American Airlines gets green light to receive up to $7.5B loan from the U.S. Treasury


American Airlines’ disclosure followed an announcement that its biggest rivals turned down further loans, effectively freeing up funds.

In total, the federal government’s stimulus package put $25 billion on the table in potential aid for the airline industry. That said, a handful of airlines including Delta Air Lines Inc. (NYSE: DAL) and Southwest Airlines Co. (NYSE: LUV) have turned down government loans in favor of private investors.

Delta put up its SkyMiles Program as collateral in order to raise $9 billion earlier in September while United raised nearly $7 billion from its MileagePlus program being offered as collateral in July.

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Airlines were also given $25 billion in aid to keep workers on the payroll, which is set to end effective Oct. 1. American Airlines CEO Doug Parker has spent the last few weeks in Washington D.C., lobbying for additional funds to keep employees on the payroll.

Despite Parker’s efforts, it is still unknown as to whether an aid extension will be provided to the airline industry to keep people on the payroll. One thing is for certain, the airline industry has struggled to stay afloat in recent months with the number of flyers at 30% of previous levels.