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MarketScreener Homepage  >  Equities  >  Nasdaq  >  American Airlines Group Inc.    AAL

AMERICAN AIRLINES GROUP INC.

(AAL)
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U.S. Treasury Reaches Loan Agreements With Five Major Airlines -- 2nd Update

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07/02/2020 | 11:58am EDT

By Alison Sider and Kate Davidson

The U.S. Treasury Department has agreed to terms for loans to American Airlines Group Inc. and four smaller airlines as part of an aid program to help the industry weather the coronavirus pandemic.

The Treasury said that in addition to American, Frontier Airlines, Hawaiian Airlines, SkyWest Airlines and Spirit Airlines Inc. had agreed to loan terms and signed letters of intent.

Air travel fell sharply this spring as government restrictions on travel and fears of infection kept passengers from flying. While air travel has started to rise, demand remains a fraction of what it was a year ago and airline executives have said they expect a full recovery will likely take years.

These are the first airlines to accept government loans from a $25 billion pool Congress earmarked under the Cares Act, the $2.2 trillion economic stimulus package passed in March. Major carriers have also received another $25 billion in federal aid to pay workers through the end of September to avoid mass layoffs they said would have been inevitable otherwise. The payroll funds are largely made up of grants that don't need to be paid back.

American expects to complete the $4.75 billion loan in the third quarter, Chief Executive Doug Parker and President Robert Isom wrote in a letter to employees Thursday. The airline has previously said it was seeking to pledge its frequent-flier program as collateral.

Even with the infusion of government funds, airlines face a dire outlook. American is burning through $35 million in cash per day, Mr. Parker and Mr. Isom wrote, and likely has more than 20,000 more employees than it needs to operate the shrunken schedule it anticipates this fall.

"To be clear, this doesn't mean 20,000 of our team members will be furloughed in October, it simply means we still have work to do to right-size our team for the airline we will operate," the executives wrote.

Airlines have been scrambling to raise as much cash as they can as travel bookings have fallen sharply, and American executives have said that the government loans were likely the most efficient form of financing available. The airline last week raised another $4.5 billion to bolster liquidity, including $2.5 billion in senior notes at an interest rate of 11.75%.

Other carriers such as Delta Air Lines Inc., United Airlines Holdings Inc. and Southwest Airlines Co. have previously said they have applied for government loans but hadn't decided whether to tap them. Airlines have through the end of September to draw the funds.

The Treasury didn't detail the amounts of the loans or the terms, but said the borrowers would have to provide warrants, equity stakes, or senior debt instruments. The Treasury said it is continuing discussions with other carriers that are eligible for loans.

Hawaiian Airlines has previously said it would be eligible for $364 million in government loans. Spirit has said it would be eligible for $741 million, and SkyWest has said it would be eligible for $497 million. A spokeswoman for Frontier Airlines declined to comment.

Write to Alison Sider at alison.sider@wsj.com and Kate Davidson at kate.davidson@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN AIRLINES GROUP INC. -0.08% 13.03 Delayed Quote.-54.57%
DELTA AIR LINES, INC. 0.37% 27.18 Delayed Quote.-53.52%
HAWAIIAN HOLDINGS, INC. 0.61% 13.16 Delayed Quote.-55.07%
SKYWEST, INC. 2.46% 29.62 Delayed Quote.-54.17%
SOUTHWEST AIRLINES 0.79% 33.28 Delayed Quote.-38.35%
SPIRIT AIRLINES, INC. 0.12% 17.28 Delayed Quote.-57.13%
UNITED CONTINENTAL HOLDINGS, INC. -0.20% 34.33 Delayed Quote.-61.03%
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Financials (USD)
Sales 2020 17 390 M - -
Net income 2020 -8 182 M - -
Net Debt 2020 30 137 M - -
P/E ratio 2020 -0,72x
Yield 2020 0,92%
Capitalization 6 627 M 6 627 M -
EV / Sales 2020 2,11x
EV / Sales 2021 1,23x
Nbr of Employees 107 400
Free-Float 98,7%
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Technical analysis trends AMERICAN AIRLINES GROUP IN
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TrendsNeutralNeutralNeutral
Income Statement Evolution
Consensus
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Mean consensus HOLD
Number of Analysts 20
Average target price 11,97 $
Last Close Price 13,03 $
Spread / Highest target 107%
Spread / Average Target -8,13%
Spread / Lowest Target -92,3%
EPS Revisions
Managers
NameTitle
William Douglas Parker Chairman & Chief Executive Officer
Robert D. Isom President
David G. Seymour Senior Vice President-Operations
Derek J. Kerr Chief Financial & Accounting Officer, Executive VP
Maya Leibman Chief Information Officer & Executive VP
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