition, capture,
seizure, deprivation, confiscation or detention (excluding requisition
for use or hire not involving a requisition of title) for any reason of
the Aircraft by any government that results in the loss of title or use
of the Aircraft for a period in excess of 180 days;
- as a result of any law, rule, regulation, order or other action by the
FAA or other government of the country of registry, the use of the
Aircraft or Airframe in the normal business of air transportation is
prohibited by virtue of a condition affecting all aircraft of the same
type for a period of 18 consecutive months, unless American is diligently
carrying forward all steps that are necessary or desirable to permit the
normal use of the Aircraft or, in any event, if such use is prohibited
for a period of three consecutive years; and
- with respect to an Engine only, any divestiture of title to or interest
in such Engine or, in certain circumstances, the installation of such
Engine on an airframe that is subject to a conditional sale or other
security agreement.
An Event of Loss with respect to an Aircraft is deemed to have occurred if
an Event of Loss occurs with respect to the Airframe, unless American elects to
substitute a replacement Airframe pursuant to the Indenture. (Indentures, Annex
A)
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences to Certificate Owners of the exchange of Old Certificates for New
Certificates pursuant to the Exchange Offer. The discussion is based on laws,
regulations, rulings and decisions in effect as of the date hereof, all of which
are subject to change, possibly with retroactive effect, or different
interpretation. No ruling has been or will be sought from the Internal Revenue
Service. The discussion does not address all of the federal income tax
consequences that may be relevant to all Certificate Owners in light of their
particular circumstances (including, for example, any special rules applicable
to tax-exempt organizations, broker-dealers, insurance companies, foreign
entities and persons who are not citizens or residents of the United States) and
does not address any tax consequences other than federal income tax
consequences. Certificate Owners should consult their own tax advisors regarding
the federal, state, local and any other tax consequences to them of exchanging
Old Certificates for New Certificates in light of their own particular
circumstances.
The exchange of Old Certificates for New Certificates pursuant to the
Exchange Offer will not be treated as a taxable event for federal income tax
purposes. Receipt of New Certificates in the Exchange Offer will be treated as a
continuation of the original investment of the Certificate Owner in the Old
Certificates. Similarly, there would be no federal income tax consequences to a
Certificate Owner that does not participate in the Exchange Offer. In
particular, no gain or loss will be recognized by Certificate Owners as a result
of the Exchange Offer and, for purposes of determining gain or loss on a
subsequent sale of Certificates, a Certificate Owner's basis and holding period
for the Certificates will not be affected by the Exchange Offer.
68
CERTAIN ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements on employee benefit plans subject to Title I of
ERISA and on entities that are deemed to hold the assets of such plans ("ERISA
Plans"), and on those persons who are fiduciaries with respect to ERISA Plans.
Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including, but not limited to, the requirement of investment
prudence and diversification and the requirement that an ERISA Plan's
investments be made in accordance with the documents governing the Plan.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code"), prohibit certain transactions involving the assets of
an ERISA Plan (as well as those plans that are not subject to ERISA but which
are subject to Section 4975 of the Code, such as individual retirement accounts
(together with ERISA Plans, "Plans")) and certain persons (referred to as
"parties in interest" or "disqualified persons") having certain relationships to
such Plans, unless a statutory or administrative exemption is applicable to the
transaction. A party in interest or disqualified person who engages in a
prohibited transaction may be subject to excise taxes and other penalties and
liabilities under ERISA and the Code.
Any Plan fiduciary which proposes to cause a Plan to purchase and hold
Certificates should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code to such an investment, and to confirm that such
purchase and holding will not constitute or result in a non-exempt prohibited
transaction or any other violation of an applicable requirement of ERISA.
Governmental plans and certain church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of ERISA and Section 4975 of the Code, may nevertheless be subject to
state or other federal laws or regulations that are substantially similar to the
foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should
consult with their counsel before purchasing Certificates to determine the need
for, and the availability, if necessary, of any exemptive relief under any such
laws or regulations.
PLAN ASSETS ISSUES
The Department of Labor has promulgated a regulation, 29 CFR Section
2510.3-101 (the "Plan Asset Regulation"), describing what constitutes the assets
of a Plan with respect to the Plan's investment in an entity for purposes of
ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan
invests (directly or indirectly) in a Certificate, the Plan's assets will
include both the Certificate and an undivided interest in each of the underlying
assets of the corresponding Trust, including the Equipment Notes held by such
Trust, unless it is established that equity participation in the Trust by
benefit plan investors (including but not limited to Plans and entities whose
underlying assets include Plan assets by reason of an employee benefit plan's
investment in the entity) is not "significant" within the meaning of the Plan
Asset Regulation. In this regard, the extent to which there is equity
participation in the Trust by, or on behalf of, benefit plan investors will not
be monitored. If the assets of the Trust are deemed to constitute the assets of
a Plan, transactions involving the assets of such Trust could be subject to the
prohibited transaction provisions of ERISA and Section 4975 of the Code unless a
statutory or administrative exemption is applicable to the transaction.
PROHIBITED TRANSACTION EXEMPTIONS
In addition, whether or not the assets of a Trust are deemed to be Plan
assets under the Plan Asset Regulation, the fiduciary of a Plan that proposes to
purchase and hold any Certificates should consider, among other things, whether
such purchase and holding may involve (i) the direct or indirect extension of
credit to a party in interest or a disqualified person, (ii) the sale or
exchange of any property between a Plan and a party in interest or a
disqualified person, or (iii) the transfer to, or use by or for the benefit of,
a party in interest or a
69
disqualified person, of any Plan assets. Such parties in interest or
disqualified persons could include, without limitation, American and its
affiliates, the Placement Agents, the Trustees and the Liquidity Provider.
Moreover, if Certificates are purchased by a Plan and Certificates of a
subordinate Class are held by a party in interest or a disqualified person with
respect to such Plan, the exercise by the holder of the subordinate Class of
Certificates of its right to purchase the senior Classes of Certificates upon
the occurrence and during the continuation of a Triggering Event could be
considered to constitute a prohibited transaction unless a statutory or
administrative exemption were applicable. Depending on the satisfaction of
certain conditions which may include the identity of the Plan fiduciary making
the decision to acquire or hold Certificates on behalf of a Plan, Prohibited
Transaction Class Exemption ("PTCE") 91-38 (relating to investments by bank
collective investment funds), PTCE 84-14 (relating to transactions effected by a
"qualified professional asset manager"), PTCE 95-60 (relating to investments by
an insurance company general account), PTCE 96-23 (relating to transactions
directed by an in-house asset manager) or PTCE 90-1 (relating to investments by
insurance company pooled separate accounts) (collectively, the "Class
Exemptions") could provide an exemption from the prohibited transaction
provisions of ERISA and Section 4975 of the Code. However, there can be no
assurance that any of these Class Exemptions or any other exemption will be
available with respect to any particular transaction involving the Certificates.
Each person who acquires or accepts a Certificate or an interest therein
will be deemed by such acquisition or acceptance to have represented and
warranted that either: (i) no assets of a Plan or any trust established with
respect to a Plan have been used to acquire such Certificate or an interest
therein or (ii) the purchase and holding of such Certificate or an interest
therein by such person are exempt from the prohibited transaction restrictions
of ERISA and the Code pursuant to one or more prohibited transaction statutory
or administrative exemptions.
SPECIAL CONSIDERATIONS APPLICABLE TO INSURANCE COMPANY GENERAL ACCOUNTS
Any insurance company proposing to invest assets of its general account in
the Certificates should consider the implications of the United States Supreme
Court's decision in John Hancock Mutual Life Insurance Co. v. Harris Trust and
Savings Bank, 510 U.S. 86, 114 S.Ct. 517 (1993), which in certain circumstances
treats such general account assets as assets of a Plan that owns a policy or
other contract with such insurance company, as well as the effect of Section
401(c) of ERISA as interpreted by regulations issued by the United States
Department of Labor in January, 2000.
EACH PLAN FIDUCIARY (AND EACH FIDUCIARY FOR A GOVERNMENTAL OR CHURCH PLAN
SUBJECT TO RULES SIMILAR TO THOSE IMPOSED ON PLANS UNDER ERISA) SHOULD CONSULT
WITH ITS LEGAL ADVISOR CONCERNING THE POTENTIAL CONSEQUENCES TO THE PLAN UNDER
ERISA, THE CODE OR SUCH SIMILAR LAWS OF AN INVESTMENT IN THE CERTIFICATES.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Certificates for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Certificates. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were acquired as a
result of market-making activities or other trading activities. We have agreed
that for a period of 90 days after the Expiration Date, we will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
We will not receive any proceeds from any sale of New Certificates by
broker-dealers. New Certificates received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Certificates or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive
70
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Certificates. Any
broker-dealer that resells New Certificates that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Certificates may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a Prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, American will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. American has agreed to pay all expenses incident to the Exchange
Offer other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the Certificates (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
LEGAL OPINIONS
The validity of the New Certificates is being passed upon for American by
Anne H. McNamara, Senior Vice President and General Counsel. Ms. McNamara will
rely upon Bingham Dana LLP, Hartford, Connecticut, counsel to State Street Bank
and Trust Company of Connecticut, National Association, as to certain matters
relating to the authorization, execution and delivery of the Basic Agreement,
each Trust Supplement and the Certificates, and the valid and binding effect
thereof.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 2001, as set forth in their reports, which are
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement. Our consolidated financial statements and schedule are incorporated
by reference in reliance on Ernst & Young's reports, given on their authority as
experts in accounting and auditing.
APPRAISERS
The references to AISI, AvSolutions and MBA, and to their respective
appraisal reports, are included herein in reliance upon the authority of each
such firm as an expert with respect to the matters contained in its appraisal
report.
71
APPENDIX I
INDEX OF TERMS
The following is an index showing the page in this Prospectus where certain
defined terms appear.
DEFINED TERM PAGE
------------ ----
Adjusted Expected Distributions....... 54
Agents' Message....................... 28
Aggregate LTV Collateral Amount....... 54
air carriers.......................... 16
Aircraft.............................. 56
AISI.................................. 56
American.............................. 1
Appraised Current Market Value........ 55
Appraisers............................ 56
Assumed Aircraft Value................ 60
ATOP.................................. 27
Average Life Date..................... 60
AvSolutions........................... 56
Bankruptcy Code....................... 39
Base Rate............................. 48
Basic Agreement....................... 31
Book-Entry Confirmation............... 26
Branch................................ 49
Business Day.......................... 34
Cash Collateral Account............... 46
Cede.................................. 42
Certificate Account................... 34
Certificate Owner..................... 42
Certificateholders.................... 32
Certificates.......................... 1
Class A-1 Certificateholders.......... 32
Class A-2 Certificateholders.......... 32
Class A-1 Certificates................ 31
Class A-2 Certificates................ 31
Class A-1 Trust....................... 31
Class A-2 Trust....................... 31
Class A-1 Trustee..................... 31
Class A-2 Trustee..................... 31
Class B Certificateholders............ 32
Class B Certificates.................. 31
Class B Trust......................... 31
Class B Trustee....................... 31
Class C Certificateholders............ 32
Class C Certificates.................. 31
Class C Trust......................... 31
DEFINED TERM PAGE
------------ ----
Class C Trustee....................... 31
Class D Certificateholders............ 32
Class D Certificates.................. 31
Class D Trust......................... 31
Class D Trustee....................... 31
Class E Certificates.................. 41
Class E Trust......................... 41
Class E Trustee....................... 41
Class Exemptions...................... 70
Code.................................. 69
Commission............................ ii
Company............................... 1
Controlling Party..................... 50
Current Distribution Date............. 52
date of determination................. 60
Definitive Certificates............... 44
Depreciation Assumption............... 60
disqualified persons.................. 69
Distribution Date..................... 33
Downgrade Drawing..................... 46
Drawing............................... 48
DTC................................... 42
DTC Participants...................... 43
Eligible Institution.................. 26
Equipment............................. 63
Equipment Notes....................... 58
ERISA................................. 69
ERISA Plans........................... 69
Event of Loss......................... 67
Exchange Act.......................... ii
Exchange Agent........................ 2
Exchange Offer........................ 23
Expected Distributions................ 52
Expiration Date....................... 25
FAA................................... 16
Final Distributions................... 51
Final Drawing......................... 48
Final Legal Distribution Date......... 33
full defeasance....................... 61
H.15(519)............................. 60
I-1
DEFINED TERM PAGE
------------ ----
holder................................ 26
indirect participants................. 43
Indenture............................. 58
Indenture Events of Default........... 61
Intercreditor Agreement............... 50
Interest Drawings..................... 45
Issuance Date......................... 23
Letter of Transmittal................. 2
LIBOR................................. 48
Liquidity Event of Default............ 49
Liquidity Expenses.................... 52
Liquidity Facility.................... 45
Liquidity Obligations................. 52
Liquidity Provider.................... 45
Loan Amount........................... 66
Loan Trustee.......................... 58
LTV Appraisal......................... 55
LTV Collateral Amount................. 54
LTV Ratio............................. 55
LTVs.................................. 7
Make-Whole Amount..................... 59
Maximum Available Commitment.......... 45
MBA................................... 56
Minimum Sale Price.................... 51
Moody's............................... 22
most recent H.15(519)................. 60
New Certificates...................... 1
Non-Extension Drawing................. 47
Non-Performing Equipment Notes........ 54
Note Holder........................... 37
Old Certificates...................... 1
Participation Agreement............... 58
parties in interest................... 69
Pass Through Trust Agreements......... 31
Performing Equipment Note............. 46
Permitted Investments................. 37
Placement Agents...................... 1
Plan Asset Regulation................. 69
Plans................................. 69
Pool Balance.......................... 34
Pool Factor........................... 34
PTC Event of Default.................. 38
DEFINED TERM PAGE
------------ ----
PTCE.................................. 70
Rating Agencies....................... 22
Registration Event.................... 23
Registration Rights Agreements........ 23
Registration Statement................ ii
Regular Distribution Dates............ 33
Remaining Weighted Average Life....... 60
Replacement Facility.................. 46
Required Amount....................... 45
Rules................................. 43
Scheduled Payments.................... 33
Section 1110.......................... 63
Section 1110 Period................... 46
Securities Act........................ ii
Series A-1 Equipment Notes............ 58
Series A-2 Equipment Notes............ 58
Series B Equipment Notes.............. 58
Series C Equipment Notes.............. 58
Series D Equipment Notes.............. 58
Series E Equipment Notes.............. 58
Shelf Registration Statement.......... 23
Special Distribution Date............. 33
Special Payment....................... 33
Special Payments Account.............. 34
Stabilization Act..................... 16
Standard & Poor's..................... 22
Stated Interest Rates................. 45
Subordination Agent................... 50
Termination Notice.................... 49
Threshold Rating...................... 47
Transportation Code................... 39
Treasury Yield........................ 60
Triggering Event...................... 51
Trust Indenture Act................... 39
Trust Property........................ 32
Trust Supplement...................... 31
Trustees.............................. 31
Trusts................................ 31
U.S. Government Obligations........... 61
TWA................................... ii
WestLB................................ 49
I-2
APPENDIX II
APPRAISAL LETTERS
II-1
[AIRCRAFT INFORMATION SERVICES, INC. LETTERHEAD]
29 November 2001
Ms. Leslie M. Benners
Managing Director
Corporate Finance and Banking
American Airlines
4333 Amon Carter Boulevard
Mail Drop 5662
Fort Worth, TX 76155
Subject: AISI Report No. A1S046BVO-4, Sight Unseen Base Value Appraisal,
Two B737-823, Ten B757-223ER, Six B757-223 and Thirteen
B777-223ER Aircraft.
Reference: (a) AAL E-mail Message, 21 August 2001
Dear Ms. Benners:
Aircraft Information Services, Inc. (AISI) is pleased to offer American Airlines
our opinion of the sight unseen adjusted base value of two B737-823, ten
B757-223ER, six B757-223 and thirteen B777-223ER aircraft as listed and defined
in the above reference (a) message and in Table I of this report. The aircraft
are valued in inflated delivery dollars if not delivered, or if delivered, are
valued in September 2001 dollars and adjusted for condition to account for their
relatively young age.
