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Subsequent Events
3 Months Ended
Mar. 31, 2020
Subsequent Event [Line Items]  
Subsequent Events Subsequent Events
2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving Facility Borrowings
In April 2020, American borrowed $750 million under the 2013 Revolving Facility, $1.5 billion under the 2014 Revolving Facility and $450 million under the April 2016 Revolving Facility. Following the April 2020 draw, American had no remaining borrowing capacity available under the 2013 Revolving Facility or the April 2016 Revolving Facility and had $110 million in remaining borrowing capacity available under the 2014 Revolving Facility.
Payroll Support Program
On April 20, 2020 (the PSP Closing Date), American, Envoy Air Inc. (Envoy), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA and together with American, Envoy and Piedmont, the Subsidiaries), each our wholly-owned subsidiary, entered into a Payroll Support Program Agreement (the PSP Agreement) with Treasury, with respect to the Payroll Support Program provided pursuant to the CARES Act. In connection with our entry into the PSP Agreement, on the PSP Closing Date, we also entered into a Warrant Agreement (the Warrant Agreement) with Treasury, and we issued a promissory note to Treasury (the Promissory Note), with the Subsidiaries as guarantors (the Guarantors).
Payroll Support Program Agreement
Pursuant to the PSP Agreement, Treasury is to provide to us financial assistance to be paid in installments (each, an Installment) expected to total in the aggregate approximately $5.8 billion. The first Installment, in the amount of approximately $2.9 billion (representing 50% of the current expected total) was disbursed by Treasury on April 21, 2020, and we currently anticipate receiving three additional Installments from May to July 2020.
In connection with the Payroll Support Program, we are required to comply with the relevant provisions of the CARES Act, including the requirement that funds provided pursuant to the PSP Agreement be used exclusively for the continuation of payment of employee wages, salaries and benefits, the requirement against involuntary furloughs and reductions in employee pay rates and benefits through September 30, 2020, the requirement that certain levels of commercial air service be maintained and the provisions that prohibit the repurchase of AAG common stock, and the payment of common stock dividends through September 30, 2021, as well as those that restrict the payment of certain executive compensation until March 24, 2022. The PSP Agreement also imposes substantial reporting obligations on us and the Subsidiaries.
Payroll Support Program Promissory Note
As compensation to the U.S. Government for the provision of financial assistance under the PSP Agreement, we issued the Promissory Note to Treasury, which provides for our unconditional promise to pay to Treasury the initial principal sum of approximately $842 million, subject to an increase equal to 30% of the amount of each additional Installment disbursed under the PSP Agreement after the PSP Closing Date, and the guarantee of our obligations by the Guarantors. Assuming the total Installments to be paid pursuant to the PSP Agreement aggregate approximately $5.8 billion, the Promissory Note will have a total principal sum of approximately $1.7 billion.
The Promissory Note bears interest on the outstanding principal amount at a rate equal to 1.00% per annum until the fifth anniversary of the PSP Closing Date and 2.00% plus an interest rate based on the secured overnight financing rate per annum or other benchmark replacement rate consistent with customary market conventions (but not to be less than 0.00%) thereafter until the tenth anniversary of the PSP Closing Date (the Maturity Date), and interest accrued thereon will be payable in arrears on the last business day of March and September of each year, beginning on September 30, 2020. The aggregate principal amount outstanding under the Promissory Note, together with all accrued and unpaid interest thereon and all other amounts payable under the Promissory Note, will be due and payable on the Maturity Date.
We may, at any time and from time to time, voluntarily prepay amounts outstanding under the Promissory Note, in whole or in part, without penalty or premium. Within 30 days of the occurrence of certain change of control triggering events, we are required to prepay the aggregate outstanding principal amount of the Promissory Note at such time, together with any accrued interest or other amounts owing under the Promissory Note at such time.
The Promissory Note is our senior unsecured obligation and each guarantee of the Promissory Note is the senior unsecured obligation of each of the Guarantors, respectively.
The Promissory Note contains events of default, including cross-default with respect to acceleration or failure to pay at maturity other material indebtedness. Upon the occurrence of an event of default and subject to certain grace periods, the outstanding obligations under the Promissory Note may, and in certain circumstances will automatically, be accelerated and become due and payable immediately.
