American Airlines unveils $7.5 billion debt sale to repay government loans
March 8, 2021
(Reuters) – American Airlines Group Inc said on Monday it will sell $7.5 billion of bonds and leveraged loans backed by its loyalty program to repay U.S. government debt.
While U.S. airlines received billions of dollars in federal grants to cover payroll costs over the past year, American also secured up to $7.5 billion of term loans from the U.S. Treasury to help it navigate the coronavirus pandemic.
Under the deal announced on Monday, American will issue a private offering of notes worth about $5 billion, half due in 2026 and half in 2029, and a $2.5 billion term loan credit facility.
Shares were up 2.4% in morning trade.
In January, the airline authorized a $1 billion stock sale, following an ongoing $1 billion offering launched in October to boost liquidity.
The company’s subsidiary American Airlines Inc and AAdvantage Loyalty IP Ltd – an indirect owned subsidiary – intend to commence the offering.
(Reporting by Sanjana Shivdas and Tracy Rucinski; Editing by Bernard Orr, Sriraj Kalluvila and Nick Zieminski)