American Airlines Flight 718, the first American Boeing 737 MAX commercial flight since regulators lifted a 20-month basis in November, departs from Miami, Florida, USA on December 29, 2020.
Marco Bello | Reuters
American Airlines said on Monday that it plans to issue $ 5 billion in bonds and support a $ 2.5 billion loan backed by its regular flyer program, which they plan to use to to repay part of its debt used to counter the coronavirus pandemic.
US and major rivals Delta Air Lines and United Airlines have pledged their regular advertising programs to address a drop in revenue after the pandemic last year. In September, Delta raised a record $ 9 billion in debt backed by its SkyMiles loyalty program.
Airlines earn money from their regular offering programs by selling miles to banks, which customers earn by using their credit cards.
American’s sales include $ 2.5 billion in five-year bonds and another $ 2.5 billion in eight-year bonds. The proceeds will be used to repay federal loans that Congress entered into last year to help the struggling airline industry, other debt or general purposes, the carrier said. According to the program, American has granted about $ 5 billion with the possibility of increasing it to $ 7.5 billion, but by the end of 2020, the airline had used only $ 550 million of that amount. The loan has an interest rate of about 4%.
Fort Worth, an American from Texas, had a total debt of $ 41 billion at the end of 2020, which was nearly 23% compared to the previous year, before the pandemic hit.