American Airlines Group Inc is in advanced talks to hire Guggenheim Securities co-chairman James Millstein for advice on tapping a US$50 billion industry relief package available from the U.S. Treasury Department to cope with the coronavirus pandemic, people familiar with the matter said.
30 Mar 2020 05:15PM
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NEW YORK: American Airlines Group Inc is in advanced talks to hire Guggenheim Securities co-chairman James Millstein for advice on tapping a US$50 billion industry relief package available from the U.S. Treasury Department to cope with the coronavirus pandemic, people familiar with the matter said.
Millstein is one of Wall Street's most seasoned debt restructuring bankers and from 2009 to 2011 was the chief architect of the Obama administration's overhaul of certain financial firms the government had bailed out, including insurance giant American International Group Inc .
While American Airlines has said it has not yet decided whether it will seek U.S. government aid, Millstein's anticipated appointment indicates the largest U.S. airline is actively preparing for such a move and girding for negotiations with Treasury officials.
Coronavirus relief legislation enacted last week provides up to US$25 billion in loans and loan guarantees for U.S. airlines that have suffered from an unprecedented decline in passengers, with an additional US$25 billion available in direct cash grants that could result in the U.S. government receiving ownership stakes in the companies.
Were Millstein to be hired, he would be advising American Airlines on the form and terms of aid it should pursue and how to navigate the U.S. Treasury Department's process for requesting the financial assistance, the sources said. Advice given to the Fort Worth, Texas-based company would be done in his own capacity, independent of Guggenheim, the sources added.
The sources cautioned that no decision on American Airlines accepting U.S. government aid had yet been made and requested anonymity to discuss the confidential preparations.
American Airlines declined to comment, while Millstein did not respond to a request for comment.
American Airlines said last week it would be slashing its capacity 60per cent in April compared with the same period a year ago and up to 80per cent in May due to a dramatic reduction in customers and travel restrictions to curb the spread of coronavirus. Its shares have lost roughly half their value in the last five weeks, giving it a market capitalization of about US$6 billion.
The company disclosed this month it had access to more than US$7.3 billion of liquidity. Its long-term debt as of the end of December totaled about US$23.9 billion.
American Airlines Chief Executive Doug Parker said last week that the company would be eligible for up to US$12 billion in total U.S. aid. He added that combining government relief with a "relatively high available cash position" would "allow us to ride through even the worst of potential future scenarios."
Some terms of the cash grants "aren't currently well defined," Parker said, adding that the company was not yet certain it would meet the conditions necessary to receive those funds. He said he expected the aid terms "will not be onerous."
Millstein, a former Lazard Ltd banker, has worked on bankruptcies and other challenges Read More – Source