American Raises $1.3 Billion in Cash

Last Updated Sep 18, 2009 10:40 AM EDT

While American's closing of the St Louis hub is a big deal, from a business perspective the biggest news is that American has raised $2.9 billion in financing and liquidity. This should quell all those lingering concerns about their cash position.

Here's exactly what they've raised:

  • $1 billion in cash from the advance sale of AAdvantage miles to their credit card partner Citibank
  • $280 million in cash from GECAS as a loan secured by previously unencumbered aircraft
  • $1.6 billion in sale-leaseback transactions for new 737s that are currently on order (also with GECAS)
This combined with the decision to restructure around its four hubs (Dallas/Ft Worth, Chicago/O'Hare, Miami, and New York/JFK) as well as Los Angeles makes for a really big move. Some of these changes seem clearly targeted at United while others seem to be preparing for additional cooperation with British Airways and Iberia should the antitrust immunity application finally be approved.

American has jumped into the fray like everyone else needing cash. The advance mile sale is always a smart move, but they also have enough unencumbered assets to make the loan a good idea as well. Now it's just a matter of waiting for traffic to start picking up so they can start adding to their cash balance the traditional way . . . profit.