Debt

9 Months Ended

Sep. 30, 2014

Long-term debt and capital lease obligations included in the condensed consolidated balance sheets consisted of (in millions):



	September 30, 2014		December 31, 2013
Secured
Senior secured credit facility, variable interest rate of 3.75%, installments through 2019	$	1,876	$	1,891
2013 Citicorp Credit Facility tranche B-1, variable interest rate of 3.50%, installments through 2019	990		1,000
2013 Citicorp Credit Facility tranche B-2, variable interest rate of 3.00%, installments through 2016	594		600
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.70% to 11.00%, maturing from 2014 to 2026	7,199		6,031
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.43% to 8.48%, maturing from 2014 to 2026	2,909		3,441
Special facility revenue bonds, fixed interest rates ranging from 5.50% to 8.50%, maturing from 2016 to 2035	1,111		1,466
7.50% senior secured notes	—		1,000
AAdvantage Miles advance purchase, effective rate of 8.30%, installments through 2017	479		611
Other secured obligations, fixed interest rates ranging from 4.19% to 12.24%, maturing from 2014 to 2028	742		303
	15,900		16,343
Unsecured
5.50% senior notes, interest only payments until due in 2019	750		—
6.125% senior notes, interest only payments until due in 2018	500		500
7.25% convertible senior notes	—		22
Industrial development bonds	—		29
	1,250		551
Total long-term debt and capital lease obligations	17,150		16,894
Less: Total unamortized debt discount	60		95
Less: Current maturities	1,439		1,446
Long-term debt and capital lease obligations, net of current maturities	$	15,651	$	15,353

2014-1 EETCs

In September 2014, American created two pass-through trusts which issued approximately $957 million aggregate face amount of Series 2014-1 Class A and Class B EETCs in connection with the financing of 17 aircraft recently delivered to, and owned by, American (the 2014 EETC Aircraft).

As of September 30, 2014, the full $957 million of the escrowed proceeds from the 2014-1 EETCs have been used to purchase equipment notes issued by American in two series: Series A equipment notes in the amount of $742 million bearing interest at 3.70% per annum and Series B equipment notes in the amount of $215 million bearing interest at 4.375% per annum. Interest and principal payments on the equipment notes are scheduled to be made in April and October of each year, beginning in April 2015. The final payments on the Series A and Series B equipment notes will be due in October 2026 and October 2022, respectively. The equipment notes are secured by liens on the 2014 EETC Aircraft.

2013-1 EETCs

In the first nine months of 2014, US Airways issued $559 million of equipment notes in two series under its 2013-1 EETCs completed in April 2013: Series A equipment notes in the amount of $423 million bearing interest at 3.95% per annum and Series B equipment notes in the amount of $136 million bearing interest at 5.375% per annum. As of September 30, 2014, the full $820 million of the escrowed proceeds from US Airways' 2013-1 EETCs have been used to purchase Series A and Series B equipment notes issued by US Airways. The equipment notes are secured by liens on aircraft.

Other Aircraft Financing Transactions

In May 2014, the Company prepaid $113 million principal amount of outstanding debt secured by certain aircraft.

During the second and third quarters of 2014, American entered into loan agreements to borrow $141 million in connection with financing certain aircraft deliveries. The notes mature in 2026 and bear interest at a rate of LIBOR plus an applicable margin.

Senior Secured Notes

In March 2014, American prepaid $100 million of its 7.50% senior secured notes at a redemption price of 103% of their principal amount plus accrued and unpaid interest. In July 2014, American prepaid the remaining outstanding principal balance of $900 million at a redemption price of 103.75% of outstanding principal amount plus accrued and unpaid interest. In connection with the prepayment of the outstanding 7.50% senior secured notes, during the nine months ended September 30, 2014, American paid $37 million of cash premiums and recorded a $5 million non-cash write off of unamortized deferred issuance costs.

