United to repay some of its US government bailout

United is set to become the latest US carrier to pay back a sliver of the taxpayer money it borrowed at the height of the coronavirus pandemic, using proceeds from a blockbuster $9b fundraising across bond and loan markets this week. The Chicago-based airline pledged its travel routes, some aircraft and flight simulators to obtain a $7.5b credit line from the US Treasury last year under provisions of the Cares Act. However, the company only ever made one draw on the facility totalling $520m, which it said on Monday it planned to repay. United received a much larger sum — $7.7b — from two tranches of the government’s payroll support programme, with an estimated $2.4b to come from a further round, according to analysts at Cowen. Most of the support is provided as a grant, contingent on the airline not culling staff, but it will still owe the Treasury roughly $3b. The $520m loan the carrier plans to pay off has so far accrued about $9.5m of interest, according to Financial Times calculations, and it came with the issue of 1.65m warrants giving the Treasury the right to buy United shares at a price of $31.50 each. Were the US Treasury to exercise those warrants and sell the shares, they would net about $40m for US taxpayers at Monday’s share price of $55.75. “The vaccinations are running their course and airline travel is picking up,” said Matt Eagan, a portfolio manager at Loomis Sayles. “Debt markets are open . . . Companies in Covid-tainted sectors are rallying a lot.”<br/>