American Airlines has completed a $10 billion financing deal backed by its AAdvantage program.
The carrier said it would use a portion of the proceeds to prepay its secured loan from the United states department of the treasury.
In doing so, American has terminated its loan commitments under the secured loan agreement.
The Coronavirus Aid, Relief, and Economic Security (Cares) Act established a $25 billion secured lending facility for United States-based airlines in response to the global pandemic.
American was allocated $7.5 billion through the loan program, with the AAdvantage program pledged as collateral.
The term of the loans under the facility was approximately five years.ADVERTISEMENTAmerican borrowed $550 million of the facility in September 2020 and, per the terms of the loan program, issued to the treasury warrants to purchase up to 4,396,483 shares of common stock at $12.51 per share.
As of today, American has prepaid the $550 million and terminated the loan agreement.
“This prepayment is a shining example of the importance of the Cares Act,” said American chief executive, Doug Parker.
“Our industry was in danger of shutting down one year ago when the Cares Act was passed.
“This important legislation, including the $25 billion secured lending program for airlines, demonstrated that our leaders understood the challenges facing our economy, and their quick action stabilized our industry and kept our workforce intact.”
He added: “American couldn’t have borrowed $7.5 billion against our AAdvantage program during the uncertainty of 2020, but the Cares Act provided the bridge that allowed us to efficiently raise $10 billion through the public markets earlier this month.
“We wouldn’t be in the position we’re in today without that bipartisan support, and it is something we will never take for granted.”
WTTC records US$4.5 trillion in tourism losses for 2020
Industry urges government to focus on testing over quarantine