1. METHODOLOGY AND DEFINITIONS
The standard terms of reference for commercial aircraft value are `base value'
and `current market value' of an `average' aircraft. Base value is a theoretical
value that assumes a hypothetical balanced market while current market value is
the value in the real market; both assume a hypothetical average aircraft
condition. All other values are derived from these values. AISI value
definitions are consistent with the current definitions of the International
Society of Transport Aircraft Trading (ISTAT), those of 01 January 1994. AISI is
a member of that organization and employs an ISTAT Certified and Senior
Certified Appraiser.
AISI defines a `base value' as that of a transaction between an equally willing
and informed buyer and seller, neither under compulsion to buy or sell, for a
single unit cash transaction with no hidden value or liability, with supply and
demand of the sale item roughly in balance and with no event which would cause a
short term change in the market.
29 November 2001
AISI File No. A1S046BVO-4
Page - 2 -
Base values are typically given for aircraft in `new' condition, `average
half-life' condition, or `adjusted' for an aircraft in a specifically described
condition at a specific time. An `average' aircraft is an operable airworthy
aircraft in average physical condition and with average accumulated flight hours
and cycles, with clear title and standard unrestricted certificate of
airworthiness, and registered in an authority which does not represent a penalty
to aircraft value or liquidity, with no damage history and with inventory
configuration and level of modification which is normal for its intended use and
age. AISI assumes average condition unless otherwise specified in this report.
AISI also assumes that airframe, engine and component maintenance and essential
records are sufficient to permit normal commercial operation under a strict
airworthiness authority.
`Half-life' condition assumes that every component or maintenance service which
has a prescribed interval that determines its service life, overhaul interval or
interval between maintenance services, is at a condition which is one-half of
the total interval.
An `adjusted' appraisal reflects an adjustment from half life condition for the
actual condition, utilization, life remaining or time remaining of an airframe,
engine or component.
It should be noted that AISI and ISTAT value definitions apply to a transaction
involving a single aircraft, and that transactions involving more than one
aircraft are often executed at considerable and highly variable discounts to a
single aircraft price, for a variety of reasons relating to an individual buyer
or seller.
AISI defines a `current market value', which is synonymous with the older term
`fair market value' as that value which reflects the real market conditions
including short term events, whether at, above or below the base value
conditions. Assumption of a single unit sale and definitions of aircraft
condition, buyer/seller qualifications and type of transaction remain unchanged
from that of base value. Current market value takes into consideration the
status of the economy in which the aircraft is used, the status of supply and
demand for the particular aircraft type, the value of recent transactions and
the opinions of informed buyers and sellers. Current market value assumes that
there is no short term time constraint to buy or sell.
AISI encourages the use of base values to consider historical trends, to
establish a consistent baseline for long term value comparisons and future value
considerations, or to consider how actual market values vary from theoretical
base values. Base values are less volatile than current market values and tend
to diminish regularly with time. Base values are normally inappropriate to
determine near term values. AISI encourages the use of current market values to
consider the probable near term value of an aircraft.
29 November 2001
AISI File No. A1S046BVO-4
Page - 3 -
If more than one aircraft is contained in this report than it should be noted
that the values given are not directly additive, that is, the total of the given
values is not the value of the fleet but rather the sum of the values of the
individual aircraft if sold individually over time so as not to exceed demand.
2. VALUATION
Following is AISI's opinion of the adjusted base value for the subject aircraft
in September 2001 US dollars if delivered, and in delivery date US dollars
inflated at 2.8% if not delivered.
Valuations are presented in Table I subject to the assumptions, definitions and
disclaimers herein and are predicated upon the reference (a) data which
describes the aircraft MTOW, engines installed, and any item or capability which
would have a significant effect on value.
The delivered aircraft are also adjusted for condition to account for their
relatively young age with the following assumptions; adjustments from new have
been applied based on the current calendar status of the delivered aircraft and
in accordance with standard AISI methods.
Adjustments are calculated only where there is sufficient information to do so,
or where reasonable assumptions can be made.
THE VALUES CONTAINED IN THIS REPORT ARE AS OF 01 SEPTEMBER 2001. THE TERRORIST
ACTIONS THAT OCCURRED IN THE UNITED STATES ON 11 SEPTEMBER 2001 ARE EXPECTED TO
HAVE A NEGATIVE BUT AS YET UNDEFINED EFFECT ON AIRCRAFT VALUES. AISI HAS ELECTED
TO NOT CHANGE OUR OPINIONS OF BASE AND CURRENT MARKET VALUE UNTIL THE MARKET
ACTS IN A MANNER THAT PROVIDES A VALID BASIS FOR CHANGE.
CURRENT MARKET VALUES WILL PROBABLY DECLINE ACROSS A BROAD FRONT; WE EXPECT
CURRENT MARKET VALUES TO RECOVER FOR MOST NEW AND NEWER AIRCRAFT TYPES. WE DO
NOT EXPECT CURRENT MARKET VALUES TO RECOVER FOR SOME OLDER EQUIPMENT.
BASE VALUES ARE SUPPOSED TO REFLECT BALANCED MARKET VALUES AND TO RESPOND TO
LONG TERM TRENDS; WE EXPECT BASE VALUES TO CONTINUE TO DECLINE REGULARLY UNLESS
AN IRREVERSIBLE MARKET CHANGE HAS OCCURRED.
29 November 2001
AISI File No. A1S046BVO-4
Page -4-
Unless otherwise agreed by Aircraft Information Services, Inc. (AISI) in
writing, this report shall be for the sole use of the client/addressee. This
report is offered as a fair and unbiased assessment of the subject aircraft.
AISI has no past, present, or anticipated future interest in the subject
aircraft. The conclusions and opinions expressed in this report are based on
published information, information provided by others, reasonable
interpretations and calculations thereof and are given in good faith. Such
conclusions and opinions are judgments that reflect conditions and values which
are current at the time of this report. The values and conditions reported upon
are subject to any subsequent change. AISI shall not be liable to any party for
damages arising out of reliance or alleged reliance on this report, or for any
party's action or failure to act as a result of reliance or alleged reliance on
this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ JOHN D. MCNICOL
John D. McNicol
Vice President
Appraisals & Forecasts
TABLE I
A1S046BVO-4
ADJUSTED BASE VALUES AS OF 01 SEPTEMBER 2001
DELIVERY MUSD @ 2.8% INFLATION
ADJUSTED BASE
NUMBER REG# MAN. SN DELIVERY DATE VALUE
------ ---- ------- ------------- -------------
BOEING 737-823; CFM 56-7B26, 174,200 LB. MTOW
1 N965AN 29544 Jun-01 50.07
2 N966AN 30094 Jun-01 50.09
BOEING 757-223ER; RB211-535E4B, 250,000 LB. MTOW
1 N185AN 32379 May-01 60.32
2 N186AN 32380 May-01 60.33
3 N187AN 32381 May-01 60.35
4 N188AN 32382 Jun-01 60.65
5 N189AN 32383 Jul-01 60.94
6 N190AA 32384 Jul-01 60.94
7 N191AN 32385 Aug-01 61.23
8 N192AN 32386 Aug-01 61.27
9 N193AN 32387 Oct-01 61.65
10 N194AA 32388 Oct-01 61.65
BOEING 757-223; RB211-535E4B, 250,000 LB. MTOW
1 N195AN 32389 Oct-01 60.90
2 N196AA 32390 Oct-01 60.90
3 N197AN 32391 Nov-01 61.09
4 N198AA 32392 Nov-01 61.09
5 N199AN 32393 Dec-01 61.28
6 N175AN 32394 Dec-01 61.28
BOEING 777-223IGW; TRENT 892, 648,000 LB. MTOW
1 N797AN 30012 Jan-01 135.30
2 N798AN 30797 Feb-01 135.85
3 N799AN 30258 Mar-01 136.44
4 N750AN 30259 Mar-01 136.50
5 N751AN 30798 Apr-01 136.98
6 N752AN 30260 May-01 137.63
7 N753AN 30261 May-01 137.68
8 N754AN 30262 Jun-01 138.25
9 N755AN 30263 Jul-01 138.89
10 N756AM 30264 Aug-01 139.47
11 N757AN 32626 Oct-01 140.35
12 N758AN 32637 Nov-01 140.79
13 N759AN 32638 Dec-01 141.24
AvSOLUTIONS
--------------------------------------------------------------------------------
November 29, 2001
Ms. Leslie M. Benners
Managing Director, Corporate Finance and Banking
American Airlines
4333 Amon Carter Boulevard
Mail Drop 5662
Fort Worth, TX 76155
Dear Ms. Benners:
AvSOLUTIONS is pleased to provide its opinion on the base values as of
August 2001 of two Boeing 737-823 aircraft, ten Boeing 757-223ER aircraft, six
Boeing 757-223 aircraft, and thirteen Boeing 777-223IGW aircraft (collectively,
the "Aircraft"). A list of the thirty-one (31) aircraft, along with their serial
numbers, delivery dates and engine types, is provided as Attachment 1 of this
document.
Set forth below is a summary of the methodology, considerations and
assumptions utilized in this appraisal.
BASE VALUE
Base value is the appraiser's opinion of the underlying economic value
of an aircraft in an open, unrestricted, stable market environment with a
reasonable balance of supply and demand, and assumes full consideration of its
"highest and best use". An aircraft's base value is founded in the historical
trend of values and in the projection of future value trends and presumes an
arm's length, cash transaction between willing, able and knowledge parties
acting prudently, with an absence of duress and with a reasonable period of time
available for marketing.
FAIR MARKET VALUE
The Fair Market Value (FMV) of an aircraft is the appraiser's opinion
of the most likely trading price that may be generated for an aircraft under the
market circumstances that are perceived to exist at the time in question,
according to the International Society of Transport Aircraft Trading (ISTAT), to
which AvSOLUTIONS belongs. The fair market value assumes that the aircraft is
valued for its highest and best use, that the parties to the hypothetical sales
transaction are willing, able, prudent and knowledgeable, and under no unusual
pressure for a prompt sale, and that the transaction would be negotiated in an
open and unrestricted market on an arm's length basis, for cash equivalent
consideration, and given an adequate amount of time for effective market
exposure to perspective buyers, which AvSOLUTIONS considers to be ten to twenty
months.
AvSOLUTIONS
--------------------------------------------------------------------------------
APPRAISAL METHODOLOGY
The method employed by AvSOLUTIONS to appraise the current and base
values of aircraft and associated equipment addresses the factors that influence
the market value of an aircraft, such as its age, condition, configuration, the
population of similar aircraft, similar aircraft on the market, operating costs,
cost to acquire a new aircraft, and the state of demand for transportation
services.
To achieve this objective, cross-sectional data concerning the values
of aircraft in each of several general categories is collected and analyzed.
Cross-sectional data is then compared with reported market values at a specified
point in time. Such data reflects the effect of deterioration in aircraft
performance due to usage and exposure to the elements, as well as the effect of
obsolescence due to the evolutionary development and implementation of new
designs and materials.
The product of the analysis identifies the relationship between the
value of each aircraft and its characteristics, such as age, model designation,
service configuration and engine type. Once the relationship is identified, one
can then postulate the effects of the difference between the economic
circumstances at the time when the cross-sectional data were collected and the
current situation. Therefore, if one can determine the current value of an
aircraft in one category, it is possible to estimate the current values of all
aircraft in that category.
The manufacturer and size of the aircraft usually determine the
specific category to which it is assigned. Segregating the world airplane fleet
in this manner accommodates the potential effects of different size and
different design philosophies.
The variability of the data used by AvSOLUTIONS to determine the
current market values implies that the actual value realized will fall within a
range of values. Therefore, if a contemplated value falls within the specified
confidence range, AvSOLUTIONS cannot reject the hypothesis that it is a
reasonable representation of the current market situation.
LIMITING CONDITIONS AND ASSUMPTIONS
In order to conduct this valuation, AvSOLUTIONS is primarily relying on
information supplied by American Airlines and from data within AvSOLUTIONS' own
database. In determining the base value of the subject aircraft, the following
assumptions have been researched and determined:
1. AvSOLUTIONS has not inspected these Aircraft or their maintenance records;
accordingly, AvSOLUTIONS cannot attest to their specific location or condition.
2. A portion of the Aircraft have been delivered to American Airlines; the
remaining Aircraft are scheduled for delivery by the end of 2001.
AvSOLUTIONS
--------------------------------------------------------------------------------
3. The Aircraft will be certified, maintained and operated under United States
Federal Aviation Regulation (FAR) Part 121.
4. All mandatory inspections and Airworthiness Directives have been complied
with.
5. The Aircraft have no damage history.
6. The Aircraft are in good condition.
7. AvSOLUTIONS considers the economic useful life of these aircraft to be at
least 32 years.
Based upon the above methodology, considerations and assumptions, it is
AvSOLUTIONS' opinion that the base values of each Aircraft are as listed in
Attachment 1.
STATEMENT OF INDEPENDENCE
This appraisal report represents the opinion of AvSOLUTIONS, Inc. and
is intended to be advisory in nature. Therefore, AvSOLUTIONS assumes no
responsibility or legal liability for actions taken or not taken by the Client
or any other party with regard to the subject Aircraft. By accepting this
report, the Client agrees that AvSOLUTIONS shall bear no responsibility or legal
liability regarding this report. Further, this report is prepared for the
exclusive use of the Client and shall not be provided to other parties without
the Client's express consent.
AvSOLUTIONS hereby states that this valuation report has been
independently prepared and fairly represents the subject aircraft and
AvSOLUTIONS' opinion of their values. AvSOLUTIONS further states that it has no
present or contemplated future interest or association with the subject
Aircraft.
Signed,
/s/ SCOTT E. DANIELS
Scott E. Daniels
Director, Asset Management
AvSOLUTIONS
--------------------------------------------------------------------------------
ATTACHMENT 1
AMERICAN AIRLINES
SERIAL ORIGINAL/
NUMBER REGISTRATION SCHEDULED ENGINE MTOW BASE VALUE
MSN NUMBER DELIVERY TYPE (LB) $ MILLIONS
------ ------------- --------- ------ ---- ----------
BOEING 737-823
1 29544 N965AN Jun-01 CFM56-7B26 174,200 48.27
2 30094 N966AN Jun-01 CFM56-7B26 174,200 48.27
BOEING 757-223ER
3 32379 N185AN May-01 RB211-535E4B 250,000 57.97
4 32380 N186AN May-01 RB211-535E4B 250,000 57.97
5 32381 N187AN May-01 RB211-535E4B 250,000 57.97
6 32382 N188AN Jun-01 RB211-535E4B 260,000 58.21
7 32383 N189AN Jul-01 RB211-535E4B 250,000 58.45
8 32384 N190AA Jul-01 RB211-535E4B 260,000 58.45
9 32385 N191AN Aug-01 RB211-535E4B 250,000 58.69
10 32386 N192AN Aug-01 RB211-535E4B 250,000 58.69
11 32387 N193AN Oct-01 RB211-535E4B 250,000 59.17
12 32388 N194AA Oct-01 RB211-535E4B 250,000 59.17
BOEING 757-223
13 32389 N195AN Oct-01 RB211-535E4B 250,000 56.12
14 32390 N196AA Oct-01 RB211-535E4B 250,000 56.12
15 32391 N197AN Nov-01 RB211-535E4B 250,000 56.31
16 32392 N198AA Nov-01 RB211-535E4B 250,000 56.31
17 32393 N199AN Dec-01 RB211-535E4B 250,000 56.49
18 32394 N175AN Dec-01 RB211-535E4B 250,000 56.49
BOEING 777-223 IGW
19 30012 N797NA Jan-01 Trent 892 648,000 133,80
20 30797 N798AN Feb-01 Trent 892 648,000 134.04
21 30258 N799AN Mar-01 Trent 892 648,000 134.25
22 30259 N750AN Mar-01 Trent 892 648,000 134.25
23 30798 N751AN Apr-01 Trent 892 648,000 134.47
24 30260 N752AN May-01 Trent 892 648,000 134.69
25 30261 N753AN May-01 Trent 892 648,000 134.92
26 30262 N754AN Jun-01 Trent 892 648,000 134.92
27 30263 N755AN Jul-01 Trent 892 648,000 135.14
28 30264 N756AN Aug-01 Trent 892 648,000 135.37
29 32636 N757AN Oct-01 Trent 892 648,000 135.82
30 32637 N758AN Nov-01 Trent 892 648,000 136.05
31 32638 N759AN Dec-01 Trent 892 648,000 136.27
DISCLAIMER
Due to the events of September 11, 2001, the base values listed above are
somewhat undetermined. However, at the current time, AvSOLUTIONS is prepared to
stand by its values considering the lack of specific aircraft trading
information available since these events.
