BUSINESS NEWS
American Airlines Group
Inc. said it would raise $7.5
billion backed by its frequent-
flier program to repay a loan
that the carrier took out from
the federal government after
the coronavirus pandemic dec-
imated air travel.
The airline on Monday said
it would issue $5 billion in
notes and seek a $2.5 billion
term loan backed by AAdvan-
tage, its loyalty initiative for
customers, to secure the
funds. Both
Delta Air Lines
Inc. and
United Airlines Hold-
ings
Inc. also have tapped
their respective frequent-flier
programs to land financing.
Carriers have found the rel-
atively stable cash flows that
their frequent-flier programs
bring in to be a rich source of
collateral for financing.
Airlines mainly earn money
from frequent-flier programs
by selling miles to banks and
retailers that then award them
to customers who sign up for
credit cards and make pur-
chases. That means airlines
B
Y
M
ICAH
M
AIDENBERG
American Borrows on Flier Club
Loyalty program used
as collateral to raise
$7.5 billion to repay
federal pandemic loan
An American Airlines counter at O’Hare airport in Chicago. Frequent-flier programs offer cash flow separate from ticket sales.
JOHN
J.
KIM/
CHICA
GO
TRIBUNE/ZUMA
PRES
S
CarbonLite Holdings
LLC,
which bills itself as the world’s
largest plastic bottle recycler,
sought bankruptcy protection
Monday,
citing
disruption
stemming from the coronavi-
rus pandemic.
CarbonLite filed a chapter 11
petition in the U.S. Bankruptcy
Court in Delaware, covering
the company’s main facility in
Riverside, Calif., and other re-
cycling plants in Texas and
Pennsylvania that supply ma-
jor beverage makers like Coca-
Cola Co., Nestle Waters North
America Inc. and PepsiCo.
The bankruptcy petition
listed $50 million and $100
million of estimated liabilities
and between $10 million and
$50 million of estimated assets.
CarbonLite
said
the
Covid-19 pandemic temporar-
ily slowed production because
of
employee
illness,
and
caused a nine-month delay in
opening the Pennsylvania fa-
cility because of travel restric-
tions that made it difficult to
obtain certain equipment.
Founded by plastics entre-
preneur Leon Farahnik, Car-
bonLite claims to be the larg-
est producer of food-grade
recycled plastic in the world,
recycling more than seven bil-
lion plastic bottles a year.
“We’ve chosen to take this
necessary step during a time
of unprecedented challenge
and expect to emerge from re-
organization
even
more
strongly positioned for the fu-
ture,” Mr. Farahnik said in a
statement.
The company’s top unse-
cured creditors are trade ven-
dors and utilities, with Nestle
Waters North America owed
$27.2 million and Niagara Bot-
tling LLC owed $20.4 million.
The law firm Pachulski
Stang Ziehl & Jones LLP is
bankruptcy counsel for Car-
bonLite.
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