The Dark Thorn

AMR gets relief on loan restrictions

In a move that’s clearly anticipating rough time ahead, AMR Corp. and American Airlines has gotten a waiver on cash flow restrictions covering nearly $700 million in loans arranged by Citicorp and J.P. Morgan Chase.

Under the restrictions of the 2006 loan, American had been required to maintain cash flow about equal to 140 percent of certain fixed charges. In an SEC filing Wednesday, AMR reported that the lenders have waived that condition until March 31, 2009, and added a new cash flow requirement therafter that will be easier to meet.

It suggests that AMR may have been in violation of the loan requirements during the second quarter, or believes it would be in the near future. Breaking those conditions could have put AMR in default of its debt, which may have spurred a bankruptcy filing.

Rev theory

- Trebor Banstetter

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