https://www.nytimes.com/aponline/202...ines-loans.htm

American and 4 Other Airlines Reach Loan Agreements With US

By The Associated Press

• July 2, 2020Updated 11:25 a.m. ET

DALLAS — American Airlines and four smaller carriers have reached agreement with the government for billions more in federal loans, a sign of the industry’s desperate fight to survive a downturn in air travel caused by the virus pandemic.The Treasury Department said Thursday that it had signed letters of intent for new loans to American, Spirit Airlines, Frontier Airlines, Hawaiian Airlines and SkyWest Airlines.

All the leading U.S. airlines had previously accepted a combination of grants and loans to help cover payroll costs through Sept. 30. These five are the first carriers to accept loans from a separate $25 billion kitty that Congress set aside under a $2.2 billion measure to help companies hurt by the pandemic.

American Airlines said it signed a term sheet with Treasury for a $4.75 billion loan, which would be in addition to $5.8 billion that Treasury has already agreed to extend to American.

“We have to complete some legal work to reach a definitive credit agreement, but we expect to finalize that loan during the third quarter,” American CEO Doug Parker and President Robert Isom said in a note to employees. They said the additional loan would give American liquidity of about $15 billion.American is generally considered the financially weakest of the largest U.S. airlines, having entered the pandemic with the largest amount of debt. Isom said in May that the airline was considering using its AAdvantage frequent-flyer program as collateral for a federal loan.

Details about terms of the new loans for American and others were not immediately clear. The Treasury Department said it would post documentation within 72 hours of the agreements becoming final — which, judging from American's comments, could be weeks from now.Analysts believed interest in the second batch of federal loans would be lower because of the terms — including giving the government a potential ownership stake — and the availability of money from private sources. Major carriers including American, United, Delta and Southwest have raised billions in available cash on the private credit market.

Treasury Secretary Steven Mnuchin said his department was still talking with other airlines about loans and hopes to reach agreements as soon as possible.

Air travel within the United States fell about 95% from March 1 through mid-April. It has recovered slowly since then, but the number of airline passengers is still about 75% below year-ago numbers.Investors gave a muted reaction to Treasury's announcement. Shares of American Airlines and its three closest competitors — Delta, United and Southwest — rose between 1% and 2% in morning trading.

New.. came out this morning (part of the email)

Dear fellow team members,

As we navigate the ongoing coronavirus (COVID-19) pandemic, it’s imperative that we stay the course with our goals of bolstering liquidity, conserving cash and encouraging customers to travel.



Bolstering liquidity

We continue to make good progress to improve our liquidity, as evidenced last week with our raise of an additional $4.5 billion. We used $1 billion of the proceeds from these transactions to repay the recently arranged bridge term loan scheduled to mature in March 2021. Refinancing this loan means we won’t have any large non-aircraft debt obligations until 2022. Separately, we have signed a term sheet with the U.S. Department of the Treasury for a $4.75 billion loan under the CARES Act. We have to complete some legal work to reach a definitive credit agreement, but we expect to finalize that loan during the third quarter. Adding the expected CARES Act financing to our cash balance at the end of the second quarter results in liquidity of approximately $15 billion.



Conserving cash

We have also taken a number of steps to reduce costs and preserve cash. On the cost side, we removed more than $14.5 billion from our operating and capital budgets this year. This results in a positive trend on our cash burn rate, from more than $100 million per day in April to less than $35 million per day at the end of June. Our cash conservation is also helped by an improving trend in cash receipts: We saw approximately $11 million in cash receipts in April, $358 million in May and more than $1 billion in June. While that improvement is encouraging, it’s compared to an average of $4.2 billion each month during the same period in 2019, so we have a ways to go.

Thank you! $4.5 B loan? Wow!!!! That is incredibly encouraging.

I am confused though as to why I never received this email. I’ve gotten every single TC and other executive emails the last 2 months, but I see nothing in my company mail. Maybe it’s full? Lol. Probably should delete some stuff.

You AA or Spirit? That was an email from Parker to all AA employees.

Haha, Spirit. Disregard.

I understand the headline says American but it also says ...and four other airlines.

Pretty sure the OP was asking if this was new or old news to Spirit since this is a spirit forum.

Your post is quite misleading for many here looking for some clarity on their futures at spirit and may not realize that the numbers in your post are so large they couldn’t possibly be for spirit.

Yep, I kept looking around for my email. Then I finally realized that was an AA memo. Wondered why the whole thing didn’t make sense.

I would classify this as “expected” news, but news nonetheless. When we took the PSP, Ted commented on the direct loan portion of the CARES act. They were going to “look into it” but it wasn’t hard to imagine that we were going for it.
Now I’m curious about the details since the government was requiring collateral and wonder what kind of rates we are getting.
I believe I read somewhere that the government was going to require some preferential stock, but not in the same way as a bond. So might me a hybrid “loan-bond” type thing. I’m also curious about the seniority of this loan since the last private loan we took was a senior note. At his point we need every penny we can get. It’s not likely that we’ll be able to break even until 1st or 2nd QTR 2021. If the government doesn’t launch a CARES II act I can see us filing chapter 11 if our cash reserves go below 4-500M.