American Airlines announced on Sunday a proposal to raise an additional $3.5 billion through an offering of senior secured notes, a new term loan, convertible senior notes and share sales. The carrier intends to fortify their balance sheet as demand returns, to weather the global COVID-19 pandemic.
Today, Fort Worth Texas-based American Airlines announced the intention to fortify their balance sheet by $2.0 billion with a private offering of $1.5 billion in aggregate principal of secured notes due 2025 as well as a new $500 billion Term Loan Facility due 2024. American Airlines expects to utilize the raised funds to refinance a delayed draw term loan scheduled to enter maturity on March 17, 2021, which they entered on March 18, 2020, as well as general corporate expenses. All final terms of the proposed notes and term loan remain subject to market conditions and may differ from company expectations.
The closing of the additional financing measures announced today are not dependent on the closing of previously announced financial agreements. According to the company, the new notes and term loan will be pari passu (a legal term, generally meaning "on equal footing with") obligations secured on a first lien basis of certain slots, gates, routes and collateral based on the airline’s nonstop service between certain U.S. airports and specific airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Mexico. The notes and loans announced today are also secured on a secondary lien basis by a pool of further assets including certain slots, gates and collateral utilized in the operation of the airline’s nonstop scheduled service between certain U.S. airports and specific gateways in the United Kingdom and the European Union.
In a separate announcement Sunday, the carrier further announced the proposed offering of $750 million in common stock and $750 million in aggregate principal amount of senior convertible notes due 2025. Underwriters will have a 30 day option to purchase up to $112.5 million in shares of common stock and $112.5 million of additional convertible notes. In total, along with the previously described offering of senior secured notes and a new term loan, American Airlines hopes to raise $3.5 billion in liquidity ($3.725 billion if underwriters exercise all options).
Source: American Airlines