American Airlines has closed a previously announced $10 billion financing backed by its customer loyalty programme and used a portion of the proceeds to prepay its CARES Act loan to the US Treasury.
The Dallas-Fort Worth-based carrier said it has thus terminated its loan commitments under the agreement.
“This prepayment is a shining example of the importance of the CARES Act,” said American’s chairman and CEO Doug Parker in a 24 March press release.
“Our industry was in danger of shutting down one year ago when the CARES Act was passed. This important legislation, including the $25 billion secured lending program for airlines, demonstrated that our leaders understood the challenges facing our economy, and their quick action stabilised our industry and kept our workforce intact.”
American was allocated $7.5 billion through the loan programme, with its AAdvantage loyalty programme pledged as collateral. The term of the loans under the facility was approximately five years.
American borrowed $550 million of the facility in September and, per the terms of the loan program, issued to the Treasury Department warrants to purchase up to 4.40 shares of American’s common stock at $12.51 per share. As of 24 March, American had prepaid the $550 million and terminated the loan agreement.
Parker added: “American couldn’t have borrowed $7.5 billion against our AAdvantage program during the uncertainty of 2020, but the CARES Act provided the bridge that allowed us to efficiently raise $10 billion through the public markets earlier this month.
“We wouldn’t be in the position we’re in today without that bipartisan support, and it is something we will never take for granted. We recognise we have a responsibility to continue safely meeting our country’s transportation needs, and we are pleased to have provided a solid return to taxpayers on this loan. We are excited about supporting the reopening of the economy as our fellow citizens and neighbours across the globe return to the skies.”