American Airlines and Other Airlines Reach Agreement with U.S. Government for More Loans

With the air travel industry in turmoil amid the ongoing threat of coronavirus, several airlines got a lifeline from the government to help them survive the pandemic. The Treasury Department announced on Thursday that it had signed letters of intent for loans with five different airlines: American, Spirit, Frontier, Hawaiian and SkyWest.

“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’s CEO and President wrote in a note to employees. American said that the loan would be worth $4.75 billion, which comes in addition to $5.8 billion that the Treasury had already lent to the company.

All major U.S. airlines previously accepted financial support from the government to help make payroll through the end of September, but this second round of loans goes to some of the airlines in the weakest financial positions amid the pandemic. American Airlines had the largest amount of debt of all major U.S. carriers at the start of the year, while budget airlines like Spirit, Frontier, and Hawaiian are feeling the damage done by a massive halt to leisure and vacation travel.

Though air travel has recovered slightly since the near-100% drop it felt at the onset of official lockdowns, the number of passengers still remains only one-fourth of what it was a year ago.

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