MORTEN BEYER & AGNEW
--------------------------------------------------------------------------------
AVIATION CONSULTING FIRM
CURRENT BASE VALUE APPRAISAL OF
THIRTY-ONE (31) VARIOUS AIRCRAFT
PREPARED FOR:
American Airlines
NOVEMBER 29, 2001
Washington. D.C. London Pacific Rim
2107 Wilson Blvd. 5-7 Spencers Road 3-16-16 Higashiooi
Suite 750 Crawley Shinagawa-ku
Arlington, Virginia 22201 West Sussex RH11 7DE Tokyo 140-0011
United States United Kingdom Japan
Phone +703 276 3200 Phone +44 1342 716248 Phone +81 3 3763 6845
Fax +703 276 3201 Fax +44 1342 718967
I. INTRODUCTION AND EXECUTIVE SUMMARY
MORTEN BEYER & AGNEW (MBA) has been retained by American Airlines (the "Client")
to determine the Current Base Value of 31 various aircraft in their present
configuration as passenger aircraft. The aircraft are further identified in
Section III of this report.
In performing this valuation, MBA did not independently inspect the aircraft or
the associated records and documentation associated with this aircraft. MBA
utilized the technical data of the aircraft provided by the Client, but at
Client's request did not independently verify the accuracy of the technical and
specification data so provided.
Section II of this report presents definitions of various terms, such as Current
Base Value, Current Market Value, Future Base Value, and Lease-Encumbered Value
as promulgated by the Appraisal Program of the International Society of
Transport Aircraft Trading (ISTAT). ISTAT is a non-profit association of
management personnel from banks, leasing companies, airlines, manufacturers,
brokers, and others who have a vested interest in the commercial aviation
industry and who have established a technical and ethical certification program
for expert appraisers.
Based on the information set forth in this report, it is our opinion as of
November 29, 2001 that the aggregate Current Base Value of the aircraft is
$2,688,760,000 with the respective value adjustments noted in Section V of this
report.
II. DEFINITIONS
CURRENT MARKET VALUE
ISTAT defines Current Market Value (CMV) as the appraisers opinion of the most
likely trading price that may be generated for an asset under market
circumstances that are perceived to exist at the time in question. Current
Market Value assumes that the asset is valued for its highest, best use, and the
parties to the hypothetical sale transaction are willing, able, prudent and
knowledgeable and under no unusual pressure for a prompt transaction. It also
assumes that the transaction would be negotiated in an open and unrestricted
market on an arm's-length basis, for cash or equivalent consideration, and given
an adequate amount of time for effective exposure to prospective buyers.
Market Value of a specific asset will tend to be consistent with its Base Value
in a stable market environment. In situations where a reasonable equilibrium
between supply and demand does not exist, trading prices, and therefore Market
Values, are likely to be at variance with the Base Value of the asset. Market
Value may be based upon either the actual (or specified) physical condition or
maintenance time or condition status of the asset, or alternatively upon an
assumed average physical condition and mid-life, mid-time maintenance status.
BASE VALUE
The ISTAT definition of Base Value (BV) has, essentially, the same elements of
Market Value except that the market circumstances are assumed to be in a
reasonable state of equilibrium. Thus, BV pertains to an idealized aircraft and
market combination, but will not necessarily reflect the actual CMV of the
aircraft in question at any point in time. BV is founded in the historical trend
of values and value in use, and is generally used to analyze historical values
or to project future values.
ISTAT defines Base Value as the Appraisers opinion of the underlying economic
value of an aircraft, engine, or inventory of aircraft parts/equipment
(hereinafter referred to as "the asset"), in an open, unrestricted, stable
market environment with a reasonable balance of supply and demand. Full
consideration is assumed of its "highest and best use". An asset's Base Value is
founded in the historical trend of values and in the
American Airlines
Job #01269b
Page 2 of 17
projection of value trends and presumes an arm's-length, cash transaction
between willing, able, and knowledgeable parties, acting prudently, with an
absence of duress and with a reasonable period of time available for marketing.
In most cases, the Base Value of an asset assumes the physical condition is
average for an asset of its type and age. It further assumes the maintenance
time/life status is at mid-time, mid-life (or benefiting from an above-average
maintenance status if its is new or nearly new, as the case may be). Since Base
Value pertains to a somewhat idealized asset and market combination it may not
necessarily reflect the actual current value of the asset in question, but is a
nominal starting value to which adjustments may be applied to determine an
actual value. Because it is related to long-term market trends, the Base Value
definition is commonly applied to analyses of historical values and projections
of residual values.
FUTURE BASE VALUE
Future Base Values are established by using the Base Value at the beginning of
the current year (present value), from which point the Future Base Values are
projected. The Base Value used for the purpose of projecting the Future Base
Values consider the aircraft to be at mid-life and mid-time conditions
pertaining to the various aspects of the maintenance status.
The Future Base Values are based on aircraft having an approximate life of 35
years from the date of manufacture. The Future Base Values commence from the
present time to the 35th year from the date of manufacture of this aircraft.
DISTRESS VALUE
Distress Value is the Appraiser's opinion of the price at which an asset could
be sold under abnormal conditions, such as an artificially limited marketing
time period, the perception of the seller being under duress to sell, an
auction, bankruptcy liquidation, commercial restrictions, legal complications,
or other such factors that significantly reduce the bargaining leverage of the
seller and give the buyer a significant advantage that can translate into
heavily discounted actual trading prices. Apart from the fact that the seller is
uncommonly motivated, the parties to the transaction are otherwise assumed to be
willing, able, prudent and knowledgeable, negotiating at arm's-length,
American Airlines
Job #01269b
Page 3 of 17
normally under the market conditions that are perceived to exist at the time,
not an idealized balanced market. While the Distress Value normally implies that
the seller is under some duress, there are occasions when buyers, not sellers
are under duress or time pressure and, therefore, willing to pay a premium
value.
SECURITIZED VALUE OR LEASE ENCUMBERED VALUE
Securitized Value or Lease Encumbered Value is the Appraiser's opinion of the
value of an asset, under lease, given a specified lease payment stream (rents
and term), and estimated future residual value at lease termination, and an
appropriate discount rate.
The lease encumbered residual value may include consideration of lease
termination conditions and remaining maintenance reserves, if any. The
Securitized Value or Lease-Encumbered Value may be more or less than the
Appraiser's opinion of Current Market Value, taking into account various
factors, such as, the credit risks associated with the parties involved, the
time-value of money to those parties, provisions of the lease that may pertain
to items such as security deposits, purchase options at various dates, term
extensions, sub-lease rights, repossession rights, reserve payments and return
conditions.
American Airlines
Job #01269b
Page 4 of 17
III. AIRCRAFT SPECIFICATIONS
Boeing 737-800
[PICTURE] SEATING: 20F/114Y
ENGINES: CFM56-7B26
N965AN MGTOW (LBS): 174,200
Boeing 757-200/ER
[PICTURE] SEATING: 22F/154Y
ENGINES: RB211-535E4B
N185AN MGTOW (LBS): 250,000
Boeing 777-200ER 18F/56B/163Y - Pacific
[PICTURE] SEATING: 16F/42B/194Y - Atlantic
TRENT 892
N797AN ENGINES: 648,000
MGTOW (LBS):
American Airlines
Job #01269b
Page 5 of 17
IV. CURRENT MARKET CONDITIONS - GENERAL
The Current Base Values in this appraisal are extracted from the MBA's Future
Aircraft Values mid-year 2001 publication, which assumed the market, was in a
state of equilibrium. In light of the recent events, MBA reviewed the Current
Market Values of each aircraft type in the MBA's Future Aircraft Values mid-year
2001 publication and revised the Market Adjustment Factor, which is expressed as
a percentage of the Base Value. Due to the sharp fall in air travel caused by
the economic recession and psychological factors, current trends of
overproduction of new aircraft, declining demand, and increasing numbers of new
and used jets on the market, MBA believe that most aircraft models if offered
will be selling at Current Market Prices well below the Base Values.
The demand for and value of new and used jet transport aircraft is driven by the
world economy. In periods of strong prosperity, traffic grows at high single
digit rates, thus creating a demand for additional lift capacity. In past
periods of decline, growth fell toward zero, and actually was negative in 1991
on a worldwide basis. Subsequently, surpluses of aircraft were created. Over the
years, we have seen that traffic growth is almost directly proportional to the
growth in regional and world domestic product, and that the long term trends are
toward slower growth, lower peaks, and deeper declines, indicating a maturity of
the world's economy and of airline traffic. In periods of decline such as we
experienced in the early 1990s, large surpluses of new and old aircraft build
up on the market, with disastrous effects on short-term prices. However, later
on, values returned to normal levels, being driven by the inherent economies and
suitability of the individual aircraft types.
The September 11 terrorist attack on the United States has created a crisis for
the world's aviation industry. A significant aspect of this crisis is the change
in the demand for and prices of new and used aircraft. As a major appraiser of
transport aircraft for over five decades, MBA's principals have the following
perceptions of the current crisis and its effect on the industry.
American Airlines
Job #01269b
Page 6 of 17
To a remarkable degree the world aviation situation is similar to that ten years
ago.
1. The world economy is in the early stages of a recession. In 1990
airline economies were in the beginning of a major downturn, having
declined significantly from the high of 1988. Current airline economies
peaked again in 1998, and in the last 12 months have experienced the
severest declines in history, even before September 11.
2. In the late 1980s airlines had experienced several terrorist attacks,
including PanAm at Lockerbie and two hijackings of TWA. Fear of flying
affected travel, particularly tourists.
3. New aircraft orders had reached unprecedented highs, with some 3,000
aircraft in backlog.
4. Stage III noise restrictions had been enacted by Congress, and the
phase-out of non-compliant aircraft began in 1990.
5. The Gulf War broke out, accompanied by a spike in fuel costs.
Virtually all of the foregoing conditions exist today, waiting to be exacerbated
by the World Trade Center disaster.
1. World economies are stagnant at best.
2. World passenger and cargo traffic is flat, and is declining further.
3. The backlog of unfilled aircraft orders is again at an all-time high,
particularly with regional jets.
4. The international situation is in turmoil in the Middle East. Adding
to this are the unknown perpetrators of the WTC attack.
5. Fuel again is a major concern, with prices volatile and OPEC limiting
production. The possibility of instability is great.
6. Stage IV noise restrictions will be promulgated this year, and may
affect the future useful lives of half the world fleet.
7. With some 800 large jets being delivered this year and a similar number
scheduled next year, a glut in available capacity exists, and is
getting worse.
8. Around 1,400 jet and turboprop aircraft are on the market and this
number is increasing rapidly.
Conversely, the majority of aircraft on lease and in operations with major
carriers are likely to continue in service, and barring the bankruptcy of the
lessees are likely to continue being leased at the stipulated rates. In event of
bankruptcies, or voluntary renegotiation by the lessors, the lease rates
may/will be reduced. This may be preferable to leaving them off lease. In the
1990 recession many aircraft, which came off lease due to bankruptcy, were
parted out (B727-100 and DC9-10 aircraft) or re-leased at 40% of previous
rates. Improvements were paid for by lessors and amortized in the new lease -the
re-lease period was generally in excess of one year.
American Airlines
Job #01269b
Page 7 of 17
MBA expects significant cancellations and delays of new orders, some of which
are already occurring. In time, the economy will turn around and later model
used aircraft will be in demand. In the short run, we expect most B727, DC9 and
B737-200 aircraft will be retired and scrapped; MD-80 and B737-300/400/500's
prices will decline and then rebound; and later model A320s and B737-NGs will
suffer temporary price reductions of 20-25%. Old widebodies will also disappear;
mid-life B757, 767, and A300/310s will suffer price reductions, and a new built
aircraft will sustain only modest price declines.
The backlog currently stands at 1,467 Boeing aircraft and 1,714 Airbus aircraft,
plus 1,327 regional jets, for a total of 4,508 jets. We expect this backlog to
be reduced through cancellations of out-year orders and postponements of
mid-year deliveries. Newly ordered aircraft with imminent deliveries and
substantial deposits tend to be delivered on schedule, but add to the current
glut and accelerate the retirement of older surplus aircraft. In the early 1990s
deliveries declined from 830 in 1991 to 482 by 1995.
The new order rate will diminish even more sharply. In the previous period new
orders fell from 1,213 in 1989 to only 324 in 1994 before picking up to a high
of 1,961 last year. This decline far exceeds the current expectations of Boeing,
Airbus, and the four regional jet manufacturers.
MBA feels that, while it is early to project current base values or evaluate the
economic lives of individual aircraft types, investors should be aware of the
instability in the aircraft asset market. The indirect effects of the recent
events and possible future events might be substantial, including the
possibility of sustained deterioration in consumer, corporate and financial
confidence and thus affecting the Base Values of the aircraft types.
However, MBA feels that it is too early to quantify the long-term impact of the
recent events, because of the uncertainty of the military situation. In the long
term, MBA is confident demand will return to normal, prices will firm, and
aircraft orders will increase sharply to recover from the unduly severe reaction
to the current crisis.
American Airlines
Job #01269b
PAGE 8 of 17
IV. CURRENT MARKET CONDITIONS - GENERIC AIRCRAFT TYPE
--------------------------
[PICTURE] BOEING 737 NEXT GENERATION
737-800
--------------------------
The 737 family, which comprises the first generation 737-100/-200, the
second-generation (Classic) 737-300/-400/-500, and the latest
-600/-700/-800/-900 (Next Generation) models, has won 4,986 orders and delivered
4,071 aircraft to date.
Boeing began replacing the `Classic' 737s with upgraded Next Generation versions
beginning with Southwest Airlines' November 1993 order for 63 737-700s. The
737-700 is equivalent in size to the 737-300, at 126 to 149 seats. First
delivery of the 737-700 went to Southwest in December 1997. This was followed by
the September 1994 launch of the -800, with initial commitments from customers
for more than 40 airplanes. The 737-800 is a stretched version of the 737-400
and can seat 162 to 189 passengers. The first -800 delivery was to German
carrier Hapag-Lloyd in the Spring of 1998. The 737-600 was launched on March 15,
1995 with Scandinavian Airlines' order for 35 airplanes. The -600 is the
smallest member of the family, and can carry 110 to 132 passengers. First
delivery of the 737-600 went to SAS in the third quarter of 1998. The newest
member of the family, the -900, is the longest Next-Generation 737, capable of
carrying either 189 passengers in a one or two-class layout - Boeing has
recently announced a redesign of the exits, on the 737-900, to accommodate a
higher certificated capacity. The 737-900 was launched with an order from Alaska
Airlines in November 1997. Boeing is also offering an executive version of the
737, known as the Boeing Business Jet (BBJ) which is a composite of the -700
and -800 variants.
For the Next Generation 737's, upgraded avionics, a new wing design, and other
improvements combine to increase range, efficiency, and performance in general
over
American Airlines
Job #01269b
Page 9 of 17
the "Classic" models. The CFM56-7 is the exclusive engine for the 3rd generation
aircraft.
