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American Airlines unveils US$7.5 billion debt sale to repay government loans

American Airlines unveils US$7.5 billion debt sale to repay government loans

FILE PHOTO: American Airlines passenger planes crowd a runway where they are parked due to flight reductions to slow the spread of coronavirus disease (COVID-19), at Tulsa International Airport in Tulsa, Oklahoma, U.S. March 23, 2020. REUTERS/Nick Oxford

REUTERS: American Airlines Group Inc said on Monday it will sell US$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 US$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 US$5 billion, half due in 2026 and half in 2029, and a US$2.5 billion term loan credit facility.

Shares were up 2.4per cent in morning trade.

In January, the airline authorized a US$1 billion stock sale, following an ongoing US$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)

Source: Reuters

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