CNN Business | United is mortgaging its frequent flyer program to raise $5 billion

New York (CNN Business) – United Airlines is mortgaging its Mileage Plus frequent flyer program, its latest effort to raise the cash it needs to weather the Covid-19 crisis.

The term loan will come from Goldman Sachs (GS), Barclays (BCS) and Morgan Stanley (MS), and it will take seven years to repay. The interest rate was not disclosed. United says between this and an additional $4.5 billion in federal loans for which it expects to be eligible, it estimates it will have $17 billion in cash on hand by the end of September, roughly three times the normal cash it carries.

US air travel is down about 80% compared to a year ago in the most recent estimates, but that indicates some modest rebound in demand for air travel from earlier this spring, when United and other carriers reported air travel demand was “virtually zero.”  —more—