JetBlue has committed slots at three airports in New York and the Washington, DC area as collateral for a $ 750 million loan. The airline reached an agreement with lenders on June 17 to raise cash and increase liquidity. JetBlue will continue to be able to use the slots for its normal operation.
JetBlue promises slots in return for funding
Like many airlines, JetBlue has been forced to look for funds in a number of different ways as the current crisis has created a major financial shortage among airlines. The US government came in to help the airlines, but the federal funds are only going to support the airline’s payroll, excluding other expenses. JetBlue has now signed a $ 750 million fixed-term loan agreement.
As a security, JetBlue has promised take-off and landing sites at three airports. These include LaGuardia Airport (LGA) in New York, John F. Kennedy International Airport (JFK), and Reagan National Airport (DCA) in Washington, DC. All of these airport slots are incredibly valuable. The airline did not disclose how many slots will be provided at each airport.
Under the agreement, JetBlue will continue to use its promised slots in accordance with FAA guidelines. This also takes into account any exemptions or exemptions that the freight forwarder has received from the Ministry of Transport.
Slots that are considered incredibly valuable
New York-JFK is one of the busiest airports in the world. With many airlines competing for flights to and from the airport, slots are incredibly valuable, if not as expensive as some others.
For JetBlue, JFK was the airline’s largest operating base. As the airline moves forward, JFK will continue to be important to the airline as it seeks to brand itself as “New York’s Home Airline.”
LaGuardia and Reagan National are smaller airports. Still, they’re incredibly important. Both are highly regarded for their proximity to major political and economic locations in New York City and Washington, DC. There are also restrictions on the size of aircraft that can enter and leave these airports due to runway length and perimeter rules that limit non-stop flights beyond a certain range.
Airport slots are generally worth a lot of money at certain airports. In 2016, Oman Air bought two slots at London Heathrow for a whopping $ 75 million. American Airlines also made a similar purchase for $ 60 million in 2015. Both purchases resulted in airlines selling slots to one another. While these slots are not worth as much as slots at Heathrow, lenders could still get a fair chunk of cash from them if the airline goes down – which the airline will do a great deal to avoid.
Airlines are still looking for leverage
JetBlue isn’t alone in finding funding. United Airlines recently used its MileagePlus program to secure a $ 5 billion loan. Meanwhile, American Airlines plans to use the proceeds from its AAdvantage credit card as collateral for a federal loan.
Slots are just some of the assets airlines can use as collateral – JetBlue could finance some of its own planes or gates for a loan. In this case, airline executives seem to think slots are the better alternative.
Are you surprised to see JetBlue mortgaging slots for a loan? Let us know in the comments!