CHICAGO—(BUSINESS WIRE)—American Airlines, Inc. is in the process of re-pricing its 2016 credit facilities and its 2013 Citicorp credit facility. Fitch Ratings has assigned a rating of ‘BB+/RR1’ to American’s re-priced 2016 credit facilities. Fitch currently rates American’s 2013 Citicorp credit facility ‘BB+/RR1’.

KEY RATING DRIVERS

American is in the process of repricing two of its existing term loans. The company’s $970 million 2013 Citicorp term loan B-1 is secured by slots at Washington Reagan, flight simulators, and certain real estate, and matures in 2019. The $1 billion 2016 term loan B is secured by the company’s mainline spare parts and matures in 2023. The re-pricing will not affect the key provisions or maturity dates of either of the term loans.

The ‘BB+/RR1’ rating on each of the term loans is based on Fitch’s recovery analysis which reflects a scenario in which a distressed enterprise value is allocated to the various debt classes in a going-concern scenario. The ‘RR1’ Recovery Rating reflects Fitch’s belief that secured creditors would receive superior recovery based on an estimate of American’s distressed enterprise value.

American’s ‘BB-’ Issuer Default Rating (IDR) is supported by the strong financial results that American has posted since its merger with US Airways and concurrent emergence from bankruptcy. Fitch expects continued solid financial results from American over the intermediate term based on a stable domestic travel environment, moderate fuel costs, and the benefits of the company’s on-going integration and fleet renewal processes.

The ‘BB-’ rating also incorporates the risks in American’s credit profile, including a significant debt balance and expectations for leverage to be somewhat high for the rating over the next two years, heavy upcoming capital requirements, and shareholder focused cash deployment.

KEY ASSUMPTIONS

Fitch’s key assumptions within the rating case for American include;

—Capacity growth in the low single digits through the forecast period.

—Continued moderate economic growth in the U.S. over the near term, translating into stable demand for air travel.

—Jet Fuel prices equating to roughly $55/barrel on average for 2017, increasing to approximately $65/barrel by the end of the forecast period.

—Mid single digit RASM decline in 2016 followed by low growth thereafter.

RATING SENSITIVITIES

Positive Rating Sensitivities for the corporate rating include:

—Adjusted leverage sustained below 4x;

—Funds from operations (FFO) fixed charge coverage sustained around 3x;

—Free cash flow generation above Fitch’s base case expectation;

—Further progress towards reaching joint collective bargaining agreements with various labor groups.

Future actions that may individually or collectively cause Fitch to take a negative rating action include:

—Adjusted debt/EBITDAR sustained above 4.5x;

—EBITDAR margins deteriorating into the low double-digit range;

—Shareholder focused cash deployment at the expense of a healthy balance sheet.

Fitch has assigned the following ratings;

American Airlines, Inc.

—Senior secured 2016 credit facility ‘BB+/RR1’.

Fitch currently rates American as follows:

American Airlines Group Inc.

-Long-Term IDR ’BB’;

-Senior unsecured notes ’BB/RR4’.

American Airlines, Inc.

-Long-Term IDR ’BB’;

—Senior secured credit facilities ‘BB+/RR1’.

Additional information is available on www.fitchratings.com

Date of Relevant Committee: Dec. 4, 2015.

Summary of Financial Statement Adjustments

Fitch sets aside a certain amount of cash and revolver availability as ‘not readily available’ to reflect a minimum amount of cash that may be necessary for the company to carry on day-to-day operations and is thus not immediately available for things like debt payments or capital expenditures. Fitch estimates this amount at roughly 10% of LTM revenue.

Applicable Criteria

Corporate Rating Methodology – Including Short-Term Ratings and Parent and Subsidiary Linkage – Effective from 17 August 2015 to 27 September 2016 (pub. 17 Aug 2015)

https://www.fitchratings.com/site/re/869362

Rating Aircraft Enhanced Equipment Trust Certificates — Effective 10/13/2015 to 5/12/2016 (pub. 13 Oct 2015)

https://www.fitchratings.com/site/re/871079

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1013468

Endorsement Policy

https://www.fitchratings.com/regulatory