AirTran Airways has altered agreements with one of its principal lenders and its largest credit card processors to shore up its cash balances to $400 million at the end of the third quarter.
The carrier has extended its letter of credit with its lender to 31 December 2010, which results in the amount AirTran is allowed to borrow under the facility increasing from $90 million to $125 million. However, the total size of the facility has decreased from $215 million to $175 million after AirTran re-worked the optimisation of its letter of credit from $125 million to $50 million.
AirTran's amended agreement with its largest credit card processor entails an extension to 31 December 2010. The carrier says the enhancements to its credit facilities result in AirTan not being subject to any cash holdbacks as of 30 September from its two largest credit card processors.
Credit card processing cash holdbacks drew a fair amount of attention last year when Frontier Airlines cited holdbacks as the primary driver in its entry into Chapter 11 restructuring. The carrier is set to emerge on 1 October.
AirTran's current cash balance of $400 million is an increase of $24 million from the $376 million in cash the carrier posted at the end of the second quarter.
US major carriers American, Delta and US Airways have all closed on financial transactions this month. American and Delta say they have raised $4.1 billion and $2.1 billion respectively. US Airways has raised $137 million.
Source: Air Transport Intelligence news
