United Airlines sells $1 bln of stock in fresh move to weather pandemic
United Airlines Holdings Inc on Tuesday announced a public offering to raise more than one billion U.S. dollars, the first major airline to sell equity to help it survive a sharp travel downturn in the coronavirus pandemic.
The offer of 39.25 million shares is underwritten by Morgan Stanley and Barclays, who IFR said were re-offering the shares at 25.95 to 26.50 U.S. dollars each, a discount of up to 6.9 percent on Tuesday's close of 27.88 U.S. dollars.
Shares in United, like other airlines, have been punished by decimated travel demand, losing 67 percent over the past three months as the pandemic forced lockdowns in many countries.
In an effort to boost capital and save costs until people start flying again, U.S. airlines have grounded fleets, raised debt, cut executive salaries, asked employees to take unpaid leaves of absence and sought government aid.
United is set to receive five billion U.S. dollars from the U.S. Treasury to cover payroll through September 30 and has said it expects to borrow up to about 4.5 billion U.S. dollars from a separate government package for airlines. In exchange for part of the funds, the airline must issue warrants for the Treasury to purchase shares at its April 9 closing price of 31.50 U.S. dollars.
The stock offering announced Tuesday includes a 30-day option for the underwriters, Morgan Stanley and Barclays, to purchase up to 3.93 million additional shares.
In a separate statement on Tuesday, United said it reached a settlement last month with Boeing Co over damages incurred in 2019, when airlines were forced to cancel flights due to the 737 MAX grounding that followed two fatal crashes. It did not disclose any financial details.
United on Monday said it expects to report a pre-tax loss of about 2.1 billion U.S. dollars for the first quarter.