United Airlines plans to refinance about $1.2 billion in outstanding debt this year, as it continues to deleverage its balance sheet.
The refinancing will consist of a $900 million term loan while the carrier will pay down the remaining $300 million in outstanding debt, says Gerry Laderman, senior vice-president of finance and treasurer at United, on the sidelines of the ISTAT Americas 2013 conference in Orlando today.
The outstanding term loan is part of a refinancing that closed in 2007 and matures in February 2014, he says. It is priced at 200bp over Libor when it closed.
United will also double its existing revolving line of credit to $1 billion from $500 million as part of the refinancing, says Laderman. Revolvers are considered liquidity on the airline's balance sheet, he adds.
Commitment fees for the revolver are cheaper than the interest rates that are available for cash deposits, explains Laderman.
United has roughly six Boeing 737-900ERs and two Boeing 787-8s with deliveries scheduled for the second half that it needs to finance, he says. He declines to comment on how the airline will finance the aircraft.
The carrier has issued enhanced equipment trust certificate (EETC) for the majority of its 2012 and first half of 2013 aircraft deliveries. It raised $2.16 billion in secured debt with three issues in the market last year.
Laderman says that the EETC market is United's "primary source of financing", during a panel discussion at the conference.