Prospects for the 3rd generation B-737 jets were thought to be considerably
enhanced by the discontinuation of the MD-80/-90 series. The MD-95 has been
adopted by Boeing as its 100-seat competitor under the aegis of B-717,
competing with its own B-737-600. Airbus is becoming more aggressive with its
A318/319/320/321 high-tech series and winning an increasing share of orders.
During 1998 Airbus had 437 narrowbody orders, Boeing had 516, including 28
MD-80/-90s. In 1999, Airbus overwhelmed Boeing with 408 narrowbody orders to
Boeing's 288. Boeing reversed this trend in 2000 with 412 orders for
narrowbodies compared to 388 for Airbus. Boeing has received 116 orders, for the
737 NG family, so far in 2001, to Airbus' 166, for the entire A320 family.
The new generation aircraft are actually starting to compete with their older
and larger sibling the Boeing 757. Aloha Airlines is finding that the
flexibility and range offered by the 737-700 fits very well its trans-Pacific
routes, while Delta, Continental and Southwest are finding it capable of
operating trans-continental routes profitably. Delta has, in some cases,
replaced their 757's with 737-800 aircraft on their routes to Central America.
While these aircraft are allowing for greater economics, the success will only
be told by passenger preferences and tolerances for smaller cabins over longer
journeys.
In light of what happened on September 11, and the ensuing downward movement of
the aviation industry, values for strong aircraft, like the 737-800, have
continued to soften. While we feel the values for this aircraft will rebound
quite easily, for the near future the market will remain soft and the liquidity
of these aircraft will be marginally affected.
American Airlines
Job #01269b
Page 10 of 17
--------------
[PICTURE] BOEING 757-200
--------------
The single-aisle 757 is in a class by itself when it comes to economics and
airport performance. The 757 has the lowest operating cost per seat-mile of any
single-aisle jetliner, and a lower cost per trip than any twin-aisle airplane.
The exceptional performance of the 757 allows it to operate out of almost any
airport in the world including those in high or hot locations, with short-field
runways, or that are noise-restricted. The 757 is environmentally friendly; it
is quiet and fuel-efficient, and meets strict worldwide standards for engine
emissions.
The 757 has excellent records for in-service reliability and passenger approval.
Some on-board surveys show that passengers prefer the 757 to all other
single-aisle airplanes and many twin-aisle airplanes. The 757 flight deck is
common with the 767, simplifying pilot training requirements. The versatile 757
can fly transatlantic and other long-haul routes as well as short-haul routes
equally as efficient.
One of the lowest cost-per-ASM aircraft, the B-757-200 is having a production
run that rivals that of any other single aircraft type. With new generation
engines of two types, higher gross weights, and ETOPS capabilities, the
B-757-200 has extended its market to every continent and type of airline:
scheduled, charter, and cargo.
As of October 2001, 959 757-200s have been delivered to 83 operators. The
current backlog stands at 28 aircraft. Boeing has only delivered 26 of these
aircraft in 2001.
American Airlines
Job #01269b
Page 11 of 17
While the 757-200 remains an exceptional aircraft to operate it is beginning to
feel the heat from Airbus and even other Boeing aircraft. The niche that the 757
used to fill very well is becoming smaller. Orders for the 757 are starting to
decline and the market availability for the aircraft has increased immensely
over the past couple of years. Currently, 34 aircraft are being marketed for
sale or lease -- which leads us to believe that there are more to come. The
freighter market looks promising for this aircraft since values are starting to
come down it might provide for easy acquisition for bottom tier cargo operators
wishing to dispose of their aging 727 fleets.
The market for the 757-200 was already feeling the pinch before the events of
September 11, and probably will remain soft for the foreseeable future.
ECONOMICS
The MBA Model shows the 757 to be one of the most efficient aircraft of any
type, size, or age. Its combination of capacity, low fuel consumption, and
reasonable price all contribute to its outstanding economics. We expect that the
757 will prove to be one of the strongest players in the residual value market
for the next two decades.
American Airlines
Job #01269b
Page 12 of 17
----------------
[PICTURE] BOEING 777-200ER
----------------
The B-777 is currently the world's largest wide body twin. It is Boeing's answer
to the A330 and, to a lesser extent the Douglas MD-11, both of which filled a
gap between Boeing's B-767 and B-747 lines. The A330 and MD-11 had the distinct
marketing advantage of being in service from two and seven years respectively
before the B-777, and already had large order books and client lists. Boeing is
playing catch-up in this market segment, but is doing it with a typical Boeing
combination of power and finesse. Only seven years since its introduction, 324
--200s have been delivered with 158 on order, with a current operator base of
27. Boeing has taken 18 orders for the 777-200 this year, and has delivered 43
to date.
The initial B-777 design was the -200A followed by the --200B (formerly called
the IGW - Increased Gross Weight or ER) and featured all three major high
by-pass engines: the P&W 4074, 4077 and 4090, the Rolls Royce Trent 871, and the
General Electric 90-B3. Gross weight has been increased from 545,000 pounds for
the -200, 640,000 pounds for the -200ER and 660,000 for the -300. A maximum
seating capacity of 440 passengers is available in the -200/-200B model and 550
in the newly announced -300 version. Base Values for mid 2001 deliveries of the
-200 versions are $109.70 and $125.69 million, respectively, with the -300 at
$136.82 million.
Production of the low gross version is expected to decline after the -300 is
debuted, but it will coexist, even as the increased capacity B-767-400ER moves
into the lower end of the B-777 capacity market.
To an increasing degree, Boeing is competing against itself as it offers an even
more variegated selection of aircraft derivatives.
American Airlines
Job #01269b
Page 13 of 17
In light of the recent terrorist activities on September 11 and the downward
economic trends, the 777-200ER, while will see some softened values in the near
future, will remain a staple in the long haul fleets around the world as
operators downsize from the larger 747s. This aircraft will have a big future
and should recover easily from this temporary slump.
ECONOMICS
The B-777 has operating characteristics and seat mile are somewhat higher than
the A330, due to higher gross weight, fuel burn, DOCs and capital cost; and
considerably better than tie MD-11, according to the MBA economic model. It
particularly appeals to the large segment of the market which traditionally buys
Boeing.
The 777 has the initial advantage of low maintenance costs, an all-new
technological design, a two-man crew, low specific fuel consumption, and high
capacity. Its operating margin and net margin after financial costs is among the
best of all aircraft types, even though the projected lease costs are 28 percent
of total operating expense. The 777 is well-suited to meet airline expansion
needs in markets where added frequencies are no longer possible due to slot and
gate facility restrictions.
STAGE 3-
The subject aircraft comply with the currently effective Stage III / Chapter III
aircraft noise limitations. However, the FAA and the ICAO are currently planning
the adoption of more stringent Stage IV noise regulations. The severity of the
proposed new regulations, nor the schedule of their implementation has not been
determined, but when enacted and effective may limit the continued utilization
of the subject aircraft in most areas of the world.
American Airlines
Job #01269b
Page 14 of 17
V. VALUATION
In developing the Current Base Value of these aircraft, MBA did not inspect the
aircraft or the historical maintenance documentation, but relied on partial
information supplied by the Client and not independently verified by MBA.
Therefore, we used certain assumptions that are generally accepted industry
practice to calculate the value of aircraft when more detailed information is
not available. The principal assumptions for the aircraft are as follows, for
each aircraft
1. The aircraft is new (or relatively new).
2. The specifications of the aircraft are those most common for an
aircraft of its type and vintage.
3. The aircraft is in a standard airline configuration.
4. No accounting is made for lease obligations or terms of
ownership.
American Airlines
Job #01269b
Page 15 of 17
AMERICAN AIRLINES MORTEN BEYER & AGNEW
--------------------------------------------------------------------------------
Values ($000,000)
TAIL DELIVERY ENGINE
# TYPE NUMBER SERIAL# DATE TYPE MTOW CURRENT BASE VALUE
-- ---- ------ ------- -------- ------ ---- ------------------
1 B737-823 N965AN 29544 Jun-01 CFM56-7B26 174,200 44.94
2 B737-823 N966AN 30094 Jun-01 CFM56-7B26 174,200 44.94
1 B757-223ER N185AN 32379 May-01 RB211-535E4B 250,000 55.38
2 B757-223ER N186AN 32380 May-01 RB211-535E4B 250,000 55.38
3 B757-223ER N187AN 32381 May-01 RB211-535E4B 250,000 55.38
4 B757-223ER N188AN 32382 Jun-01 RB211-535E4B 250,000 55.49
5 B757-223ER N189AN 32383 Jul-01 RB211-535E4B 250,000 55.61
6 B757-223ER N190AA 32384 Jul-01 RB211-535E4B 250,000 55.61
7 B757-223ER N191AN 32385 Aug-01 RB211-535E4B 250,000 55.72
8 B757-223ER N192AN 32386 Aug-01 RB211-535E4B 250,000 55.72
9 B757-223ER N193AN 32387 Oct-01 RB211-535E4B 250,000 55.94
10 B757-223ER N194AA 32388 Oct-01 RB211-535E4B 250,000 55.94
11 B757-223 N195AN 32389 Oct-01 RB211-535E4B 250,000 55.94
12 B757-223 N196AA 32390 Oct-01 RB211-535E4B 250,000 55.94
13 B757-223 N197AN 32391 Nov-01 RB211-535E4B 250,000 56.05
14 B757-223 N198AA 32392 Nov-01 RB211-535E4B 250,000 56.05
15 B757-223 N199AN 32393 Dec-01 RB211-535E4B 250,000 56.16
16 B757-223 N175AN 32394 Dec-01 RB211-535E4B 250,000 56.16
1 B777-223IGW N797AN 30012 Jan-01 Trent 892 648,000 129.97
2 B777-223IGW N798AN 30797 Feb-01 Trent 892 648,000 130.24
3 B777-223IGW N799AN 30258 Mar-01 Trent 892 648,000 130.50
4 B777-223IGW N750AN 30259 Mar-01 Trent 892 648,000 130.50
5 B777-223IGW N751AN 30798 Apr-01 Trent 892 648,000 130.76
6 B777-223IGW N752AN 30260 May-01 Trent 892 648,000 131.02
7 B777-223IGW N753AN 30261 May-01 Trent 892 648,000 131.02
8 B777-223IGW N754AN 30262 Jun-01 Trent 892 648,000 131.28
9 B777-223IGW N755AN 30263 Jul-01 Trent 892 648,000 131.54
10 B777-223IGW N756AM 30264 Aug-01 Trent 892 648,000 131.81
11 B777-223IGW N757AN 32636 Oct-01 Trent 892 648,000 132.33
12 B777-223IGW N758AN 32637 Nov-01 Trent 892 648,000 132.59
13 B777-223IGW N759AN 32638 Dec-01 Trent 892 648,000 132.85
--------
TOTAL 2,688.76
========
American Airlines
Job #01269b
Page 16 of 17
VI. COVENANTS
This report has been prepared for the exclusive use of American Airlines and
shall not be provided to other parties by MBA without the express consent of
American Airlines. MBA certifies that this report has been independently
prepared and that it fully and accurately reflects MBA's opinion as to the
Current Base Value. MBA further certifies that it does not have, and does not
expect to have, any financial or other interest in the subject or similar
aircraft.
This report represents the opinion of MBA as to the Current Base Value of the
subject aircraft and is intended to be advisory only, in nature. Therefore, MBA
assumes no responsibility or legal liability for any actions taken, or not
taken, by American Airlines or any other party with regard to the subject
aircraft. By accepting this report, all parties agree that MBA shall bear no
such responsibility or legal liability.
