Airline seeks more financing
American Airlines has approached card partner Citigroup for funds, not long after securing a $100m (€74m) loan from Germany’s DVB Bank, the Financial Times reported today (March 3).
Talks are said to be in the early stage and focus on AA’s 60 million member frequent flyer programme, which is co-branded with Citigroup.
AA, the world’s second largest airline, will sell flyer miles to Citigroup as part of the deal.
But talks may end if AA finds other sources of liquidity or if travel demand improves, reducing the pressure on its balance sheet.
AA has around $3.1bn in cash and $3.5bn in assets and other potential sources of liquidity, reports said.
The DVB loan, finalised last week, is said to be secured against a number of AA’s B777 and B757 aircraft.
Despite falling fuel prices and airline capacity airlines are finding it harder to find financing.
In 2008, rivals United Airlines and Continental Airlines made similar deals with their card partner JPMorgan Chase, it was reported.
Delta Air Lines also negotiated $2bn deal with American Express to extend its card contract.