MIAMI – Alaska Airlines (AS), has secured approximately US$1.2bn in private loans to help it cope with the effects of the COVID-19 pandemic.
As part of a private Enhanced Equipment Trust Certificate (EETC) offering, AS will use 61 of it’s owned aircraft as collateral to back the debt: 26 Boeing 737-800, 16 Boeing 737-900, and 19 Embraer 175.
The aircraft will remain encumbered until the debt is repaid. The first in the series, totaling US$966m, will be repaid by August 15, 2027; the second, US$208m, by August 15, 2025.
Results for Alaska Airlines
Shane Tackett, Alaska’s Executive Vice President of Finance and CFO said, “We’re proud of what our people have built at Alaska. Because of our long-standing commitment to conservative financial management and a strong balance sheet, we were fortunate to see strong demand for our offering,”
With the new liquidity available, AS should be able to reduce its cash burn rate and remain a rival against some larger competitors.
Positive Outlook for the Alaska Group
As part of the Payroll Support Program (PSP) under the Coronavirus Aid Relief and Economic Security (CARES) act, McGee Air Services, a wholly-owned ground services subsidiary of Alaska Airlines that operates independently, has also received nearly US$30m in funding.
This comes in addition to the US$992m which AS and Horizon Air (QX) jointly received to pay employee salaries, wages, and benefits through September 30, 2020.
Alaska Airlines remains crucial in providing essential air service for its passengers along with moving critical cargo shipments, such as food, medicine, mail, and e-commerce deliveries.
AS and its subsidiaries serve 115 destinations across the United States and North America.