U.S. Sees Airline Loyalty Assets as Possible Collateral
The U.S. Treasury Department is in talks with some airlines about accepting their loyalty programs as collateral against government loans to help them weather the coronavirus crisis.
Other assets are also in play, including some international flight routes, planes, engines, airport gates and spare parts, according to people familiar with the negotiations, who requested anonymity because the matter is private. Applications are due Friday for the $25 billion loan program, the second round of U.S. funds made available to airlines. The people didn’t name the airlines.
Airlines are among the industries hardest hit by the spread of the coronavirus and related government restrictions on travel. Passenger traffic in the U.S. has dropped to 5% of what it was a year earlier, and carriers have slashed flying capacity by as much as 90%.
The Treasury already has doled out a separate $25 billion in cash assistance and loans to help airlines pay employees. American Airlines Group Inc. Chief Executive Officer Doug Parker said Tuesday that his carrier would seek a $4.75 billion loan from the Treasury. Other carriers have declined to comment on plans to seek loans.
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