American Airlines bags another USD5.5 billion in federal loans
American Airlines announced it has secured a $5.5 billion federal loan ahead of a looming funding crisis for the industry.
The airline could take another $2 billion subject to another stimulus package being announced soon.
However, current funding to protect airline jobs runs out in just a few days with no new package agreed yet.
Airlines have until September 30 to take the U.S. Treasury loans, which are part of the CARES Act relief bill that was passed by Congress six months ago.
American secured more than it had previously been allocated as airlines including Delta Air Lines and Southwest Airlines said they will not need to take the loans.
AA has also secured private funding including a $1.2 billion debt offering with Goldman Sachs.
Under the terms of the federal loans, airlines have to agree to restrictions on executive pay and shareholder buybacks.
United Airlines will likely tap its allocation of $4.5 billion this week.
The loans are separate to the $25 billion provision under the CARES Act to fund payroll costs to protect thousands of airline jobs.
If no extension is announced at the last minute, the industry is warning of up to 40,000 job cuts.
However American Airlines CEO Doug Parker said at the weekend that he is confident Congress will finally reach an agreement to extend the Covid-19 stimulus package beyond 30 September.
Written by Ray Montgomery, US editor
TravelMole Editorial Team
Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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