Payroll Support Program Warrant Agreement and Warrants
As compensation to the U.S. Government for the provision of financial assistance under the PSP Agreement, and pursuant to the Warrant Agreement, we have agreed to issue warrants (each a PSP Warrant and, collectively, the PSP Warrants) to Treasury to purchase up to an aggregate of approximately 13.7 million shares (the Warrant Shares) of AAG common stock. The exercise price of the Warrant Shares is $12.51 per share (which was the closing price of AAG common stock on The Nasdaq Global Select Market on April 9, 2020) (the Exercise Price) subject to certain anti-dilution provisions provided for in the PSP Warrant.
Pursuant to the Warrant Agreement, (a) on the PSP Closing Date, we issued to Treasury a PSP Warrant to purchase up to an aggregate of approximately 6.7 million shares of AAG common stock based on the terms described herein and (b) on the date of each increase of the principal amount of the Promissory Note in connection with the disbursement of an additional Installment under the PSP Agreement, we will issue to Treasury an additional PSP Warrant for a number of shares of AAG common stock equal to 10% of such increase of the principal amount of the Promissory Note, divided by the Exercise Price. Assuming the total Installments to be paid pursuant to the PSP Agreement aggregate approximately $5.8 billion, the total number of Warrant Shares issuable is approximately 13.7 million, subject to certain anti-dilution provisions, including, among others, for below market issuances and payment of dividends, provided for in the PSP Warrants.
The PSP Warrant does not have any voting rights and is freely transferrable, with registration rights. Each PSP Warrant expires on the fifth anniversary of the date of issuance of such PSP Warrant. The PSP Warrants will be exercisable either through net share settlement or cash, at our option.
The PSP Warrant was issued solely as compensation to the U.S. Government related to entry into the PSP Agreement. No separate proceeds (apart from the financial assistance Installments described above) were received upon issuance of the PSP Warrant or will be received upon exercise thereof.
American Airlines, Inc. [Member]  
Subsequent Event [Line Items]  
Subsequent Events Subsequent Events
2013 Revolving Facility, 2014 Revolving Facility and April 2016 Revolving Facility Borrowings
In April 2020, American borrowed $750 million under the 2013 Revolving Facility, $1.5 billion under the 2014 Revolving Facility and $450 million under the April 2016 Revolving Facility. Following the April 2020 draw, American had no remaining borrowing capacity available under the 2013 Revolving Facility or the April 2016 Revolving Facility and had $110 million in remaining borrowing capacity available under the 2014 Revolving Facility.
Payroll Support Program
On April 20, 2020 (the PSP Closing Date), American, Envoy Air Inc. (Envoy), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA and together with American, Envoy and Piedmont, the Subsidiaries), each a wholly-owned subsidiary of AAG, entered into a Payroll Support Program Agreement (the PSP Agreement) with Treasury, with respect to the Payroll Support Program provided pursuant to the CARES Act. In connection with the Subsidiaries' entry into the PSP Agreement, on the PSP Closing Date, AAG also entered into a Warrant Agreement (the Warrant Agreement) with Treasury, and AAG issued a promissory note to Treasury (the Promissory Note), with the Subsidiaries as guarantors (the Guarantors).
Payroll Support Program Agreement
Pursuant to the PSP Agreement, Treasury is to provide to AAG and the Subsidiaries financial assistance to be paid in installments (each, an Installment) expected to total in the aggregate approximately $5.8 billion. The first Installment, in the amount of approximately $2.9 billion (representing 50% of the current expected total) was disbursed by Treasury on April 21, 2020, and AAG currently anticipates receiving three additional Installments from May to July 2020.
In connection with the Payroll Support Program, AAG and the Subsidiaries are required to comply with the relevant provisions of the CARES Act, including the requirement that funds provided pursuant to the PSP Agreement be used exclusively for the continuation of payment of employee wages, salaries and benefits, the requirement against involuntary furloughs and reductions in employee pay rates and benefits through September 30, 2020, the requirement that certain levels of commercial air service be maintained and the provisions that prohibit the repurchase of AAG common stock, and the payment of common stock dividends through September 30, 2021, as well as those that restrict the payment of certain executive compensation until March 24, 2022. The PSP Agreement also imposes substantial reporting obligations on AAG and the Subsidiaries.
