American Airlines Flight 718, the first commercial Boeing 737 MAX flight in the US since regulators lifted a 20-month link in November, takes off from Miami, Florida, USA on December 29, 2020.
Marco Bello | Reuters
American Airlines said Monday it intends to issue $ 5 billion in bonds and seek a $ 2.5 billion loan, backed by its frequent flyer program, funds it intends to use to repay some of the debt. its used to resist the coronavirus pandemic.
US and big rivals Delta Air Lines and United Airlines have mortgaged their frequent flyer programs to cope with declining revenues after last year’s pandemic. In September, Delta raised a record $ 9 billion in debt backed by its SkyMiles loyalty program.
Airlines earn money from their frequent sales programs by selling miles to banks, which customers earn using credit cards.
US sales include $ 2.5 billion in five-year bonds and another $ 2.5 billion in 8-year bonds. The proceeds will be used to repay federal loans that Congress approved last year to help the struggling airline industry, other debts or general purposes, the carrier said. The American has been awarded about $ 5 billion under this program, with the possibility of raising it to $ 7.5 billion, but since the end of 2020, the airline has received only $ 550 million of this amount. The loan has an interest rate of approximately 4%.
The American from Fort Worth, Texas, had a total debt of 41 billion dollars at the end of 2020, increasing by almost 23% compared to the previous year, before the pandemic hit.