Transaction Summary: Treasury Loan to American Airlines, Inc. (Updated)

Summary

A U.S. Department of the Treasury transaction summary for a loan of up to $7.5 billion to American Airlines, Inc., a wholly owned subsidiary of American Airlines Group, Inc., made under section 4003(b)(1) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It states Treasury originally agreed to lend up to $5.477 billion and increased the maximum loan amount on October 21, 2020. The loan is secured by the AAdvantage loyalty program, carries an interest rate of LIBOR plus 3.5% and matures on June 30, 2025. The company drew $550 million at loan close, and Treasury will receive warrants to purchase common stock equal to 10% of the total loan amount drawn.

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Cite this document

“Transaction Summary: Treasury Loan to American Airlines, Inc. (Updated).” Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/treas-american-airlines-updated-transaction-summary-381544dfd4/, SHA-256 2a109719942773ddfca0a8db774468af67e814847ef464540dfe017abc4b7fe0.

Full text

                                    Transaction Summary

The U.S. Department of the Treasury agreed to make a loan of up to $7.5 billion to American
Airlines, Inc. (the Company). Treasury originally agreed to make a loan of up to $5.477 billion to
the Company, and on October 21, 2020, Treasury increased the maximum loan amount to $7.5
billion. The Company is a wholly owned subsidiary of American Airlines Group, Inc. and one of
the largest domestic airlines in the United States. The Company had approximately 157,000 U.S.
employees in March 2020 and carried more than 150 million passengers in 2019.

Treasury made the loan pursuant to section 4003(b)(1) the Coronavirus Aid, Relief, and
Economic Security (CARES) Act. The loan is secured by the Company’s AAdvantage loyalty
program. The loan has an interest rate equal to LIBOR plus 3.5% and matures on June 30, 2025.
The Company elected to draw $550 million at loan close and may draw the remaining loan funds
in multiple draws through May 28, 2021. The loan proceeds will be used to provide liquidity to
continue the Company’s operations. The transaction agreement includes covenants by the
Company to comply with certain restrictions on employee compensation, stock repurchases,
dividends, and reductions in employment levels, as required by the CARES Act. Treasury will
receive warrants to purchase common stock equal to 10% of the total loan amount drawn.

File and source

File: TREAS-American-Airlines-Updated-Transaction-Summary.pdf
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SHA-256: 2a109719942773ddfca0a8db774468af67e814847ef464540dfe017abc4b7fe0
Our copy: TREAS-American-Airlines-Updated-Transaction-Summary.pdf
Original: home.treasury.gov