This report has been prepared by:
/s/ BRYSON P. MONTELEONE
BRYSON P. MONTELEONE
VICE PRESIDENT
Reviewed by:
/s/ MORTEN S. BEYER
NOVEMBER 29, 2001 MORTEN S. BEYER, APPRAISER FELLOW
CHAIRMAN & CEO
ISTAT CERTIFIED SENIOR APPRAISER
American Airlines
Job #01269b
Page 17 of 17
APPENDIX III
EQUIPMENT NOTE PRINCIPAL PAYMENTS
SERIES A-1 EQUIPMENT NOTES
DATE N965AN N966AN N185AN N186AN N187AN N188AN N189AN
---- -------- -------- ---------- ---------- ---------- ---------- --------
April 1, 2002......................... $ 16,562 $ 16,568 $ 19,822 $ 19,825 $ 19,832 $ 19,930 $ 8,373
October 1, 2002....................... 845,374 845,716 1,011,779 1,011,951 1,012,293 1,017,306 937,812
April 1, 2003......................... 16,562 16,568 19,822 19,825 19,832 19,930 18,373
October 1, 2003....................... 781,485 781,801 935,315 935,473 935,789 940,423 866,938
April 1, 2004......................... 16,562 16,568 19,822 19,825 19,832 19,930 18,373
October 1, 2004....................... 718,247 718,537 859,628 859,774 860,065 864,324 796,784
April 1, 2005......................... 16,562 16,568 19,822 19,825 19,832 19,930 18,373
October 1, 2005....................... 590,415 590,654 706,634 706,753 706,992 710,493 654,975
April 1, 2006......................... 16,562 16,568 19,822 19,825 19,832 19,930 18,373
October 1, 2006....................... 574,541 574,774 687,636 687,752 687,984 691,391 637,365
April 1, 2007......................... 16,562 16,568 19,822 19,825 19,832 19,930 18,373
October 1, 2007....................... 527,341 527,555 631,144 631,251 631,465 634,592 585,004
April 1, 2008......................... 16,562 16,568 19,822 19,825 19,832 19,930 18,373
October 1, 2008....................... 493,118 493,318 590,185 590,285 590,484 593,409 547,039
April 1, 2009......................... 57,369 57,392 68,661 68,673 68,696 69,036 63,642
October 1, 2009....................... 487,179 487,376 583,076 583,175 583,372 586,261 540,450
April 1, 2010......................... 231,016 231,110 276,490 276,537 276,630 278,000 256,277
October 1, 2010....................... 380,815 380,970 455,776 455,853 456,007 458,266 422,456
April 1, 2011......................... 208,849 208,934 249,960 250,002 250,087 251,325 231,686
DATE N190AA N191AN N192AN N193AN
---- -------- -------- -------- --------
April 1, 2002......................... $ 18,373 $ 18,462 $ 18,476 $ 18,525
October 1, 2002....................... 937,812 942,392 943,077 945,571
April 1, 2003......................... 18,373 18,462 18,476 18,525
October 1, 2003....................... 866,938 871,172 871,804 874,110
April 1, 2004......................... 18,373 18,462 18,476 18,525
October 1, 2004....................... 796,784 800,676 801,257 803,377
April 1, 2005......................... 18,373 18,462 18,476 18,525
October 1, 2005....................... 654,975 658,173 658,651 660,394
April 1, 2006......................... 18,373 18,462 18,476 18,525
October 1, 2006....................... 637,365 640,478 640,943 642,639
April 1, 2007......................... 18,373 18,462 18,476 18,525
October 1, 2007....................... 585,004 587,861 588,288 589,844
April 1, 2008......................... 18,373 18,462 18,476 18,525
October 1, 2008....................... 547,039 549,711 550,110 551,565
April 1, 2009......................... 63,642 63,952 63,999 64,168
October 1, 2009....................... 540,450 543,089 543,484 544,921
April 1, 2010......................... 256,277 257,529 257,716 258,397
October 1, 2010....................... 422,456 424,519 424,828 425,951
April 1, 2011......................... 231,686 232,818 232,987 233,603
DATE N194AA N195AN N196AA N197AN N198AA N199AN N175AN N797AN
---- -------- -------- -------- -------- -------- -------- -------- ----------
April 1, 2002........................... $ 18,525 $ 16,323 $ 16,323 $ 16,514 $ 16,536 $ 16,438 $ 16,438 $ 41,996
October 1, 2002......................... 945,571 833,199 833,199 842,951 844,075 839,076 839,076 2,143,643
April 1, 2003........................... 18,525 16,323 16,323 16,514 16,536 16,438 16,438 41,996
October 1, 2003......................... 874,110 770,230 770,230 779,245 780,285 775,663 775,663 1,981,638
April 1, 2004........................... 18,525 16,323 16,323 16,514 16,536 16,438 16,438 41,996
October 1, 2004......................... 803,377 707,903 707,903 716,188 717,143 712,896 712,896 1,821,283
April 1, 2005........................... 18,525 16,323 16,323 16,514 16,536 16,438 16,438 41,996
October 1, 2005......................... 660,394 581,912 581,912 588,723 589,508 586,016 586,016 1,497,135
April 1, 2006........................... 18,525 16,323 16,323 16,514 16,536 16,438 16,438 41,996
October 1, 2006......................... 642,639 566,267 566,267 572,895 573,659 570,261 570,261 1,456,884
April 1, 2007........................... 18,525 16,323 16,323 16,514 16,536 16,438 16,438 41,996
October 1, 2007......................... 589,844 519,746 519,746 525,830 526,531 523,413 523,413 1,337,197
April 1, 2008........................... 18,525 16,323 16,323 16,514 16,536 16,438 16,438 41,996
October 1, 2008......................... 551,565 486,016 486,016 491,705 492,361 489,445 489,445 1,250,417
April 1, 2009........................... 64,168 56,542 56,542 57,204 57,280 56,941 56,941 145,471
October 1, 2009......................... 544,921 480,162 480,162 485,783 486,430 483,549 483,549 1,235,356
April 1, 2010........................... 258,397 227,689 227,689 230,354 230,661 229,295 229,295 585,796
October 1, 2010......................... 425,951 375,331 375,331 379,724 380,231 377,978 377,978 965,647
April 1, 2011........................... 233,603 205,841 205,841 208,251 208,529 207,293 207,293 529,586
DATE N798AN N799AN
---- ---------- ----------
April 1, 2002........................... $ 46,006 $ 46,084
October 1, 2002......................... 2,348,349 2,352,303
April 1, 2003........................... 46,006 46,084
October 1, 2003......................... 2,170,873 2,174,529
April 1, 2004........................... 46,006 46,084
October 1, 2004......................... 1,995,205 1,998,565
April 1, 2005........................... 46,006 46,084
October 1, 2005......................... 1,640,103 1,642,865
April 1, 2006........................... 46,006 46,084
October 1, 2006......................... 1,596,008 1,598,696
April 1, 2007........................... 46,006 46,084
October 1, 2007......................... 1,464,892 1,467,358
April 1, 2008........................... 46,006 46,084
October 1, 2008......................... 1,369,824 1,372,131
April 1, 2009........................... 159,363 159,631
October 1, 2009......................... 1,353,325 1,355,604
April 1, 2010........................... 641,736 642,816
October 1, 2010......................... 1,057,861 1,059,642
April 1, 2011........................... 580,159 581,136
III-1
DATE N750AN N751AN N752AN N753AN N754AN N755AN N756AM
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
April 1, 2002.......................... $ 46,104 $ 45,238 $ 45,040 $ 45,134 $ 45,144 $ 41,301 $ 41,238
October 1, 2002........................ 2,353,330 2,309,148 2,299,020 2,303,810 2,304,358 2,108,158 2,104,975
April 1, 2003.......................... 46,104 45,238 45,040 45,134 45,144 41,301 41,238
October 1, 2003........................ 2,175,478 2,134,636 2,125,272 2,129,701 2,130,207 1,948,835 1,945,893
April 1, 2004.......................... 46,104 45,238 45,040 45,134 45,144 41,301 41,238
October 1, 2004........................ 1,999,437 1,961,900 1,953,294 1,957,364 1,957,829 1,791,134 1,788,430
April 1, 2005.......................... 46,104 45,238 45,040 45,134 45,144 41,301 41,238
October 1, 2005........................ 1,643,582 1,612,725 1,605,651 1,608,997 1,609,380 1,472,352 1,470,130
April 1, 2006.......................... 46,104 45,238 45,040 45,134 45,144 41,301 41,238
October 1, 2006........................ 1,599,393 1,569,366 1,562,483 1,565,738 1,566,110 1,432,767 1,430,604
April 1, 2007.......................... 46,104 45,238 45,040 45,134 45,144 41,301 41,238
October 1, 2007........................ 1,467,999 1,440,439 1,434,120 1,437,109 1,437,450 1,315,061 1,313,076
April 1, 2008.......................... 46,104 45,238 45,040 45,134 45,144 41,301 41,238
October 1, 2008........................ 1,372,730 1,346,958 1,341,050 1,343,844 1,344,164 1,229,718 1,227,861
April 1, 2009.......................... 159,701 156,703 156,016 156,341 156,378 143,063 142,847
October 1, 2009........................ 1,356,196 1,330,734 1,324,897 1,327,658 1,327,974 1,214,906 1,213,072
April 1, 2010.......................... 643,097 631,023 628,256 629,565 629,714 576,099 575,229
October 1, 2010........................ 1,060,104 1,040,202 1,035,639 1,037,797 1,038,044 949,662 948,228
April 1, 2011.......................... 581,389 570,474 567,972 569,156 569,291 520,820 520,034
DATE N757AN N758AN N759AN
---- ---------- ---------- ----------
April 1, 2002.......................... $ 41,096 $ 41,026 $ 40,939
October 1, 2002........................ 2,097,723 2,094,166 2,089,721
April 1, 2003.......................... 41,096 41,026 40,939
October 1, 2003........................ 1,939,188 1,935,900 1,931,791
April 1, 2004.......................... 41,096 41,026 40,939
October 1, 2004........................ 1,782,268 1,779,246 1,775,469
April 1, 2005.......................... 41,096 41,026 40,939
October 1, 2005........................ 1,465,064 1,462,580 1,459,476
April 1, 2006.......................... 41,096 41,026 40,939
October 1, 2006........................ 1,425,675 1,423,258 1,420,237
April 1, 2007.......................... 41,096 41,026 40,939
October 1, 2007........................ 1,308,552 1,306,333 1,303,560
April 1, 2008.......................... 41,096 41,026 40,939
October 1, 2008........................ 1,223,631 1,221,556 1,218,963
April 1, 2009.......................... 142,355 142,114 141,812
October 1, 2009........................ 1,208,892 1,206,843 1,204,281
April 1, 2010.......................... 573,247 572,275 571,060
October 1, 2010........................ 944,961 943,359 941,356
April 1, 2011.......................... 518,242 517,363 517,109
III-2
APPENDIX III
EQUIPMENT NOTE PRINCIPAL PAYMENTS
SERIES A-2 EQUIPMENT NOTES
DATE N965AN N966AN N185AN N186AN N187AN N188AN N189AN
---- ----------- ----------- ----------- ----------- ----------- ----------- -----------
April 1, 2002........ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002...... 0 0 0 0 0 0 0
April 1, 2003........ 0 0 0 0 0 0 0
October 1, 2003...... 0 0 0 0 0 0 0
April 1, 2004........ 0 0 0 0 0 0 0
October 1, 2004...... 0 0 0 0 0 0 0
April 1, 2005........ 0 0 0 0 0 0 0
October 1, 2005...... 0 0 0 0 0 0 0
April 1, 2006........ 0 0 0 0 0 0 0
October 1, 2006...... 0 0 0 0 0 0 0
April 1, 2007........ 0 0 0 0 0 0 0
October 1, 2007...... 0 0 0 0 0 0 0
April 1, 2008........ 0 0 0 0 0 0 0
October 1, 2008...... 0 0 0 0 0 0 0
April 1, 2009........ 0 0 0 0 0 0 0
October 1, 2009...... 0 0 0 0 0 0 0
April 1, 2010........ 0 0 0 0 0 0 0
October 1, 2010...... 0 0 0 0 0 0 0
April 1, 2011........ 0 0 0 0 0 0 0
October 1, 2011...... 13,767,600 13,767,600 16,798,320 16,798,320 16,798,320 16,850,680 17,627,456
DATE N190AA N191AN N192AN N193AN
---- ----------- ----------- ----------- -----------
April 1, 2002........ $ 0 $ 0 $ 0 $ 0
October 1, 2002...... 0 0 0 0
April 1, 2003........ 0 0 0 0
October 1, 2003...... 0 0 0 0
April 1, 2004........ 0 0 0 0
October 1, 2004...... 0 0 0 0
April 1, 2005........ 0 0 0 0
October 1, 2005...... 0 0 0 0
April 1, 2006........ 0 0 0 0
October 1, 2006...... 0 0 0 0
April 1, 2007........ 0 0 0 0
October 1, 2007...... 0 0 0 0
April 1, 2008........ 0 0 0 0
October 1, 2008...... 0 0 0 0
April 1, 2009........ 0 0 0 0
October 1, 2009...... 0 0 0 0
April 1, 2010........ 0 0 0 0
October 1, 2010...... 0 0 0 0
April 1, 2011........ 0 0 0 0
October 1, 2011...... 17,627,456 17,682,060 17,682,060 17,739,876
DATE N194AA N195AN N196AA N197AN N198AA N199AN N175AN
---- ----------- ----------- ----------- ----------- ----------- ----------- -----------
April 1, 2002................ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.............. 0 0 0 0 0 0 0
April 1, 2003................ 0 0 0 0 0 0 0
October 1, 2003.............. 0 0 0 0 0 0 0
April 1, 2004................ 0 0 0 0 0 0 0
October 1, 2004.............. 0 0 0 0 0 0 0
April 1, 2005................ 0 0 0 0 0 0 0
October 1, 2005.............. 0 0 0 0 0 0 0
April 1, 2006................ 0 0 0 0 0 0 0
October 1, 2006.............. 0 0 0 0 0 0 0
April 1, 2007................ 0 0 0 0 0 0 0
October 1, 2007.............. 0 0 0 0 0 0 0
April 1, 2008................ 0 0 0 0 0 0 0
October 1, 2008.............. 0 0 0 0 0 0 0
April 1, 2009................ 0 0 0 0 0 0 0
October 1, 2009.............. 0 0 0 0 0 0 0
April 1, 2010................ 0 0 0 0 0 0 0
October 1, 2010.............. 0 0 0 0 0 0 0
April 1, 2011................ 0 0 0 0 0 0 0
October 1, 2011.............. 17,739,876 17,550,368 17,550,368 17,550,368 17,540,732 17,662,788 17,662,788
DATE N797AN N798AN N799AN
---- ----------- ----------- -----------
April 1, 2002................ $ 0 $ 0 $ 0
October 1, 2002.............. 0 0 0
April 1, 2003................ 0 0 0
October 1, 2003.............. 0 0 0
April 1, 2004................ 0 0 0
October 1, 2004.............. 0 0 0
April 1, 2005................ 0 0 0
October 1, 2005.............. 0 0 0
April 1, 2006................ 0 0 0
October 1, 2006.............. 0 0 0
April 1, 2007................ 0 0 0
October 1, 2007.............. 0 0 0
April 1, 2008................ 0 0 0
October 1, 2008.............. 0 0 0
April 1, 2009................ 0 0 0
October 1, 2009.............. 0 0 0
April 1, 2010................ 0 0 0
October 1, 2010.............. 0 0 0
April 1, 2011................ 0 0 0
October 1, 2011.............. 40,154,309 38,554,977 38,676,544
III-3
DATE N750AN N751AN N752AN N753AN N754AN N755AN
---- ----------- ----------- ----------- ----------- ----------- -----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0
October 1, 2006.................... 0 0 0 0 0 0
April 1, 2007...................... 0 0 0 0 0 0
October 1, 2007.................... 0 0 0 0 0 0
April 1, 2008...................... 0 0 0 0 0 0
October 1, 2008.................... 0 0 0 0 0 0
April 1, 2009...................... 0 0 0 0 0 0
October 1, 2009.................... 0 0 0 0 0 0
April 1, 2010...................... 0 0 0 0 0 0
October 1, 2010.................... 0 0 0 0 0 0
April 1, 2011...................... 0 0 0 0 0 0
October 1, 2011.................... 38,676,544 39,196,080 39,448,640 39,448,640 39,565,680 41,389,832
DATE N756AM N757AN N758AN N759AN
---- ----------- ----------- ----------- -----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0
April 1, 2003...................... 0 0 0 0
October 1, 2003.................... 0 0 0 0
April 1, 2004...................... 0 0 0 0
October 1, 2004.................... 0 0 0 0
April 1, 2005...................... 0 0 0 0
October 1, 2005.................... 0 0 0 0
April 1, 2006...................... 0 0 0 0
October 1, 2006.................... 0 0 0 0
April 1, 2007...................... 0 0 0 0
October 1, 2007.................... 0 0 0 0
April 1, 2008...................... 0 0 0 0
October 1, 2008.................... 0 0 0 0
April 1, 2009...................... 0 0 0 0
October 1, 2009.................... 0 0 0 0
April 1, 2010...................... 0 0 0 0
October 1, 2010.................... 0 0 0 0
April 1, 2011...................... 0 0 0 0
October 1, 2011.................... 41,518,312 41,778,484 41,910,176 42,045,746
III-4
EQUIPMENT NOTE PRINCIPAL PAYMENTS
SERIES B EQUIPMENT NOTES
DATE N965AN N966AN N185AN N186AN N187AN N188AN N189AN
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0 0
October 1, 2006.................... 0 0 0 0 0 0 0
April 1, 2007...................... 0 0 0 0 0 0 0
October 1, 2007.................... 0 0 0 0 0 0 0
April 1, 2008...................... 0 0 0 0 0 0 0
October 1, 2008.................... 0 0 0 0 0 0 0
April 1, 2009...................... 0 0 0 0 0 0 0
October 1, 2009.................... 0 0 0 0 0 0 0
April 1, 2010...................... 0 0 0 0 0 0 0
October 1, 2010.................... 0 0 0 0 0 0 0
April 1, 2011...................... 3,292,746 3,295,128 3,880,563 3,881,754 3,884,135 3,909,170 4,102,815
DATE N190AA N191AN N192AN N193AN
---- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0
April 1, 2003...................... 0 0 0 0
October 1, 2003.................... 0 0 0 0
April 1, 2004...................... 0 0 0 0
