AMR gets court approval of settlements with Boeing, GE, Rolls-Royce

By Lisa Kerner

Charlotte, N.C., Jan. 23 - AMR Corp. was granted approval of settlements it reached with Boeing Co., General Electric Co. and some of its affiliates and Rolls-Royce plc and some of its affiliates on Thursday by the U.S. Bankruptcy Court for the Southern District of New York, according to an attorney familiar with the case.

As previously reported, under the Boeing settlement, numerous aircraft purchase and related agreements will be assumed.

Under a restructuring agreement component of the Boeing agreement:

• Boeing will waive and release a $2.28 million interest claim;

• A $2.23 million commitment claim will be reduced to $825,000 and allowed as a general unsecured claim against American Airlines, Inc.;

• A $140,000 rent payment claim will be allowed in full as a general unsecured claim against American;

• After application of a previous payment and a mutually agreed adjustment, and after application of $12.29 million of additional credits issued by Boeing to American pursuant to existing agreements, American will pay to Boeing the remaining $6.43 million balance of a Spares claim; and

• American will pay a $791,000 Jeppesen assumption and cure agreement claim and a $5.22 million Aviall agreement claim.

GE settlement

AMR said previously the GE settlement would include assumption of specified agreements and payment of related cure costs and entry into two new agreements with the GE parties. One agreement is related to engine maintenance coverage, and the other is related to the purchase of engines for future Boeing aircraft purchases by the AMR debtors.

Under the restructuring agreement portion of the GE settlement:

• A $5.14 million cure payment will be made in connection with the assumption of agreements;

• The GE parties will have a $285,157 administrative expense claim in connection with all section 503(b)(9) and reclamation claims; and

• The GE parties will have a $1.34 million allowed general unsecured claim against American, which takes into account credits due to American.

Rolls-Royce agreement

As previously reported, according to AMR the Rolls-Royce agreement also includes the assumption of specified agreements and the payment of cure costs.

Under the Rolls-Royce agreement:

• American will pay $3.5 million of cure costs to Rolls-Royce in connection with the assumption of the agreements;

• The Rolls-Royce parties will pay Eagle Holding $115,000 to be used as a credit against future charges and will waive all claims related to Eagle assumed agreements;

• Rolls-Royce will give Eagle Holding credits per engine flight hour flown during the extended term of an AE3007A Series fleet hour agreement; and

• Other than the $3.5 million cure amount, the Rolls-Royce parties will waive all other claims related to assumed agreements, including all reclamation claims, 503(b)(9) claims and all other claims filed in connection with Rolls-Royce 757 agreements and the Rolls-Royce 777 agreements.

AMR, the Fort Worth-based parent of American Airlines, filed for bankruptcy on Nov. 29, 2011. Its Chapter 11 case number is 11-15463.

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