American Airlines secures $5.5 billion Treasury loan,
could tap more
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[September 26, 2020] By
Tracy Rucinski and David Shepardson
WASHINGTON (Reuters) - American
Airlines <AAL.O> said on Friday it has secured a $5.5 billion government
loan and could tap up to $2 billion more in October depending on how the
U.S. Treasury allocates extra funds under a $25 billion loan package for
Airlines have until Sept. 30 to decide whether to take the U.S. Treasury
loans, which were authorized under the CARES Act coronavirus relief bill
passed by Congress in March.
American Airlines was originally allocated $4.75 billion, but carriers
including Delta Air Lines <DAL.N> and Southwest Airlines <LUV.N> have
already said they do not intend to take their share of the package,
opening the door for the funds to be used by other airlines.
Fort Worth, Texas-based American said it has already drawn down $550
million of the Treasury loan, which is backed by its loyalty program.
The loans also require airlines to issue warrants and carry restrictions
on executive compensation and buybacks.
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A member of a ground crew walks past American Airlines planes parked
at the gate during the coronavirus disease (COVID-19) outbreak at
Ronald Reagan National Airport in Washington, U.S., April 5, 2020.
Among other carriers, United Airline <UAL.O> said this week it will tap the
Treasury loans, but it was not clear whether the airline would only seek its
$4.5 billion share or more.
U.S. airlines received a separate $25 billion in March under the CARES Act
primarily in the form of grants to keep employees on payroll through the end of
this month and avoid furloughs while the industry battles a deep downturn from
the coronavirus pandemic.
The have also tapped capital markets to bolster liquidity, but with passenger
traffic still down about 70% from pre-pandemic levels, the industry is urging
Washington to extend another $25 billion in payroll support through March, 2021.
American said it has also closed a $1.2 billion debt offering with Goldman
Sachs, backed by some intellectual property and airport slots.
(Reporting by Tracy Rucinski and David Shepardson; Editing by Tom Brown)
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