Jun 15, 2020 - Economy & Business

United Airlines mortgages its MileagePlus loyalty program to borrow $5 billion

Photo: Joshua Lott/AFP via Getty Images

United Airlines said Monday that it secured a $5 billion loan using its MileagePlus loyalty program as collateral and has other assets to pledge if it decides to tap another $4.5 billion from taxpayers to weather the coronavirus crisis.

Why it matters: While officials at the Chicago-based airline said there's early evidence of a modest rebound in air travel, their goal is to build a $17 billion cash cushion by the end of the third quarter — three times their normal liquidity balance.

Details: The MileagePlus loyalty program is one of United's most valuable assets, spinning off $5.3 billion in cash and $1.8 billion in EBITDA profit each year, and is worth an estimated $20 billion, according to company officials.

  • The revenue comes as consumers redeem frequent-flier miles for trips, credit card purchases, hotels, car rentals and other items from United's non-airline partners.
  • While some bankrupt airlines have used their frequent-flier programs as collateral to obtain financing in the past, United said its deal is uniquely structured so it will not give up any operating control — or equity — to its lenders.
  • Goldman Sachs, Barclays Bank and Morgan Stanley are providing the loan.

What to watch: United says it has other collateral such as airport gates, slots and routes to secure a future $4.5 billion Treasury loan, should it need to under the CARES Act.

Go deeper

Dion Rabouin, author of Markets
Sep 9, 2020 - Economy & Business

Small businesses are losing confidence in their survival

Data: Goldman Sachs; Chart: Axios Visuals

Small businesses have largely exhausted their federal funding and are starting to lay off workers, with many worrying about having to shut their doors for good, according to a new survey from Goldman Sachs provided exclusively to Axios.

Why it matters: Business still has not returned to normal, six months after the coronavirus pandemic first appeared in U.S. But small firms say the money they received from the Paycheck Protection Program has run dry.

Go deeper (1 min. read)Arrow
Axios
Updated 19 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 12 p.m. ET: 30,241,377 — Total deaths: 947,266— Total recoveries: 20,575,416 — Map.
  2. U.S.: Total confirmed cases as of 12 p.m. ET: 6,681,251 — Total deaths: 197,763 — Total recoveries: 2,540,334 — Total tests: 91,546,598 — Map.
  3. Politics: Trump vs. his own administration on virus response.
  4. Health: Massive USPS face mask operation called off — The risks of moving too fast on a vaccine.
  5. Business: Unemployment drop-off reverses course — 1 million mortgage-holders fall through safety net — How the pandemic has deepened Boeing's 737 MAX crunch.
  6. Education: At least 42% of school employees are vulnerable.
Go deeper (<1 min. read)Arrow
Joann Muller, author of Navigate
22 mins ago - Economy & Business

Anxious days for airline workers as mass layoffs loom

Sara Nelson, president of the Association of Flight Attendants, during a Sept. 9 protest outside the Capitol. Photo: Alex Wong/Getty Images

The clock is ticking for tens of thousands of anxious airline employees, who face mass reductions when the government's current payroll support program expires on Sept. 30.

Where it stands: Airline CEOs met Thursday with White House Chief of Staff Mark Meadows, who said President Trump would support an additional $25 billion from Congress to extend the current aid package through next March.

Go deeper (2 min. read)Arrow