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United seeks nearly $10B in loans to stabilize amid COVID-19 crisis

United seeks nearly $10B in loans to stabilize amid COVID-19 crisis
The carrier said it's already reduced capital, operating and vendor expenditures, suspended raises, frozen hiring and reduced executives pay to keep costs down. File Photo by Brian Kersey/UPI | License Photo

June 15 (UPI) -- United Airlines said Monday it expects to have nearly $20 billion in liquidity by the end of the third quarter, to clamp down mass spending periods that were brought on by the COVID-19 crisis.

The airline said it plans to use its frequent flyer MileagePlus program to secure a $5 billion loan. United also expects to borrow $4.5 billion from the Coronavirus Aid, Relief, and Economic Security Act loan program.

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With the cash infusion of nearly $10 billion, United said it will have $17 billion in liquidity by September.

"[This] will provide even more flexibility as the airline navigates the most disruptive financial crisis in the history of aviation," United said in a statement.

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Since the pandemic began early this year, United has been burning through millions of dollars per day due to depressed world markets and sagging demand for air travel.

The carrier said it's already reduced capital, operating and vendor expenditures, suspended raises, frozen hiring and reduced executives pay to keep costs down. It expects its cash burn rate to slow from $40 million a day, on average, in the second quarter to $30 million per day in the third between July and October.

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American Airlines said Friday it will similarly use its AAdvantage frequent flyer program to secure a $4.7 billion federal loan and has already been cutting jobs to slow its cash burn rate.

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The global coronavirus pandemic almost completely shut down air travel worldwide and grounded fleets. Airlines have taken unusual steps to generate and preserve revenue.

Cash-strapped British Airways hired Sotheby's to auction off millions of dollars of corporate artwork by painters such as Damien Hirst and Peter Doig to bring in operating cash, the Evening Standard reported.

German airline Lufthansa accepted a $10 billion rescue bailout package that included selling stock to the German government and replacing two board members with government officials.

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