American Airlines just boosted the amount they are borrowing against the AAdvantage program to a record-breaking $10 billion.
- United Airlines went to market first to mortgage MileagePlus seeking to raise $5 billion which they then upsized to $6.8 billion.
- Delta followed with a plan to borrow $6.5 billion against SkyMiles, but stopped their transactions at $9 billion.
- American Airlines pledged AAdvantage against a subsidized CARES Act loan of up to $7.5 billion from the U.S. Treasury.
This week American announced a plan to raise $7.5 billion from the private markets instead to close out their CARES Act lending facility. This led to huge amounts of detailed disclosure about the program to investors.
Now American is supersizing their AAdvantage mortgage refinancing to $10 billion. The cash-out ReFi breaks down as follows,
- $3.5 billion senior secured notes at 5.5% due in 2026
- $3.0 billion senior secured notes at 5.75% due 2029
- $3.5 billion term loan facility
The blended average rate on this debt is 5.575%, paid by three subsidiaries that now make up AAdvantage based in the Cayman Islands. When the pandemic is over I’m encouraging American to throw a Members Only Party on board several flights to Grand Cayman where we can all visit our miles.