October 1, 2004.................... 0 0 0 0
April 1, 2005...................... 0 0 0 0
October 1, 2005.................... 0 0 0 0
April 1, 2006...................... 0 0 0 0
October 1, 2006.................... 0 0 0 0
April 1, 2007...................... 0 0 0 0
October 1, 2007.................... 0 0 0 0
April 1, 2008...................... 0 0 0 0
October 1, 2008.................... 0 0 0 0
April 1, 2009...................... 0 0 0 0
October 1, 2009.................... 0 0 0 0
April 1, 2010...................... 0 0 0 0
October 1, 2010.................... 0 0 0 0
April 1, 2011...................... 4,102,815 4,127,681 4,132,648 4,141,886
DATE N194AA N195AN N196AA N197AN N198AA N199AN N175AN
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0 0
October 1, 2006.................... 0 0 0 0 0 0 0
April 1, 2007...................... 0 0 0 0 0 0 0
October 1, 2007.................... 0 0 0 0 0 0 0
April 1, 2008...................... 0 0 0 0 0 0 0
October 1, 2008.................... 0 0 0 0 0 0 0
April 1, 2009...................... 0 0 0 0 0 0 0
October 1, 2009.................... 0 0 0 0 0 0 0
April 1, 2010...................... 0 0 0 0 0 0 0
October 1, 2010.................... 0 0 0 0 0 0 0
April 1, 2011...................... 4,141,886 3,355,394 3,355,394 3,426,173 3,435,809 3,380,806 3,380,806
DATE N797AN N798AN N799AN
---- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0
April 1, 2003...................... 0 0 0
October 1, 2003.................... 0 0 0
April 1, 2004...................... 0 0 0
October 1, 2004.................... 0 0 0
April 1, 2005...................... 0 0 0
October 1, 2005.................... 0 0 0
April 1, 2006...................... 0 0 0
October 1, 2006.................... 0 0 0
April 1, 2007...................... 0 0 0
October 1, 2007.................... 0 0 0
April 1, 2008...................... 0 0 0
October 1, 2008.................... 0 0 0
April 1, 2009...................... 0 0 0
October 1, 2009.................... 0 0 0
April 1, 2010...................... 0 0 0
October 1, 2010.................... 0 0 0
April 1, 2011...................... 8,832,552 8,456,989 8,459,963
III-5
DATE N750AN N751AN N752AN N753AN N754AN N755AN N756AM
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0 0
October 1, 2006.................... 0 0 0 0 0 0 0
April 1, 2007...................... 0 0 0 0 0 0 0
October 1, 2007.................... 0 0 0 0 0 0 0
April 1, 2008...................... 0 0 0 0 0 0 0
October 1, 2008.................... 0 0 0 0 0 0 0
April 1, 2009...................... 0 0 0 0 0 0 0
October 1, 2009.................... 0 0 0 0 0 0 0
April 1, 2010...................... 0 0 0 0 0 0 0
October 1, 2010.................... 0 0 0 0 0 0 0
April 1, 2011...................... 8,467,012 8,695,055 8,577,044 8,610,384 8,592,172 8,952,376 8,909,575
DATE N757AN N758AN N759AN
---- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0
April 1, 2003...................... 0 0 0
October 1, 2003.................... 0 0 0
April 1, 2004...................... 0 0 0
October 1, 2004.................... 0 0 0
April 1, 2005...................... 0 0 0
October 1, 2005.................... 0 0 0
April 1, 2006...................... 0 0 0
October 1, 2006.................... 0 0 0
April 1, 2007...................... 0 0 0
October 1, 2007.................... 0 0 0
April 1, 2008...................... 0 0 0
October 1, 2008.................... 0 0 0
April 1, 2009...................... 0 0 0
October 1, 2009.................... 0 0 0
April 1, 2010...................... 0 0 0
October 1, 2010.................... 0 0 0
April 1, 2011...................... 8,817,037 8,771,024 8,718,208
III-6
EQUIPMENT NOTE PRINCIPAL PAYMENTS
SERIES C EQUIPMENT NOTES
DATE N965AN N966AN N185AN N186AN N187AN N188AN N189AN
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0 0
October 1, 2006.................... 4,536,761 4,536,598 5,544,693 5,544,613 5,544,453 5,560,864 6,043,512
DATE N190AA N191AN N192AN N193AN
---- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0
April 1, 2003...................... 0 0 0 0
October 1, 2003.................... 0 0 0 0
April 1, 2004...................... 0 0 0 0
October 1, 2004.................... 0 0 0 0
April 1, 2005...................... 0 0 0 0
October 1, 2005.................... 0 0 0 0
April 1, 2006...................... 0 0 0 0
October 1, 2006.................... 6,043,512 6,061,543 6,061,257 6,081,321
DATE N194AA N195AN N196AA N197AN N198AA N199AN N175AN
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0 0
October 1, 2006.................... 6,081,321 6,058,634 6,058,634 6,054,600 6,050,620 6,097,218 6,097,218
DATE N797AN N798AN N799AN
---- ----------- ----------- -----------
April 1, 2002...................... $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0
April 1, 2003...................... 0 0 0
October 1, 2003.................... 0 0 0
April 1, 2004...................... 0 0 0
October 1, 2004.................... 0 0 0
April 1, 2005...................... 0 0 0
October 1, 2005.................... 0 0 0
April 1, 2006...................... 0 0 0
October 1, 2006.................... 14,031,523 12,970,441 13,012,828
DATE N750AN N751AN N752AN N753AN N754AN N755AN
---- ----------- ----------- ----------- ----------- ----------- -----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0
October 1, 2006.................... 13,012,386 12,961,862 13,057,111 13,054,863 13,096,547 14,229,157
DATE N756AM N757AN N758AN N759AN
---- ----------- ----------- ----------- -----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0
April 1, 2003...................... 0 0 0 0
October 1, 2003.................... 0 0 0 0
April 1, 2004...................... 0 0 0 0
October 1, 2004.................... 0 0 0 0
April 1, 2005...................... 0 0 0 0
October 1, 2005.................... 0 0 0 0
April 1, 2006...................... 0 0 0 0
October 1, 2006.................... 14,277,350 14,375,268 14,424,784 14,476,508
III-7
EQUIPMENT NOTE PRINCIPAL PAYMENTS
SERIES D EQUIPMENT NOTES
DATE N965AN N966AN N185AN N186AN N187AN N188AN N189AN
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0 0
October 1, 2006.................... 4,417,242 4,417,859 5,354,150 5,354,457 5,355,075 5,375,113 5,585,570
DATE N190AA N191AN N192AN N193AN
---- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0
April 1, 2003...................... 0 0 0 0
October 1, 2003.................... 0 0 0 0
April 1, 2004...................... 0 0 0 0
October 1, 2004.................... 0 0 0 0
April 1, 2005...................... 0 0 0 0
October 1, 2005.................... 0 0 0 0
April 1, 2006...................... 0 0 0 0
October 1, 2006.................... 5,585,570 5,605,997 5,607,274 5,624,509
DATE N194AA N195AN N196AA N197AN N198AA N199AN N175AN
---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0 0
October 1, 2006.................... 5,624,509 5,373,637 5,373,637 5,391,830 5,391,830 5,409,066 5,409,066
DATE N797AN N798AN N799AN
---- ----------- ----------- -----------
April 1, 2002...................... $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0
April 1, 2003...................... 0 0 0
October 1, 2003.................... 0 0 0
April 1, 2004...................... 0 0 0
October 1, 2004.................... 0 0 0
April 1, 2005...................... 0 0 0
October 1, 2005.................... 0 0 0
April 1, 2006...................... 0 0 0
October 1, 2006.................... 12,683,615 12,268,459 12,300,959
DATE N750AN N751AN N752AN N753AN N754AN N755AN
---- ----------- ----------- ----------- ----------- ----------- -----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0 0 0
April 1, 2003...................... 0 0 0 0 0 0
October 1, 2003.................... 0 0 0 0 0 0
April 1, 2004...................... 0 0 0 0 0 0
October 1, 2004.................... 0 0 0 0 0 0
April 1, 2005...................... 0 0 0 0 0 0
October 1, 2005.................... 0 0 0 0 0 0
April 1, 2006...................... 0 0 0 0 0 0
October 1, 2006.................... 12,302,798 12,399,910 12,434,748 12,443,380 12,468,968 12,940,010
DATE N756AM N757AN N758AN N759AN
---- ----------- ----------- ----------- -----------
April 1, 2002...................... $ 0 $ 0 $ 0 $ 0
October 1, 2002.................... 0 0 0 0
April 1, 2003...................... 0 0 0 0
October 1, 2003.................... 0 0 0 0
April 1, 2004...................... 0 0 0 0
October 1, 2004.................... 0 0 0 0
April 1, 2005...................... 0 0 0 0
October 1, 2005.................... 0 0 0 0
April 1, 2006...................... 0 0 0 0
October 1, 2006.................... 12,962,033 13,005,121 13,027,144 13,048,464
III-8
APPENDIX IV
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
N966AN N185AN N186AN
N965AN --------------------------- --------------------------- -------------
------------------------------ ASSUMED ASSUMED ASSUMED
ASSUMED AIRCRAFT LOAN TO AIRCRAFT LOAN TO AIRCRAFT LOAN TO AIRCRAFT
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT VALUE (IN
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO MILLIONS)
---------------- ----------- ------------- ----------- ------------- ----------- -------------
January 1, 2002...... $47.76 67.1% $47.77 67.1% $57.89 67.0% $57.89
April 1, 2002........ 46.33 69.1 46.33 69.1 56.15 69.0 56.16
October 1, 2002...... 46.33 67.3 46.33 67.3 56.15 67.2 56.16
April 1, 2003........ 44.89 69.4 44.90 69.4 54.42 69.3 54.42
October 1, 2003...... 44.89 67.6 44.90 67.6 54.42 67.6 54.42
April 1, 2004........ 43.46 69.8 43.47 69.8 52.68 69.8 52.68
October 1, 2004...... 43.46 68.2 43.47 68.2 52.68 68.2 52.68
April 1, 2005........ 42.03 70.5 42.03 70.5 50.94 70.4 50.95
October 1, 2005...... 42.03 69.1 42.03 69.1 50.94 69.1 50.95
April 1, 2006........ 40.60 71.5 40.60 71.5 49.21 71.5 49.21
October 1, 2006...... 40.60 48.0 40.60 48.0 49.21 47.9 49.21
April 1, 2007........ 39.16 49.7 39.17 49.7 47.47 49.6 47.47
October 1, 2007...... 39.16 48.3 39.17 48.4 47.47 48.3 47.47
April 1, 2008........ 37.73 50.1 37.74 50.1 45.73 50.1 45.74
October 1, 2008...... 37.73 48.8 37.74 48.8 45.73 48.8 45.74
April 1, 2009........ 36.30 50.6 36.30 50.6 44.00 50.6 44.00
October 1, 2009...... 36.30 49.3 36.30 49.3 44.00 49.2 44.00
April 1, 2010........ 34.86 50.6 34.87 50.6 42.26 50.6 42.26
October 1, 2010...... 34.86 49.5 34.87 49.5 42.26 49.5 42.26
April 1, 2011........ 33.43 41.2 33.44 41.2 40.52 41.5 40.53
October 1, 2011...... 0.00 0.0 0.00 0.0 0.00 0.0 0.00
N186AN N187AN N188AN
----------- --------------------------- ---------------------------
ASSUMED ASSUMED
LOAN TO AIRCRAFT LOAN TO AIRCRAFT LOAN TO
AIRCRAFT VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
VALUE RATIO MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
----------- ------------- ----------- ------------- -----------
January 1, 2002...... 67.0% $57.90 67.0% $58.12 67.0%
April 1, 2002........ 69.0 56.16 69.0 56.37 69.0
October 1, 2002...... 67.2 56.16 67.2 56.37 67.2
April 1, 2003........ 69.3 54.43 69.3 54.63 69.3
October 1, 2003...... 67.6 54.43 67.6 54.63 67.6
April 1, 2004........ 69.8 52.69 69.8 52.89 69.8
October 1, 2004...... 68.2 52.69 68.2 52.89 68.2
April 1, 2005........ 70.4 50.95 70.4 51.14 70.4
October 1, 2005...... 69.1 50.95 69.1 51.14 69.1
April 1, 2006........ 71.5 49.22 71.5 49.40 71.5
October 1, 2006...... 47.9 49.22 47.9 49.40 47.9
April 1, 2007........ 49.6 47.48 49.6 47.66 49.6
October 1, 2007...... 48.3 47.48 48.3 47.66 48.3
April 1, 2008........ 50.1 45.74 50.1 45.91 50.1
October 1, 2008...... 48.8 45.74 48.8 45.91 48.8
April 1, 2009........ 50.6 44.00 50.6 44.17 50.6
October 1, 2009...... 49.2 44.00 49.2 44.17 49.2
April 1, 2010........ 50.6 42.27 50.6 42.43 50.6
October 1, 2010...... 49.5 42.27 49.5 42.43 49.5
April 1, 2011........ 41.5 40.53 41.4 40.68 41.4
October 1, 2011...... 0.0 0.00 0.0 0.00 0.0
N189AN N190AA N191AN
--------------------------- --------------------------- ---------------------------
ASSUMED ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- ----------- ------------- -----------
January 1, 2002................... $58.33 68.6% $58.33 68.6% $58.55 68.6%
April 1, 2002..................... 58.33 68.6 58.33 68.6 58.55 68.6
October 1, 2002................... 56.58 69.1 56.58 69.1 56.79 69.1
April 1, 2003..................... 56.58 69.0 56.58 69.0 56.79 69.0
October 1, 2003................... 54.83 69.6 54.83 69.6 55.03 69.6
April 1, 2004..................... 54.83 69.6 54.83 69.6 55.03 69.6
October 1, 2004................... 53.08 70.4 53.08 70.4 53.28 70.4
April 1, 2005..................... 53.08 70.4 53.08 70.4 53.28 70.4
October 1, 2005................... 51.33 71.5 51.33 71.5 51.52 71.5
April 1, 2006..................... 51.33 71.5 51.33 71.5 51.52 71.5
October 1, 2006................... 49.58 49.2 49.58 49.2 49.76 49.2
April 1, 2007..................... 49.58 49.2 49.58 49.2 49.76 49.2
October 1, 2007................... 47.83 49.8 47.83 49.8 48.01 49.8
April 1, 2008..................... 47.83 49.7 47.83 49.7 48.01 49.7
October 1, 2008................... 46.08 50.4 46.08 50.4 46.25 50.4
April 1, 2009..................... 46.08 50.3 46.08 50.3 46.25 50.3
October 1, 2009................... 44.33 51.1 44.33 51.1 44.50 51.1
April 1, 2010..................... 44.33 50.5 44.33 50.5 44.50 50.5
October 1, 2010................... 42.58 51.6 42.58 51.6 42.74 51.6
April 1, 2011..................... 42.58 41.4 42.58 41.4 42.74 41.4
October 1, 2011................... 0.00 0.0 0.00 0.0 0.00 0.0
N192AN N193AN
--------------------------- ---------------------------
ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- -----------
January 1, 2002................... $58.56 68.6% $58.92 68.4%
April 1, 2002..................... 58.56 68.6 58.92 68.4
October 1, 2002................... 56.80 69.1 57.15 68.8
April 1, 2003..................... 56.80 69.0 57.15 68.8
October 1, 2003................... 55.05 69.6 55.38 69.4
April 1, 2004..................... 55.05 69.6 55.38 69.4
October 1, 2004................... 53.29 70.4 53.62 70.2
April 1, 2005..................... 53.29 70.4 53.62 70.2
October 1, 2005................... 51.53 71.5 51.85 71.3
April 1, 2006..................... 51.53 71.5 51.85 71.2
October 1, 2006................... 49.78 49.2 50.08 49.1
April 1, 2007..................... 49.78 49.2 50.08 49.1
October 1, 2007................... 48.02 49.8 48.31 49.6
April 1, 2008..................... 48.02 49.7 48.31 49.6
October 1, 2008................... 46.26 50.4 46.55 50.3
April 1, 2009..................... 46.26 50.3 46.55 50.2
October 1, 2009................... 44.51 51.1 44.78 50.9
April 1, 2010..................... 44.51 50.5 44.78 50.3
October 1, 2010................... 42.75 51.6 43.01 51.4
April 1, 2011..................... 42.75 41.4 43.01 41.2
October 1, 2011................... 0.00 0.0 0.00 0.0
IV-1
N194AA N195AN N196AA
--------------------------- --------------------------- ---------------------------
ASSUMED ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- ----------- ------------- -----------
January 1, 2002................... $58.92 68.4% $56.12 68.2% $56.12 68.2%
April 1, 2002..................... 58.92 68.4 56.12 68.2 56.12 68.2
October 1, 2002................... 57.15 68.8 54.44 68.7 54.44 68.7
April 1, 2003..................... 57.15 68.8 54.44 68.7 54.44 68.7
October 1, 2003................... 55.38 69.4 52.75 69.4 52.75 69.4
April 1, 2004..................... 55.38 69.4 52.75 69.4 52.75 69.4
October 1, 2004................... 53.62 70.2 51.07 70.3 51.07 70.3
April 1, 2005..................... 53.62 70.2 51.07 70.3 51.07 70.3
October 1, 2005................... 51.85 71.3 49.39 71.5 49.39 71.5
April 1, 2006..................... 51.85 71.2 49.39 71.5 49.39 71.5
October 1, 2006................... 50.08 49.1 47.70 48.8 47.70 48.8
April 1, 2007..................... 50.08 49.1 47.70 48.8 47.70 48.8
October 1, 2007................... 48.31 49.6 46.02 49.4 46.02 49.4
April 1, 2008..................... 48.31 49.6 46.02 49.4 46.02 49.4
October 1, 2008................... 46.55 50.3 44.33 50.2 44.33 50.2
April 1, 2009..................... 46.55 50.2 44.33 50.1 44.33 50.1
October 1, 2009................... 44.78 50.9 42.65 50.9 42.65 50.9
April 1, 2010..................... 44.78 50.3 42.65 50.4 42.65 50.4
October 1, 2010................... 43.01 51.4 40.97 51.5 40.97 51.5
April 1, 2011..................... 43.01 41.2 40.97 42.8 40.97 42.8
October 1, 2011................... 0.00 0.0 0.00 0.0 0.00 0.0
N197AN N198AA
--------------------------- ---------------------------
ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- -----------
January 1, 2002................... $56.31 68.2% $56.31 68.2%
April 1, 2002..................... 56.31 68.2 56.31 68.2
