AMR <AMR> AIRCRAFT FINANCING SEEN POSITIVELY
The deal AMR Corp cut to buy 40 new
planes is a plus for the company because it clearly puts the
financial burden on aircraft manufacturers Boeing Co <BA> and
<Airbus Industrie>, a European consortium, analysts said.
    "The terms put most of the risk on the shoulders of the
manufacturers," said analyst Kevin Murphy of Morgan Stanley and
Co. "They're called walkaway leases."
    AMR agreed to buy 15 planes from Boeing and 25 from Airbus
but said its American Airlines unit will lease the aircraft,
which essentially will be owned by the manufacturers.
    AMR declined to value the deal, which analysts estimated at
roughly 2.4 billion dlrs. American Airlines will use the
planes, scheduled for delivery in 1988 and 1989, to expand its
service in the Caribbean and to Europe.
    But AMR will not lay out cash deposits to pay for the
planes, nor will it take on new debt to finance the purchases.
The carrier has 20-year leases on the aircraft, with four-year
extension options, and may cancel the leases with 30 days
notice by paying a small penalty, according to AMR chairman
Robert Crandall.
    "We're getting the aircraft on very favorable terms,"
Crandall told a press briefing here. He called the deals "off
balance sheet" limited obligation leases, under which the
financing is provided by the manufacturers.
    A spokesman for Airbus confirmed those terms. "We will own
the aircraft and they will be leasing them from us," he said.
Airbus is providing American Airlines with 25 of its twin-jet,
long-range A300-600 planes.
    A spokesman for Boeing Commercial Airplane Co, the unit of
Boeing that makes the long-range 767-300 planes that are part
of the deal, declined to comment on financing arrangements.
    Analysts said "walkaway lease" deals have been used before
by airlines buying aircraft, particularly new generations of
planes, but not to this extent.
    Julius Maldutis of Salomon Brothers Inc said the deal will
give AMR financial stability as it grows. "AMR is using the
manufacturers' balance sheets to finance these airplanes and
consequently, its debt to equity ratio will remain stable into
the early 1990s," he said.
    "The deal reflects a fundamental trend where airlines will
increasingly become operators of assets rather than owners" to
reduce their exposure to risk, he added.
 Reuter
