Financing

American Airlines Gets $ 5.5 Billion Treasury Loan, Could Get More From It

American Airlines said on Friday it got a $ 5.5 billion government loan and could get up to $ 2 billion more in October depending on how the U.S. Treasury allocates additional funds under a loan program from $ 25 billion for the airlines.

Airlines have until September 30 to decide whether or not to take out the U.S. Treasury loans, which were authorized under the CARES Act coronavirus relief bill passed by Congress in March.

American Airlines had initially received $ 4.75 billion, but carriers including Delta Airlines and Southwest Airlines have already said they have no plans to take their part of the package, opening the door for the funds to be used by other airlines.

The Fort Worth, Texas-based American said he has already used $ 550 million on the Treasury loan, which is backed by his loyalty program. The loans also force airlines to issue warrants and apply restrictions on executive pay and buyouts.

Among other carriers, United airline said this week it would use Treasury loans, but it was not clear whether the airline would only seek its share of $ 4.5 billion or more.

U.S. airlines received a separate $ 25 billion in March under the CARES Act, mostly in the form of grants to keep employees on the payroll until the end of this month and avoid time off while the industry is fighting a deep slowdown in the coronavirus pandemic.

They have also tapped financial markets to boost liquidity, but with passenger traffic still down about 70% from pre-pandemic levels, the industry is urging Washington to extend an additional $ 25 billion of payroll support until March 2021.

American said it also closed a $ 1.2 billion debt offer with Goldman Sachs, backed by intellectual property and airport slots.

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