October 1, 2002................... 54.62 68.8 54.62 68.8
April 1, 2003..................... 54.62 68.7 54.62 68.7
October 1, 2003................... 52.93 69.5 52.93 69.5
April 1, 2004..................... 52.93 69.4 52.93 69.4
October 1, 2004................... 51.24 70.3 51.24 70.3
April 1, 2005..................... 51.24 70.3 51.24 70.3
October 1, 2005................... 49.55 71.5 49.55 71.5
April 1, 2006..................... 49.55 71.5 49.55 71.5
October 1, 2006................... 47.86 48.9 47.86 48.9
April 1, 2007..................... 47.86 48.8 47.86 48.8
October 1, 2007................... 46.17 49.5 46.17 49.5
April 1, 2008..................... 46.17 49.4 46.17 49.4
October 1, 2008................... 44.48 50.2 44.48 50.2
April 1, 2009..................... 44.48 50.1 44.48 50.1
October 1, 2009................... 42.80 50.9 42.80 50.9
April 1, 2010..................... 42.80 50.4 42.80 50.4
October 1, 2010................... 41.11 51.5 41.11 51.5
April 1, 2011..................... 41.11 42.7 41.11 42.7
October 1, 2011................... 0.00 0.0 0.00 0.0
N199AN N175AN N797AN
--------------------------- --------------------------- ---------------------------
ASSUMED ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- ----------- ------------- -----------
January 1, 2002................... $56.49 68.2% $56.49 68.2% $133.02 68.4%
April 1, 2002..................... 56.49 68.2 56.49 68.2 133.02 68.3
October 1, 2002................... 54.80 68.7 54.80 68.7 128.91 68.9
April 1, 2003..................... 54.80 68.7 54.80 68.7 128.91 68.8
October 1, 2003................... 53.10 69.4 53.10 69.4 124.80 69.5
April 1, 2004..................... 53.10 69.4 53.10 69.4 124.80 69.5
October 1, 2004................... 51.41 70.3 51.41 70.3 120.68 70.3
April 1, 2005..................... 51.41 70.3 51.41 70.3 120.68 70.3
October 1, 2005................... 49.71 71.5 49.71 71.5 116.57 71.5
April 1, 2006..................... 49.71 71.5 49.71 71.5 116.57 71.5
October 1, 2006................... 48.02 48.8 48.02 48.8 112.45 49.0
April 1, 2007..................... 48.02 48.8 48.02 48.8 112.45 49.0
October 1, 2007................... 46.32 49.4 46.32 49.4 108.34 49.6
April 1, 2008..................... 46.32 49.4 46.32 49.4 108.34 49.6
October 1, 2008................... 44.63 50.2 44.63 50.2 104.22 50.3
April 1, 2009..................... 44.63 50.1 44.63 50.1 104.22 50.2
October 1, 2009................... 42.93 50.9 42.93 50.9 100.11 51.0
April 1, 2010..................... 42.93 50.4 42.93 50.4 100.11 50.4
October 1, 2010................... 41.24 51.5 41.24 51.5 96.00 51.6
April 1, 2011..................... 41.24 42.8 41.24 42.8 96.00 41.8
October 1, 2011................... 0.00 0.0 0.00 0.0 0.00 0.0
N798AN N799AN
--------------------------- ---------------------------
ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- -----------
January 1, 2002................... $133.38 66.7% $133.73 66.7%
April 1, 2002..................... 129.25 68.8 129.59 68.8
October 1, 2002................... 129.25 67.0 129.59 67.0
April 1, 2003..................... 125.13 69.1 125.46 69.1
October 1, 2003................... 125.13 67.4 125.46 67.4
April 1, 2004..................... 121.00 69.7 121.32 69.7
October 1, 2004................... 121.00 68.0 121.32 68.0
April 1, 2005..................... 116.88 70.4 117.19 70.4
October 1, 2005................... 116.88 69.0 117.19 69.0
April 1, 2006..................... 112.75 71.5 113.05 71.5
October 1, 2006................... 112.75 47.7 113.05 47.6
April 1, 2007..................... 108.63 49.4 108.91 49.4
October 1, 2007................... 108.63 48.1 108.91 48.1
April 1, 2008..................... 104.50 49.9 104.78 49.9
October 1, 2008................... 104.50 48.6 104.78 48.6
April 1, 2009..................... 100.38 50.5 100.64 50.5
October 1, 2009................... 100.38 49.1 100.64 49.1
April 1, 2010..................... 96.25 50.5 96.51 50.5
October 1, 2010................... 96.25 49.4 96.51 49.4
April 1, 2011..................... 92.13 41.9 92.37 41.9
October 1, 2011................... 0.00 0.0 0.00 0.0
IV-2
N750AN N751AN N752AN
--------------------------- --------------------------- ---------------------------
ASSUMED ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- ----------- ------------- -----------
January 1, 2002................... $133.75 66.7% $134.07 66.9% $134.45 66.8%
April 1, 2002..................... 129.61 68.8 130.05 68.9 130.41 68.9
October 1, 2002................... 129.61 67.0 130.05 67.1 130.41 67.1
April 1, 2003..................... 125.48 69.1 126.03 69.3 126.38 69.2
October 1, 2003................... 125.48 67.4 126.03 67.6 126.38 67.5
April 1, 2004..................... 121.34 69.7 122.00 69.7 122.35 69.7
October 1, 2004................... 121.34 68.0 122.00 68.1 122.35 68.1
April 1, 2005..................... 117.20 70.4 117.98 70.4 118.31 70.4
October 1, 2005................... 117.20 69.0 117.98 69.1 118.31 69.1
April 1, 2006..................... 113.07 71.5 113.96 71.5 114.28 71.5
October 1, 2006................... 113.07 47.7 113.96 47.8 114.28 47.8
April 1, 2007..................... 108.93 49.4 109.94 49.5 110.25 49.5
October 1, 2007................... 108.93 48.1 109.94 48.2 110.25 48.2
April 1, 2008104.79............... 49.9 105.92 50.0 106.21 50.0 106.29
October 1, 2008104.79............. 48.6 105.92 48.7 106.21 48.7 106.29
April 1, 2009100.66............... 50.5 101.89 50.5 102.18 50.5 102.25
October 1, 2009100.66............. 49.1 101.89 49.2 102.18 49.2 102.25
April 1, 201096.52................ 50.5 97.87 50.6 98.15 50.6 98.21
October 1, 201096.52.............. 49.4 97.87 49.5 98.15 49.5 98.21
April 1, 201192.38................ 41.9 93.85 41.8 94.11 41.9 94.18
October 1, 20110.00............... 0.0 0.00 0.0 0.00 0.0 0.00
N753AN N754AN
--------------------------- ---------------------------
ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- -----------
January 1, 2002................... $134.54 66.9% $134.82 66.8%
April 1, 2002..................... 130.50 68.9 130.77 68.9
October 1, 2002................... 130.50 67.1 130.77 67.1
April 1, 2003..................... 126.47 69.2 126.73 69.2
October 1, 2003................... 126.47 67.5 126.73 67.5
April 1, 2004..................... 122.43 69.7 122.68 69.7
October 1, 2004................... 122.43 68.1 122.68 68.1
April 1, 2005..................... 118.40 70.4 118.64 70.4
October 1, 2005................... 118.40 69.1 118.64 69.1
April 1, 2006..................... 114.36 71.5 114.59 71.5
October 1, 2006................... 114.36 47.8 114.59 47.8
April 1, 2007..................... 110.32 49.5 110.55 49.5
October 1, 2007................... 110.32 48.2 110.55 48.2
April 1, 2008104.79............... 50.0 106.51 50.0
October 1, 2008104.79............. 48.7 106.51 48.7
April 1, 2009100.66............... 50.5 102.46 50.5
October 1, 2009100.66............. 49.2 102.46 49.2
April 1, 201096.52................ 50.6 98.42 50.6
October 1, 201096.52.............. 49.5 98.42 49.5
April 1, 201192.38................ 41.9 94.37 41.9
October 1, 20110.00............... 0.0 0.00 0.0
N755AN N756AM N757AN
--------------------------- --------------------------- ---------------------------
ASSUMED ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- ----------- ------------- -----------
January 1, 2002................... $135.14 68.4% $135.37 68.4% $135.82 68.4%
April 1, 2002..................... 135.14 68.4 135.37 68.4 135.82 68.4
October 1, 2002................... 131.09 68.9 131.31 68.9 131.75 68.9
April 1, 2003..................... 131.09 68.9 131.31 68.9 131.75 68.9
October 1, 2003................... 127.03 69.6 127.25 69.6 127.67 69.5
April 1, 2004..................... 127.03 69.5 127.25 69.5 127.67 69.5
October 1, 2004................... 122.98 70.4 123.19 70.4 123.60 70.4
April 1, 2005..................... 122.98 70.3 123.19 70.3 123.60 70.3
October 1, 2005................... 118.92 71.5 119.13 71.5 119.52 71.5
April 1, 2006..................... 118.92 71.5 119.13 71.5 119.52 71.5
October 1, 2006................... 114.87 49.1 115.06 49.1 115.45 49.0
April 1, 2007..................... 114.87 49.0 115.06 49.0 115.45 49.0
October 1, 2007................... 110.81 49.6 111.00 49.6 111.37 49.6
April 1, 2008..................... 110.81 49.6 111.00 49.6 111.37 49.6
October 1, 2008................... 106.76 50.3 106.94 50.3 107.30 50.3
April 1, 2009..................... 106.76 50.2 106.94 50.2 107.30 50.2
October 1, 2009................... 102.71 51.0 102.88 51.0 103.22 51.0
April 1, 2010..................... 102.71 50.4 102.88 50.4 103.22 50.4
October 1, 2010................... 98.65 51.6 98.82 51.6 99.15 51.6
April 1, 2011..................... 98.65 42.0 98.82 42.0 99.15 42.1
October 1, 2011................... 0.00 0.0 0.00 0.0 0.00 0.0
N758AN N759AN
--------------------------- ---------------------------
ASSUMED ASSUMED
AIRCRAFT LOAN TO AIRCRAFT LOAN TO
VALUE (IN AIRCRAFT VALUE (IN AIRCRAFT
MILLIONS) VALUE RATIO MILLIONS) VALUE RATIO
------------- ----------- ------------- -----------
January 1, 2002................... $136.05 68.4% $136.27 68.4%
April 1, 2002..................... 136.05 68.3 136.27 68.3
October 1, 2002................... 131.97 68.9 132.18 68.9
April 1, 2003..................... 131.97 68.8 132.18 68.8
October 1, 2003................... 127.89 69.5 128.09 69.5
April 1, 2004..................... 127.89 69.5 128.09 69.5
October 1, 2004................... 123.81 70.3 124.01 70.3
April 1, 2005..................... 123.81 70.3 124.01 70.3
October 1, 2005................... 119.72 71.5 119.92 71.5
April 1, 2006..................... 119.72 71.5 119.92 71.5
October 1, 2006................... 115.64 49.0 115.83 49.0
April 1, 2007..................... 115.64 49.0 115.83 49.0
October 1, 2007................... 111.56 49.6 111.74 49.6
April 1, 2008..................... 111.56 49.6 111.74 49.5
October 1, 2008................... 107.48 50.3 107.65 50.3
April 1, 2009..................... 107.48 50.2 107.65 50.2
October 1, 2009................... 103.40 51.0 103.57 51.0
April 1, 2010..................... 103.40 50.4 103.57 50.4
October 1, 2010................... 99.32 51.6 99.48 51.6
April 1, 2011..................... 99.32 42.2 99.48 42.3
October 1, 2011................... 0.00 0.0 0.00 0.0
IV-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended, provides
in regard to indemnification of directors and officers as follows:
sec. 145. Indemnification of officers, directors, employees and agents;
insurance
(a) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (4)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance
II-1
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if any, as
the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Article VII of American's By-Laws provides in regard to indemnification of
directors and officers as follows:
SECTION 1. Nature of Indemnity. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was or has agreed to become a director or officer of the corporation, or is or
was serving or has agreed to serve at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any
II-2
person who was or is a party or is threatened to be made a party to such an
action by reason of the fact that he is or was or has agreed to become an
employee or agent of the corporation, or is or was serving or has agreed to
serve at the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding had no reasonable cause to believe his conduct was
unlawful; except that in the case of an action or suit by or in the right of the
corporation to procure a judgment in its favor (1) such indemnification shall be
limited to expenses (including attorneys' fees) actually and reasonably incurred
by such person in the defense or settlement of such action or suit, and (2) no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 2. Successful Defense. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section 1
hereof or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
SECTION 3. Determination That Indemnification Is Proper. (a) Any
indemnification of a director or officer of the corporation under Section 1
hereof (unless ordered by a court) shall be made by the corporation unless a
determination is made that indemnification of the director or officer is not
proper in the circumstances because he has not met the applicable standard of
conduct set forth in Section 1 hereof. Such determination shall be made, with
respect to a director or officer, (1) by a majority vote of the directors who
are not parties to such action, suit or proceeding, even though less than a
quorum, or (2) by a committee of such directors designated by a majority vote of
such directors, even though less than a quorum, or (3) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (4) by the stockholders.
(b) Any indemnification of an employee or agent of the corporation (who is
not also a director or officer of the corporation) under Section 1 hereof
(unless ordered by a court) may be made by the corporation upon a determination
that indemnification of the employee or agent is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Section 1 hereof. Such determination, in the case of an employee or agent, may
be made (1) in accordance with the procedures outlined in the second sentence of
this Section 3(a), or (2) by an officer of the corporation, upon delegation of
such authority by a majority of the Board of Directors.
SECTION 4. Advance Payment of Expenses. Expenses (including attorneys'
fees) incurred by a director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this Article.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the corporation deems
appropriate. The board of directors may authorize the corporation's counsel to
represent a director, officer, employee or agent in any action, suit or
proceeding, whether or not the corporation is a party to such action, suit or
proceeding.
II-3
SECTION 5. Procedure for Indemnification of Directors or Officers. Any
indemnification of a director or officer of the corporation under Sections 1 and
2, or advance of costs, charges and expenses of a director or officer under
Section 4 of this Article, shall be made promptly, and in any event within 60
days, upon the written request of the director or officer. If the corporation
fails to respond within 60 days, then the request for indemnification shall be
deemed to be approved. The right to indemnification or advances as granted by
this Article shall be enforceable by the director or officer in any court of
competent jurisdiction if the corporation denies such request, in whole or in
part. Such person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the advance
of costs, charges and expenses under Section 4 of this Article where the
required undertaking, if any, has been received by the corporation) that the
claimant has not met the standard of conduct set forth in Section 1 of this
Article, but the burden of proving such defense shall be on the corporation.
Neither the failure of the corporation (including its board of directors or a
committee thereof, its independent legal counsel, and its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he has
met the applicable standard of conduct set forth in Section 1 of this Article,
nor the fact that there has been an actual determination by the corporation
(including its board of directors or a committee thereof, its independent legal
counsel, and its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
SECTION 6. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
corporation and each director, officer, employee and agent who serves in such
capacity at any time while these provisions as well as the relevant provisions
of the Delaware Corporation Law are in effect and any repeal or modification
thereof shall not affect any right or obligation then existing with respect to
any state of facts then or previously existing or any action, suit, or
proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a "contract right" may not be modified
retroactively without the consent of such director, officer, employee or agent.
The indemnification provided by this Article VII shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
SECTION 7. Insurance. The corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the corporation, or is or was serving at the request of
the corporation as director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him or on his behalf in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article,
provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire board of
directors.
