United Airlines will be the latest US airline to repay a small portion of the taxpayer’s money borrowed at height. Coronavirus pandemicUse revenue from $ 9 billion in funding this week, which was a huge hit across the fixed income and loan markets.
The Chicago-based airline has promised to acquire its travel routes, some aircraft and flight simulators. $ 7.5 billion credit line from US Treasury Last year based on the provisions of the Care Law. However, the company withdrew a total of $ 520 million in facilities only once, saying it plans to repay on Monday.
United received a much larger amount ($ 7.7 billion) from two tranches in the government’s payroll program. Further round, According to Cowen analysts. Most of the support is provided as a grant, provided that the airline does not remove staff, but the Treasury still has a debt of about $ 3 billion.
According to the Financial Times, the $ 520 million loan that the carrier plans to repay has so far earned about $ 9.5 million in interest, and a $ 1.65 million decree granting the Treasury the right to buy. It was issued. United Stocks at a price of $ 31.50 each.
If the US Treasury exercises these warrants to sell its shares, it will pay US taxpayers a net amount of approximately $ 40 million at a stock price of $ 55.75 on Monday.
Airlines are providing investors with additional funding, despite the plunge in air travel, as the government stands behind companies and the Federal Reserve Board of Governors is investing in financial markets. I was able to survive the pandemic repeatedly.
Today, companies are using investors in better terms due to the optimistic view that the rollout of the coronavirus vaccine and the lifting of movement restrictions will impact economic activity.
Matt Eagan, Portfolio Manager at Loomis Sayles, said: “”Bond market it is open. .. .. Companies in the Covid-contaminated sector hold many rallies. “
United’s $ 9 billion in funding follows American Airlines. Set an industry record For $ 10 billion last month, we used a portion of our earnings to repay $ 550 million borrowed under the US Treasury loan facility.
Cowen analysts have calculated that US taxpayers have an estimated profit of 10.2 percent on American Airlines loans, including the interest and value of warrants still held by the US Treasury. Americans will be spending about $ 12 billion after three rounds of bailout funding, including $ 3.5 billion to repay.
United listed bonds slowly recovered from the plunge at the start of the pandemic, but the company still burned cash at a rate of $ 9 million in the first three months of the year, according to a regulatory filing on Monday. It was.
The company will mature in 2026 and 2029 and will borrow $ 5.5 billion through bonds secured against routes, slots and gates, as well as $ 3.5 billion in the leveraged drone market. We are also considering setting up a new $ 1.75 billion revolving credit line with our banks.
United will repay part of its taxpayer loan and refinance $ 2.4 billion in other debt and $ 1 billion in unpaid revolving credit lines.
The remaining revenue will be added to the company’s cash reserves to survive the pandemic.
“They need to make sure they have enough capital for a likely confused recovery,” Cowen analyst Hellen Becker said.
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United Airlines to repay some of its US government bailout Source link United Airlines to repay some of its US government bailout