Payroll Support Program Promissory Note
As compensation to the U.S. Government for the provision of financial assistance under the PSP Agreement, AAG issued the Promissory Note to Treasury, which provides for AAG's unconditional promise to pay to Treasury the initial principal sum of approximately $842 million, subject to an increase equal to 30% of the amount of each additional Installment disbursed under the PSP Agreement after the PSP Closing Date, and the guarantee of AAG's obligations by the Guarantors. Assuming the total Installments to be paid pursuant to the PSP Agreement aggregate approximately $5.8 billion, the Promissory Note will have a total principal sum of approximately $1.7 billion.
The Promissory Note bears interest on the outstanding principal amount at a rate equal to 1.00% per annum until the fifth anniversary of the PSP Closing Date and 2.00% plus an interest rate based on the secured overnight financing rate per annum or other benchmark replacement rate consistent with customary market conventions (but not to be less than 0.00%) thereafter until the tenth anniversary of the PSP Closing Date (the Maturity Date), and interest accrued thereon will be payable in arrears on the last business day of March and September of each year, beginning on September 30, 2020. The aggregate principal amount outstanding under the Promissory Note, together with all accrued and unpaid interest thereon and all other amounts payable under the Promissory Note, will be due and payable on the Maturity Date.
AAG may, at any time and from time to time, voluntarily prepay amounts outstanding under the Promissory Note, in whole or in part, without penalty or premium. Within 30 days of the occurrence of certain change of control triggering events, AAG is required to prepay the aggregate outstanding principal amount of the Promissory Note at such time, together with any accrued interest or other amounts owing under the Promissory Note at such time.
The Promissory Note is AAG's senior unsecured obligation and each guarantee of the Promissory Note is the senior unsecured obligation of each of the Guarantors, respectively.
The Promissory Note contains events of default, including cross-default with respect to acceleration or failure to pay at maturity other material indebtedness. Upon the occurrence of an event of default and subject to certain grace periods, the
outstanding obligations under the Promissory Note may, and in certain circumstances will automatically, be accelerated and become due and payable immediately.
Payroll Support Program Warrant Agreement and Warrants
As compensation to the U.S. Government for the provision of financial assistance under the PSP Agreement, and pursuant to the Warrant Agreement, AAG has agreed to issue warrants (each a PSP Warrant and, collectively, the PSP Warrants) to Treasury to purchase up to an aggregate of approximately 13.7 million shares (the Warrant Shares) of AAG common stock. The exercise price of the Warrant Shares is $12.51 per share (which was the closing price of AAG common stock on The Nasdaq Global Select Market on April 9, 2020) (the Exercise Price) subject to certain anti-dilution provisions provided for in the PSP Warrant.
Pursuant to the Warrant Agreement, (a) on the PSP Closing Date, AAG issued to Treasury a PSP Warrant to purchase up to an aggregate of approximately 6.7 million shares of AAG common stock based on the terms described herein and (b) on the date of each increase of the principal amount of the Promissory Note in connection with the disbursement of an additional Installment under the PSP Agreement, AAG will issue to Treasury an additional PSP Warrant for a number of shares of AAG common stock equal to 10% of such increase of the principal amount of the Promissory Note, divided by the Exercise Price. Assuming the total Installments to be paid pursuant to the PSP Agreement aggregate approximately $5.8 billion, the total number of Warrant Shares issuable is approximately 13.7 million, subject to certain anti-dilution provisions, including, among others, for below market issuances and payment of dividends, provided for in the PSP Warrants.
The PSP Warrant does not have any voting rights and is freely transferrable, with registration rights. Each PSP Warrant expires on the fifth anniversary of the date of issuance of such PSP Warrant. The PSP Warrants will be exercisable either through net share settlement or cash, at AAG's option.
The PSP Warrant was issued solely as compensation to the U.S. Government related to entry into the PSP Agreement. No separate proceeds (apart from the financial assistance Installments described above) were received upon issuance of the PSP Warrant or will be received upon exercise thereof.