JetBlue has followed Delta’s April example and pledged slots as collateral on a $750 million loan as it seeks to strengthen its balance sheet to deal with COVID 19.
In April Delta announced it was raising $3 billion against a mix of slots, gates and routes at a number of US and European airports, which was later raised to $5 billion due to strong investor demand.
Likewise JetBlue has originally approached the markets to raise $500 million before raising this to $750 million secured against slots at airports in New York and Washington DC and intellectual property rights, with the deal struck on June 17, according to an SEC filing.
The loans under the term loan facility will bear interest at a variable rate equal to LIBOR (subject to a 1.00% LIBOR floor), or at JetBlue’s election another rate, in each case, plus a specified margin. The term loan facility does not limit the amount of unsecured debt that we or our subsidiaries may incur, or the amount of debt secured by assets other than the collateral that we may incur.
The term loan facility will be subject to amortization payments of 5.00% per year, payable quarterly, commencing on September 30, 2020 (not subject to any prepayment premium). The remaining balance of the Term Loans will be due and payable in a single payment on the maturity date of June 17, 2024.
As a result of handing over the slots JetBlue has amended the collateral under an existing revolving credit facility secured by Citibank on April 6 to include other unencumbered assets such as aircraft and simulators.