MIAMI – United Airlines (UA) arranged a US$2bn one-year credit through private equity firm Apollo Global Management, gaining liquidity to survive the current crisis.
The deal is one of many in which banks in the US have negotiated with investment firms to help airlines throughout the coming months after American for Airlines (A4A) proposed a bailout package with grants, loans and tax relief for the aviation industry.
Details of the deal
By March 23, UA’s shares had lost 73% of its 2020 value, according to firm The Motley Fool, as the remainder of its 2019 US$20.5bn debt and lease liabilities, and cash and investments of about US$4.9bn.
Previously, on March 19, Fitch Ratings had given the carrier a negative outlook due to its international exposure and the no expected extension of operative disruptions.
The arrangement, closed in mid-March, secured aircraft and other assets as collateral, giving Barclays, Citigroup, JPMorgan Chase, Morgan Stanley and Apollo a direct claim to them as it involved those entities.
American Airlines (AA), jetBlue (B6), and Southwest Airlines (WN) have sealed similar arrangements, according to ch-aviation.com.
While the US government has not made any statement about a bailout as of yet, deals between banks, firms and airlines can increase as the crisis gets worse as the days go by.
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