American Airlines shares rose 4.47% Friday after $5.5 billion government loan that could tap as much as $2 billion more in October depending on how a U.S. Treasury allocates funds that are extra a $25 billion loan package for airlines.
Airlines have until Sept. 30 to decide whether to take the U.S. Treasury loans, which were authorized under the CARES Act coronavirus relief bill passed by Congress in March.
American Airlines was originally allocated $4.75 billion, but carriers Delta that is including Air (N:DAL) and Southwest Airlines (N:LUV) have already said they do not intend to simply take their share of the package, opening the door for the funds to be utilized by other airlines.
Fort Worth, Texas-based American said it has already drawn down $550 million associated with the Treasury loan, which is backed by its loyalty program. The loans also need airlines to issue warrants and carry restrictions on executive compensation and buybacks. American Airlines shares rose 4.47% Friday after $5.5 billion loan.
Among other carriers, United Airline (O:UAL) said this it will tap the Treasury loans, but it was not clear perhaps the airline would only seek its $4.5 billion share or more week.
U.S. airlines received a split $25 billion in March under the CARES Act primarily in the form of grants to keep employees on payroll through the end with this month and avoid furloughs while the industry battles a downturn that is deep the coronavirus pandemic.
The have actually also tapped capital markets to bolster liquidity, but with passenger traffic still down about 70% from pre-pandemic amounts, the industry is Washington that is urging to another $25 billion in payroll support through March, 2021.
American stated it has additionally closed a $1.2 billion debt offering with Goldman Sachs (NYSE:GS), supported by some property that is intellectual airport slots.