Washington: American Airlines Group Inc. closed a $5.48 billion loan with the US Treasury, increasing its pool of cash to help fund operations until travel demand begins to return.
The credit facility, backed by American’s loyalty program, increased from an original $4.75 billion target after companies such as Delta Air Lines Inc. and Southwest Airlines Co. opted out of the funds and the remaining money was reallocated. American said it could receive as much as $2 billion more when the funds are adjusted a second time, according to a regulatory filing Friday.
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US airlines slammed by the coronavirus pandemic have been building cash through equity sales and loans as passenger totals remain about 70% below year-ago levels. They have also parked aircraft, cut flying schedules and asked thousands of employees retire early or take leaves to further reduce spending.
American rose 1.8% to $12.51 after the close of regular trading in New York.
The industry got $25 billion in federal payroll support earlier this year, consisting largely of grants with a portion in loans. American received $5.8 billion as part of that package. Congress is debating whether to extend the payroll aid, which expires at the end of the month, in an effort to avoid tens of thousands of industry layoffs.
American drew $550 million from the new federal funding, according to the filing.