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Airline debt grows: takers for US government loans are dwindling

Premium Analysis

As the deadline to access loans from the US federal government nears, Southwest Airlines, Delta and Spirit have decided not to pursue that avenue, opting instead to access the markets to continue building liquidity as the COVID-19 crisis continues to result in depressed demand. 

After United used its loyalty programme as collateral to raise capital, Delta has raised a whopping USD9 billion backed by its SkyMiles frequent flyer programme. Spirit has also forged new financings backed by its loyalty programme.

All airlines are working to bolster their liquidity as hopes of break-even cash burn appear to be slipping well in to 2021 as demand, while showing some signs of improvement, remains severely depressed. 

Delta, Southwest and Spirit will avoid some of the more onerous stipulations associated with the federal loans; but all airlines continue to build up significant debt that they will work feverishly to restructure when some sense of normality returns to commercial aviation. 

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