American Airlines to raise £2.83 billion in new financing to boost liquidity amidst COVID-19

As the Coronavirus cases continue to rise across the globe, several airlines are preparing for a prolonged impact of the health crisis on demand for air travel. Amidst the novel financial struggles, American Airlines Group (NASDAQ: AAL) revealed plans of securing new financing worth £2.83 billion to boost liquidity on Sunday.

Shares of the company opened about 7% down on Monday. At £12 per share, American Airlines is roughly 50% down year to date in the stock market after recovering from a low of £7.28 per share in mid-May. Learn more about how to invest in the stock market.

American Airlines seeks a new term loan facility worth £500 million

As per the U.S. air carrier, it is planning a share sale that combined with senior convertible notes due in 2025, will raise £1.21 billion in total. Additionally, it will raise another £1.21 billion from secured senior notes. American Airlines is also seeking a new term loan facility worth £500 million due in 2024.

The U.S. airline also highlighted on Sunday that the money it will raise from the share sale and convertible notes will be directed at supporting its liquidity amidst COVID-19 and compensating for the general corporate purposes.

According to Bloomberg, these offerings will come with a 30-day option that will enable the underwriters to buy up to £90.66 million each of additional common shares and convertible notes. American Airlines also announced late on Sunday that Citigroup, Goldman Sachs, JP Morgan, and Bank of America Securities, will serve the role of representatives for the underwriters.

American Airlines reports early signs of recovery in demand

In April, the U.S. government had revealed passenger numbers to have plunged to historically low due to the pandemic. Last week, however, Delta Air Lines and American Airlines reported early signs of recovery in demand that was contributing to slashing the daily cash burn for the air carriers in June.  

The Coronavirus pandemic that has so far infected more than 2.3 million people in the United States and caused over 122,000 deaths has weighed heavily on American Airlines’ financial performance in recent months with the company reporting a 90% decline in its revenue in mid-April.

In his statement in April, CEO Doug Parker of American Airlines said that he had no idea when the global airline industry will recover from the impact of COVID-19.