Alaska Airlines announces nearly $1.2bn in debt financing

US carrier Alaska Airlines has announced that it raised approximately $1.2bn in debt financing amid the coronavirus (Covid-19) pandemic.

The carrier will use the funding to strengthen its financial position and balance liquidity amount.

Alaska Airlines chief financial officer and finance EVP Shane Tackett said: “We’re proud of what our people have built at Alaska.

“Because of our longstanding commitment to conservative financial management and a strong balance sheet, we were fortunate to see strong demand for our offering.

“With this financing and the actions we’ve taken to reduce our cash burn rate, we’ve created a liquidity runway that rivals our strongest competitors.”

Comprising 26 Boeing 737-800s, 16 Boeing 737-900ERs and 19 Embraer 175s, the airline’s 61 aircraft will be used as collateral under the Enhanced Equipment Trust Certificate (EETC) offering.

The debt will be repaid in two series. Series A of $966m is scheduled to be repaid by 15 August 2027 and Series B of $208m by 15 August 2025.

Alaska Airlines’ wholly owned subsidiary McGee Air Services also received nearly $30m financing as part of the Payroll Support Program (PSP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Additionally, the carrier and Horizon Air had jointly received a $725m grant and a $267m loan. This will be used solely for employee salaries, wages and benefits payments through 30 September.

In March, the carrier planned to reduce operations across the US and beyond due to Covid-19.