American Airlines and its loyalty entity AAdvantage Loyalty have amended their term loan credit and guaranty agreement, according to an SEC filing. The amendment, signed on March 24, 2025, reprices the company's $2.3bn term loan under “substantially similar terms”, but with revised interest rates and repayment schedules.
Under the terms of the amendment, the existing 2021 term loans have been replaced with new loans of the same principal amount, but will bear interest at either a base rate plus a $1.25% margin each year or — at the borrowers' option — the three-month SOFR rate plus a 2.25% margin.
The scheduled principal amortization payments have been reduced to 0.25% of the outstanding loan amount, payable quarterly beginning July this year. The replacement term loans will not be subject to a cost spread adjustment.
As of the end of 2024, the airline had a total debt of $38.6bn and a net debt of $31.6bn. The company said this was its lowest net debt since 2015. During the fourth quarter, the airline prepaid $750 million of near-term debt maturities and repriced two term loans.
“We achieved our total debt reduction goal of $15bn from peak levels in mid-2021 a full-year ahead of schedule,” said American CFO Devon May in its annual earnings call for 2024. Peak levels had reached a total debt of $54bn.
After reaching its goal a year early, the company brought forward its target of a total debt below $35bn a year earlier to year-end 2027.
Additionally, the company said it will settle its 6.50% convertible senior notes due 2025 in cash. Noteholders were notified of a change in the default settlement method, ensuring that no shares of its common stock will be issued upon conversion unless the stock price exceeds approximately $22 per share during the designated trading period.
Barclays Bank acted as administrative agent and Wilmington Trust, National Association as a collateral administrator.