United to put up frequent-flier programme for $5b loan

United will mortgage its frequent-flier program to secure a $5b loan from three banks as it seeks to build a cash cushion to see it through the coronavirus pandemic. The scramble for cash has been one of the biggest challenges for airlines in recent months, as the pandemic and the travel restrictions put in place in response caused travel demand to dry up. United said it expects to have $17b in total liquidity by the end of the third quarter, compared with about $10b at the beginning of May. American said Friday it expects to have $11b on hand by June 30 including a government loan. United’s war chest also includes a $4.5b government loan the airline is eligible for as part of another piece of airline aid that was included in the Cares Act. It has until the end of September to decide whether to draw that loan, and the company said Monday that it believes it will be able to use slots, gates and routes as collateral. United said it expects to slow its cash burn rate to $40m a day in Q2 and $30m a day in Q3, as demand for travel has started to show signs of improvement. Still, the airline expects June revenue to be down 90% from a year ago and July revenue to be down as much as 88%.<br/>