American Airlines pledges brand and slots to secure $1.2bn loan

American Airlines pledged its brand and hard-to-get take-off and landing rights in New York and Washington to secure a $1.2b loan, as it tries to weather the sharp downturn in travel due to the coronavirus pandemic. The airline Thursday said it had reached a deal with the merchant banking division of Goldman Sachs for $1b in senior notes, secured by a first lien on the “American Airlines” trademark and “aa.com” domain name in the US and some foreign jurisdictions. Another $200m in senior notes will be secured by a second lien on certain slots at New York’s LaGuardia Airport and Washington’s Reagan National Airport. Derek Kerr, American’s CFO, said the company’s intellectual property was worth approximately $10b. The airline, which has been the most aggressive of the three largest US carriers to add back capacity after the pandemic devastated demand, ended Q2 with a higher cash burn than its rivals. American averaged a $55m daily cash burn for the quarter, going from a high of $100m a day down to $30m by June. American added more flights in May and June when demand for air travel improved from its April nadir, and investors sent the stock upward. Yet rising Covid-19 cases in southern and western US states stalled the travel rebound, which remained a fraction of 2019 passenger numbers. Doug Parker, CE, said he was pleased with the results of the airline’s strategy to fly more than competitors. “Our revenue in June was six times what it was in April, and that would not have been the case if we’d flown only 20% of our capacity,” he said. <br/>