United Airlines has agreed to borrow $500 million from Goldman Sachs Bank USA in the form of a one-year secured term loan.

The Chicago-headquartered carrier will use the loan for related transaction costs, fees and expenses, and for working capital and other general corporate purposes. It has pledged some of its spare parts as collateral for the loan.

The loan has a variable interest rate equal to Libor plus a margin of 2.75%, 3%, 3.25% or 3.5% per annum. Alternatively, United can choose “another rate based on certain market interest rates”, plus a margin of 1.75%, 2%, 2.25% or 2.5% per annum. In each of these cases, the incremental increases to the margin will occur at 90 days, 180 days and 270 days.

The deal was agreed on 20 March and United drew down the loan in two separate disbursements on 23 March and 24 March.

United must pay back the principal amount of the term loan in a single installment on the maturity date, which falls on 22 March 2021. United may prepay all or a portion of the term loan from time to time, at par plus accrued and unpaid interest.

US carriers are suffering as the coronavirus spreads throughout the country, with over 85,000 confirmed cases and 1,296 deaths, according to data from Johns Hopkins University.

Earlier this week, United stepped back plans to cut 95% of capacity and leave just a skeleton network in place through the coronavirus crisis. It has now reinstated some daily international routes to Europe, Asia and Australia, while running a few additional flights between now and the end of March to repatriate displaced travellers.

Last weekend, Delta secured a $2.1 billion term loan, adding to its liquidity as it faces an 80% reduction in revenues for the second quarter due to the coronavirus pandemic.