04 July, 2020

Alaska Airlines puts up 61 aircraft as security for nearly $1.2 billion in private funding

Owned aircraft will be used as collateral; McGee Air Services attains PSP relief


The Seattle based Alaska Airlines, formally known as McGee Airways has secured nearly $1.2 billion in private loans to help it cope with the effects of the coronavirus COVID-19 pandemic.  As part of an Enhanced Equipment Trust Certificate (EETC) offering, Alaska will use 61 of its owned aircraft as collateral to back the debt: 26 Boeing 737-800s, 16 Boeing 737-900ERs and 19 Embraer 175s.

The aircraft will remain encumbered until the debt is repaid: Series A ($966 million) will be repaid by Aug. 15, 2027, and Series B ($208 million) will be repaid by Aug. 15, 2025.



"We're proud of what our people have built at Alaska. Because of our long-standing commitment to conservative financial management and a strong balance sheet, we were fortunate to see strong demand for our offering," said Shane Tackett, Alaska's executive vice president of finance and chief financial officer. "With this financing and the actions we've taken to reduce our cash burn rate, we've created a liquidity runway that rivals our strongest competitors."

As part of the Payroll Support Program (PSP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act, McGee Air Services, a wholly owned ground services subsidiary of Alaska Airlines that operates independently, has also received nearly $30 million in funding. This is in addition to the $992 million in the form of a $725 million grant and a $267 million loan that Alaska Airlines and Horizon Air jointly received to be exclusively used to pay employee salaries, wages and benefits through Sept. 30.







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