Chicago-based UAL Corp. in a statement said it has completed a $125 million aircraft financing agreement, of which it would receive $60 million immediately and the rest by mid-October. The airline also has a series of asset sale agreements in place to raise $140 million, though it did not say what it was selling. Finally United said it plans to substitute certain cash collateral with a letter of credit, a move that would generate about $10 million in net incremental cash before year's end.
This is the second such announcement by UAL in a month, following its Sept. 18 announcement that it completed an amendment of its co-branded card-marketing services agreement with Chase Bank and credit card-processing agreement with Chase/Paymentech LLC designed to boost liquidity by $1.2 billion.
UAL like most airlines has been looking to grab whatever cash it can to help weather soaring fuel prices and an economic slowdown. The airline industry is expected to bleed through billions in 2008; however, transactions like what UAL announced Wednesday should be enough according to analysts to ensure no major carrier is a bankruptcy risk for the time being.
United said it has more than $3 billion in unencumbered assets it can tap if needed. - Lou Whiteman
See UAL's statement announcing the new funding
See UAL's statement on its September liquidity boost
See Dealscape post on US Airways raising $155 million in August
See Dealwatch: Airlines
The parent of United Airlines has moved to shore up its cash position, saying Wednesday it has secured $275 million in fresh cash via a series of transactions.
