The global health crisis continues to rock airlines in the United States with many flights still suspended. Subsequently, at the end of last month, JetBlue drew $115 million under a loan agreement with the United States Department of the Treasury.
According to a United States Securities and Exchange Commission report seen by Simple Flying, in accordance with the loan agreement, the treasury agreed to extend loans to the airline in an aggregate principal amount of up to $1.14 billion until March 26th, 2021. Ultimately, on September 29th, the carrier drew $115 million under the agreement.
“Unless otherwise terminated early, all borrowings under the Loan Agreement are due and payable on the fifth anniversary of the initial borrowing date, at which point the obligations under Loan Agreement mature,” the report clarified.
“Borrowings under the Loan Agreement bear interest at a variable rate equal to the London interbank offering rate, known as LIBOR (or another rate based on certain market interest rates, plus a margin of 1% per annum, in each case with a floor of 0%), plus a margin of 2.75% per annum.”
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Moreover, JetBlue issued warrants to the US Treasury to buy 1.21 million shares, as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES). The New York outfit also received a payment of $27.1 million on September 30th from under the Payroll Support Program (PSP). Additionally, it issued warrants for an extra 85,650 shares in return for the PSP loan.
The pandemic is still taking its toll on the aviation industry across the continents. However, there has been a close eye on the US market over the last month as the terms of the CARES Act were coming to an end.
While politicians in the country continue to debate on the best course of action to support US airlines over the next six months, JetBlue shared that it remains cautiously optimistic. The airline’s COO and president Joanna Geraghty last week stated that she is hopeful that authorities will do the right thing for the industry. However, the sensitive nature of the process means that thousands of jobs are at risk across the nation.
Nonetheless, JetBlue isn’t just sitting back and playing the waiting game. It has been implementing several initiatives to help regain confidence in travel amid the downturn in passenger activity. It introduced a series of scaled-up health measures, such as the deployment of ultraviolet cleaning on its aircraft. Furthermore, it recently announced a partnership to offer its customers with pending travel plans at-home COVID-19 testing.
Altogether, it’s a such a challenging time for airlines. However, as society adapts to the situation, demand will slowly return. Moreover, several carriers remain hopeful that a COVID-19 vaccine will help the recovery process. Therefore, until then, most operators will be relying on some sort of financial support to get through the crisis.
Simple Flying reached out to JetBlue for comment on the agreement but did not hear back before publication. We will update the article with any further announcements.
What are your thoughts about JetBlue drawing $115 million from the US Treasury loan? Is this a good move for the airline? Let us know what you think of the situation in the comment section.