American Airlines 2002 Annual Report Download - page 45

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43
Availability of Future Financing In the aftermath of the events of September 11, 2001, the Company raised
substantial amounts of money to finance capital commitments and day-to-day operations. Although the Company
has a limited amount of unencumbered assets (for example, as of December 31, 2002, the Company had Section
1110 eligible unencumbered aircraft with a market value of approximately $670 million) its ability to use those
assets for financing activities is uncertain and these assets may not maintain their current market value. Thus, the
Company’s current access to capital markets is extremely limited. As noted elsewhere in this Report, credit
ratings for the Company’s debt instruments have been downgraded significantly below investment grade and
remain on review for a further downgrade. These reductions have increased the Company’s borrowing costs. To
the extent the Company’s credit ratings are further downgraded, the ability of the Company to access capital
markets would be restricted further and/or the Company would have increased financing costs. To the extent that
the Company is unable to access the capital markets for long-term capital spending requirements or short-term
liquidity needs, the Company will be unable to fund its obligations and sustain its operations and will be forced to
initiate a Chapter 11 filing.