Obligations Associated with Special Facility Revenue Bonds

In the first nine months of 2014, the Company prepaid $312 million of obligations, of which $135 million was reflected as debt on its balance sheet, associated with special facility revenue bonds issued by municipalities to build or improve certain airport and maintenance facilities. The off-balance sheet portion of these obligations was accounted for as an operating lease.

In addition, in August 2014, American elected to exercise its option to reset the interest rate on approximately $220 million aggregate principal amount of special facility revenue bonds reflected as debt on its balance sheet, related to the Los Angeles International Airport, resulting in the repurchase of these bonds by American in September 2014. American has the option to remarket these bonds in the future. In connection with the repurchase of these bonds, American paid $2 million in cash premiums and recorded a $5 million non-cash write off of unamortized debt discount and issuance costs.

5.50% Senior Notes

In September 2014, the Company issued $750 million aggregate principal amount of 5.50% Senior Notes due 2019 (the 5.50% senior notes), the net proceeds of which will be used for general corporate purposes. These notes bear interest at a rate of 5.50% per annum, which is payable semi-annually in arrears on each April 1 and October 1, beginning April 1, 2015. The 5.50% senior notes mature on October 1, 2019 and are fully and unconditionally guaranteed by American, US Airways Group and US Airways. The 5.50% senior notes are senior unsecured obligations of the Company. In addition, if the Company experiences specific kinds of changes of control, the Company must offer to repurchase the 5.50% senior notes at a price of 101% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date. The indenture for the 5.50% senior notes contains covenants and events of default generally customary for similar financings. Upon the occurrence of certain events of default, the 5.50% senior notes may be accelerated and become due and payable.

7.25% Convertible Notes

In March 2014, the Company notified the holders of US Airways Group's 7.25% convertible notes that it had elected to settle solely in cash instead of shares of AAG Common Stock all conversions during the period beginning on March 15, 2014 and ending on, and including, the second scheduled trading day immediately preceding the maturity date of May 15, 2014. In May 2014, the Company settled all outstanding 7.25% convertible notes in cash for approximately $175 million.

Guarantees

In March 2014, AAG, US Airways Group and US Airways entered into amended and restated guarantees of the payment obligations of US Airways under the equipment notes relating to each of its Series 2010-1, 2011-1, 2012-1, 2012-2 and 2013-1 Pass Through Certificates, the result of which was to add AAG as a guarantor of such equipment notes on a joint and several basis with US Airways Group. Refer to Note 16 for further information.

AA [Member]

Debt Instrument [Line Items]

Debt

Long-term debt and capital lease obligations included in the condensed consolidated balance sheets consisted of (in millions):



	September 30, 2014		December 31, 2013
Secured
Senior secured credit facility, variable interest rate of 3.75%, installments through 2019	$	1,876	$	1,891
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.70% to 7.00%, maturing from 2017 to 2026	4,271		3,516
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.43% to 8.10%, maturing from 2014 to 2026	1,778		2,140
Special facility revenue bonds, fixed interest rates ranging from 5.50% to 8.50%, maturing from 2016 to 2035	1,082		1,393
7.50% senior secured notes	—		1,000
AAdvantage Miles advance purchase, effective rate of 8.30%, installments through 2017	479		611
Other secured obligations, fixed interest rates ranging from 4.19% to 12.24%, maturing from 2014 to 2028	741		300
	10,227		10,851
Unsecured
Affiliate unsecured obligations	27		27
	27		27
Total long-term debt and capital lease obligations	10,254		10,878
Less: Total unamortized debt discount	43		69
Less: Current maturities	956		957
Long-term debt and capital lease obligations, net of current maturities	$	9,255	$	9,852

2014-1 EETCs

Other Aircraft Financing Transactions

In May 2014, American prepaid $61 million principal amount of outstanding debt secured by certain aircraft.

Senior Secured Notes

Obligations Associated with Special Facility Revenue Bonds

In the first nine months of 2014, American prepaid $98 million of obligations, of which $62 million was reflected as debt on its balance sheet, associated with special facility revenue bonds issued by municipalities to build or improve certain airport and maintenance facilities. The off-balance sheet portion of these obligations was accounted for as an operating lease.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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