The stock price of AMR Corp. surged on Thursday after the American Airlines parent company said it obtained $2.9 billion in new financing.
AMR’s (AMR, Fortune 500) stock was up more than 20% one hour after the opening bell.
The company, which owns American Airlines and American Eagle, said the funds included $1.3 billion in new liquidity, including $1 billion in cash from the advance sale of AAdvantage frequent flyer miles to Citi (C, Fortune 500), and nearly $300 million via a cash loan from GE Capital Aviation Services.
The remaining $1.6 billion comes from sale-lease finance commitments for Boeing 737 aircraft that were previously owned by the company, AMR said.
AMR said it will use the funding to purchase additional aircraft and to add first class cabins to existing aircraft. The company also said it will shift more capacity to hubs in Dallas-Forth Worth, Chicago, Miami and New York City.
Throughout the recession, the airline industry has been cutting back on flights to cut costs in the face of fuel price volatility and reduced air travel. But AMR said that capacity is actually expected to increase by 1% in 2010.
"Today’s announcement is obviously positive for the company and our employees, as this new financing will help us navigate through a tough environment and lay the groundwork for future success," said AMR Chief Executive Gerard Arpey, in a press release.
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