United secures $9.5bn in a double financial deal

United secures $9.5bn in a double financial deal

United Airlines has secured $9.5 billion in funding by mortgaging its MileagePlus loyalty programme and securing a $4.5 billion US government-backed loan.

US carrier United announced the twin deals today saying they would extend the company’s liquidity to $17 billion by September.

The $5-billion deal to mortgage United’s MileagePlus programme was secured with investment banks Goldman Sachs, Barclays and Morgan Stanley which will provide a term loan facility – meaning a loan with a specified repayment schedule.

United gave few details other than that the deal should close by the end of July.

The carrier has also secured $4.5 billion in US federal funding under the Coronavirus Aid, Relief, and Economic Security (CARES) Act loans programme.

In a statement, United said: “The company believes it has sufficient slots, gates and routes collateral available to meet the collateral coverage that may be required for the full $4.5 billion available under the loan programme.

“This $9.5 billion of additional liquidity will provide even more flexibility as the airline navigates the most disruptive financial crisis in the history of aviation.”

United reported it had “spent the past several months aggressively and proactively cutting costs”.

This had reduced its average daily ‘cash burn’ to $40 million in the three months to June and would further reduce it to $30 million in the quarter to the end of September.

The cost-cutting measures have included executive pay cuts, a wage and recruitment freeze and unpaid leave.