SECTION 8. Savings Clause. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the corporation, to the full extent permitted by any applicable portion
of this Article that shall not have been invalidated and to the full extent
permitted by applicable law.
II-4
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
provides in regard to the limitation of liability of directors and officers as
follows:
(b) In addition to the matters required to be set forth in the certificate
of incorporation by subsection (a) of this section, the certificate of
incorporation may also contain any or all of the following matters:
* * * *
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director: (i) For any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under sec.174 of this title; or (iv) for any
transaction from which the director derived an improper personal benefit. No
such provision shall eliminate or limit the liability of a director for any act
or omission occurring prior to the date when such provision becomes effective.
All references in this paragraph to a director shall also be deemed to refer (x)
to a member of the governing body of a corporation which is not authorized to
issue capital stock, and (y) to such other person or persons, if any, who,
pursuant to a provision of the certificate of incorporation in accordance with
sec.141(a) of this title, exercise or perform any of the powers or duties
otherwise conferred or imposed upon the board of directors by this title.
Article Ninth of American's Restated Certificate of Incorporation provides
in regard to the limitation of liability of directors and officers as follows:
NINTH: No director of the corporation shall be liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its shareholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
American's directors and officers are also insured against claims arising
out of the performance of their duties in such capacities.
ITEM 21. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
4.1 Pass Through Trust Agreement, dated as of October 4, 2001,
between American Airlines, Inc. ("American") and State
Street Bank and Trust Company of Connecticut, National
Association (the "Pass Through Trustee")
4.2 Trust Supplement No. 2001-2A-1, dated as of October 4, 2001
("Trust Supplement No. 2001-2A-1"), between American and the
Pass Through Trustee
4.3 Form of 6.978% American Airlines Exchange Pass Through
Certificate, Series 2001-2A-1 (included in Exhibit 4.2)
4.4 Refunding Amendment, dated as of October 26, 2001, to Trust
Supplement No. 2001-2A-1
4.5 Second Refunding Amendment, dated as of December 12, 2001,
to Trust Supplement No. 2001-2A-1
4.6 Trust Supplement No. 2001-2A-2, dated as of October 4, 2001
("Trust Supplement No. 2001-2A-2"), between American and the
Pass Through Trustee
4.7 Form of 7.858% American Airlines Exchange Pass Through
Certificate, Series 2001-2A-2 (included in Exhibit 4.6)
4.8 Refunding Amendment, dated as of October 26, 2001, to Trust
Supplement No. 2001-2A-2
4.9 Second Refunding Amendment, dated as of December 12, 2001,
to Trust Supplement No. 2001-2A-2
II-5
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
4.10 Trust Supplement No. 2001-2B, dated as of October 4, 2001
("Trust Supplement No. 2001-2B"), between American and the
Pass Through Trustee
4.11 Form of 8.608% American Airlines Exchange Pass Through
Certificate, Series 2001-2B (included in Exhibit 4.10)
4.12 Refunding Amendment, dated as of October 26, 2001, to Trust
Supplement No. 2001-2B
4.13 Second Refunding Amendment, dated as of December 12, 2001,
to Trust Supplement No. 2001-2B
4.14 Trust Supplement No. 2001-2C, dated as of October 26, 2001
("Trust Supplement No. 2001-2C"), between American and the
Pass Through Trustee
4.15 Form of 7.800% American Airlines Exchange Pass Through
Certificate, Series 2001-2C (included in Exhibit 4.14)
4.16 Refunding Amendment, dated as of December 12, 2001, to Trust
Supplement No. 2001-2C
4.17 Trust Supplement No. 2001-2D, dated as of December 12, 2001,
between American and the Pass Through Trustee
4.18 Form of 9.092% American Airlines Exchange Pass Through
Certificate, Series 2001-2D (included in Exhibit 4.17)
4.19 Intercreditor Agreement, dated as of October 4, 2001 (the
"Intercreditor Agreement"), among the Pass Through Trustee,
Westdeutsche Landesbank Girozentrale, New York Branch (the
"Liquidity Provider") and State Street Bank and Trust
Company of Connecticut, National Association, as
Subordination Agent (the "Subordination Agent")
4.20 Refunding Amendment, dated as of October 26, 2001, to the
Intercreditor Agreement
4.21 Second Refunding Amendment, dated as of December 12, 2001,
to the Intercreditor Agreement
4.22 Revolving Credit Agreement (2001-2A-1), dated as of October
4, 2001, between the Subordination Agent and the Liquidity
Provider
4.23 Revolving Credit Agreement (2001-2A-2), dated as of October
4, 2001, between the Subordination Agent and the Liquidity
Provider
4.24 Revolving Credit Agreement (2001-2B), dated as of October 4,
2001, between the Subordination Agent and the Liquidity
Provider
4.25 Revolving Credit Agreement (2001-2C), dated as of October
26, 2001, between the Subordination Agent and the Liquidity
Provider
4.26 Registration Rights Agreement, dated October 4, 2001, among
American, the Pass Through Trustee, Morgan Stanley & Co,
Incorporated, Credit Suisse First Boston Corporation,
Merrill Lynch Price Fenner & Smith Incorporated, J.P. Morgan
Securities Inc. and Salomon Smith Barney Inc.
4.27 Registration Rights Agreement, dated October 26, 2001, among
American, the Pass Through Trustee, Morgan Stanley & Co,
Incorporated, Credit Suisse First Boston Corporation,
Merrill Lynch Price Fenner & Smith Incorporated, J.P. Morgan
Securities Inc. and Salomon Smith Barney Inc.
4.28 Registration Rights Agreement, dated December 12, 2001,
among American, the Pass Through Trustee, Morgan Stanley &
Co, Incorporated, Credit Suisse First Boston Corporation,
Merrill Lynch Price Fenner & Smith Incorporated, J.P. Morgan
Securities Inc. and Salomon Smith Barney Inc.
4.29 Participation Agreement, dated as of October 4, 2001, among
American, the Pass Through Trustee, the Subordination Agent,
State Street Bank and Trust Company of Connecticut, National
Association, as Loan Trustee (the "Loan Trustee") and State
Street Bank and Trust Company of Connecticut, in its
individual capacity as set forth therein, relating to one
Boeing 737-823 aircraft bearing United States registration
number N965AN ("N965AN")
4.30 Amendment to Participation Agreements
4.31 Second Amendment to Participation Agreements
4.32 Indenture and Security Agreement, dated as of October 4,
2001, among American and the Loan Trustee, relating to
N965AN
4.33 Form of Series 2001-2 Equipment Notes, relating to N965AN
(included in Exhibit 4.32)
II-6
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
4.34 First Amendment to Indenture and Security Agreement, dated
as of October 26, 2001, relating to N965AN
4.35 Second Amendment to Indenture and Security Agreement, dated
as of December 12, 2001, relating to N965AN
5.1 Opinion of Anne H. McNamara, Senior Vice President and
General Counsel of American
23.1 Consent of Ernst & Young LLP
23.2 Consent of Anne H. McNamara, Senior Vice President and
General Counsel of American (included in Exhibit 5.1)
23.3 Consent of Aircraft Information Services, Inc.
23.4 Consent of Aviation Solutions, Inc.
23.5 Consent of Morten Beyer & Agnew
24.1 Powers of Attorney
25.1 Statement of Eligibility of State Street Bank and Trust
Company of Connecticut, National Association for the 2001-2
Pass Through Certificates on Form T-1
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 Form of Letter to Clients
99.5 Schedule I
Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 99.5 filed
herewith contains a list of other documents that relate to the offering of
American's Pass Through Certificates, Series 2001-2, which documents are
substantially identical to those applicable to the Boeing 737-823 aircraft
bearing United States registration number N965AN (which are filed herewith as
Exhibits 4.29, 4.30, 4.31, 4.32, 4.33, 4.34 and 4.35). Exhibit 99.5 sets forth
the details by which such other documents differ from the corresponding
documents filed in respect of the aircraft bearing United States registration
number N965AN.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement; provided, however, that the undertakings set forth in
paragraphs (i) and (ii) above do not apply if the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission
by the
II-7
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, American
Airlines, Inc. has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fort Worth,
State of Texas, on this 13th day of May, 2002.
AMERICAN AIRLINES, INC.
By /s/ ANNE H. MCNAMARA
------------------------------------
Anne H. McNamara
Senior Vice President and General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman of the Board, President and
------------------------------------------------ Chief Executive Officer; Director
Donald J. Carty (Principal Executive Officer)
* Senior Vice President -- Finance and
------------------------------------------------ Chief Financial Officer (Principal
Thomas W. Horton Financial and Accounting Officer)
* Director
------------------------------------------------
John W. Bachmann
* Director
------------------------------------------------
David L. Boren
* Director
------------------------------------------------
Edward A. Brennan
* Director
------------------------------------------------
Armando M. Codina
* Director
------------------------------------------------
Earl G. Graves
* Director
------------------------------------------------
Ann McLaughlin Korologos
* Director
------------------------------------------------
Michael A. Miles
II-9
SIGNATURE TITLE DATE
--------- ----- ----
* Director
------------------------------------------------
Philip J. Purcell
* Director
------------------------------------------------
Joe M. Rodgers
* Director
------------------------------------------------
Judith Rodin
* Director
------------------------------------------------
Roger T. Staubach
*By /s/ ANNE H. MCNAMARA
------------------------------------------
Anne H. McNamara
(Attorney-in-Fact)
II-10
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
4.1 Pass Through Trust Agreement, dated as of October 4, 2001,
between American Airlines, Inc. ("American") and State
Street Bank and Trust Company of Connecticut, National
Association (the "Pass Through Trustee")
4.2 Trust Supplement No. 2001-2A-1, dated as of October 4, 2001
("Trust Supplement No. 2001-2A-1"), between American and the
Pass Through Trustee
4.3 Form of 6.978% American Airlines Exchange Pass Through
Certificate, Series 2001-2A-1 (included in Exhibit 4.2)
4.4 Refunding Amendment, dated as of October 26, 2001, to Trust
Supplement No. 2001-2A-1
4.5 Second Refunding Amendment, dated as of December 12, 2001,
to Trust Supplement No. 2001-2A-1
4.6 Trust Supplement No. 2001-2A-2, dated as of October 4, 2001
("Trust Supplement No. 2001-2A-2"), between American and the
Pass Through Trustee
4.7 Form of 7.858% American Airlines Exchange Pass Through
Certificate, Series 2001-2A-2 (included in Exhibit 4.6)
4.8 Refunding Amendment, dated as of October 26, 2001, to Trust
Supplement No. 2001-2A-2
4.9 Second Refunding Amendment, dated as of December 12, 2001,
to Trust Supplement No. 2001-2A-2
4.10 Trust Supplement No. 2001-2B, dated as of October 4, 2001
("Trust Supplement No. 2001-2B"), between American and the
Pass Through Trustee
4.11 Form of 8.608% American Airlines Exchange Pass Through
Certificate, Series 2001-2B (included in Exhibit 4.10)
4.12 Refunding Amendment, dated as of October 26, 2001, to Trust
Supplement No. 2001-2B
4.13 Second Refunding Amendment, dated as of December 12, 2001,
to Trust Supplement No. 2001-2B
4.14 Trust Supplement No. 2001-2C, dated as of October 26, 2001
("Trust Supplement No. 2001-2C"), between American and the
Pass Through Trustee
4.15 Form of 7.800% American Airlines Exchange Pass Through
Certificate, Series 2001-2C (included in Exhibit 4.14)
4.16 Refunding Amendment, dated as of December 12, 2001, to Trust
Supplement No. 2001-2C
4.17 Trust Supplement No. 2001-2D, dated as of December 12, 2001,
between American and the Pass Through Trustee
4.18 Form of 9.092% American Airlines Exchange Pass Through
Certificate, Series 2001-2D (included in Exhibit 4.17)
4.19 Intercreditor Agreement, dated as of October 4, 2001 (the
"Intercreditor Agreement"), among the Pass Through Trustee,
Westdeutsche Landesbank Girozentrale, New York Branch (the
"Liquidity Provider") and State Street Bank and Trust
Company of Connecticut, National Association, as
Subordination Agent (the "Subordination Agent")
4.20 Refunding Amendment, dated as of October 26, 2001, to the
Intercreditor Agreement
4.21 Second Refunding Amendment, dated as of December 12, 2001,
to the Intercreditor Agreement
4.22 Revolving Credit Agreement (2001-2A-1), dated as of October
4, 2001, between the Subordination Agent and the Liquidity
Provider
4.23 Revolving Credit Agreement (2001-2A-2), dated as of October
4, 2001, between the Subordination Agent and the Liquidity
Provider
4.24 Revolving Credit Agreement (2001-2B), dated as of October 4,
2001, between the Subordination Agent and the Liquidity
Provider
4.25 Revolving Credit Agreement (2001-2C), dated as of October
26, 2001, between the Subordination Agent and the Liquidity
Provider
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
4.26 Registration Rights Agreement, dated October 4, 2001, among
American, the Pass Through Trustee, Morgan Stanley & Co,
Incorporated, Credit Suisse First Boston Corporation,
Merrill Lynch Price Fenner & Smith Incorporated, J.P. Morgan
Securities Inc. and Salomon Smith Barney Inc.
4.27 Registration Rights Agreement, dated October 26, 2001, among
American, the Pass Through Trustee, Morgan Stanley & Co,
Incorporated, Credit Suisse First Boston Corporation,
Merrill Lynch Price Fenner & Smith Incorporated, J.P. Morgan
Securities Inc. and Salomon Smith Barney Inc.
4.28 Registration Rights Agreement, dated December 12, 2001,
among American, the Pass Through Trustee, Morgan Stanley &
Co, Incorporated, Credit Suisse First Boston Corporation,
Merrill Lynch Price Fenner & Smith Incorporated, J.P. Morgan
Securities Inc. and Salomon Smith Barney Inc.
4.29 Participation Agreement, dated as of October 4, 2001, among
American, the Pass Through Trustee, the Subordination Agent,
State Street Bank and Trust Company of Connecticut, National
Association, as Loan Trustee (the "Loan Trustee") and State
Street Bank and Trust Company of Connecticut, in its
individual capacity as set forth therein, relating to one
Boeing 737-823 aircraft bearing United States registration
number N965AN ("N965AN")
4.30 Amendment to Participation Agreements
4.31 Second Amendment to Participation Agreements
4.32 Indenture and Security Agreement, dated as of October 4,
2001, among American and the Loan Trustee, relating to
N965AN
4.33 Form of Series 2001-2 Equipment Notes, relating to N965AN
(included in Exhibit 4.32)
4.34 First Amendment to Indenture and Security Agreement, dated
as of October 26, 2001, relating to N965AN
4.35 Second Amendment to Indenture and Security Agreement, dated
as of December 12, 2001, relating to N965AN
5.1 Opinion of Anne H. McNamara, Senior Vice President and
General Counsel of American
23.1 Consent of Ernst & Young LLP
23.2 Consent of Anne H. McNamara, Senior Vice President and
General Counsel of American (included in Exhibit 5.1)
23.3 Consent of Aircraft Information Services, Inc.
23.4 Consent of Aviation Solutions, Inc.
23.5 Consent of Morten Beyer & Agnew
24.1 Powers of Attorney
25.1 Statement of Eligibility of State Street Bank and Trust
Company of Connecticut, National Association for the 2001-2
Pass Through Certificates on Form T-1
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 Form of Letter to Clients
99.5 Schedule I
Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 99.5 filed
herewith contains a list of other documents that relate to the offering of
American's Pass Through Certificates, Series 2001-2, which documents are
substantially identical to those applicable to the Boeing 737-823 aircraft
bearing United States registration number N965AN (which are filed herewith as
Exhibits 4.29, 4.30, 4.31, 4.32, 4.33, 4.34 and 4.35). Exhibit 99.5 sets forth
the details by which such other documents differ from the corresponding
documents filed in respect of the aircraft bearing United States registration
number N965AN.