After finalizing a deal with the U.S. government for a stimulus package, United Airlines Holdings Inc (UAL.O) will raise $1 billion by selling new shares to increase capital in order to survive a collapse in travel demand amid the virus outbreak.
This Chicago-based carrier was the first major airline to sell 39.25 Million shares to investors during this pandemic. Morgan Stanley and Barclays are underwriting Unitied’s shares priced at $26.50 each with a 4.9% discount on Tuesday’s close.
The airline company did the necessary measures to save its remaining capital until everything goes back to normal.
The $5 billion payroll aid requires United Airlines to issue warrants to the U.S. government, giving the Treasury the option to buy shares in the company at its April 9 closing price of $31.50.
The company announced on Tuesday that it had also granted Morgan Stanley and Barclays a 30-day option to buy up to 3.93 Million additional shares.
United Airlines said on Monday that it recorded a pre-tax loss of $2.1 billion in the first quarter of 2020.