Alaska Air Group, Inc. has announced a significant financial maneuver, securing a $1.5 billion senior secured term loan facility. This move, known as the Mileage Plan Financing, will involve the issuance of additional pari passu senior secured debt. The funds will be raised through AS Mileage Plan IP Ltd., an exempted company incorporated in the Cayman Islands and wholly owned by Alaska Air Group.
The loan will be secured by the valuable rights and interests associated with Alaska’s customer loyalty program, the Alaska Airlines Mileage PlanTM. This move underscores the strategic importance of this program as a key asset for the company.
The proceeds from the financing, after accounting for fees and expenses, will be directed towards two primary purposes. First, a reserve and collection account will be established. Second, funds from the collection account will be used to provide an intercompany loan to Alaska Airlines. This loan is intended to facilitate the redemption of debt assumed from the recent merger with Hawaiian Airlines. Any remaining funds will be utilized to bolster general corporate activities and strengthen overall liquidity.
Beyond strengthening Alaska’s financial standing, the Mileage Plan Financing serves as a testament to the strategic importance of its loyalty program. This initiative demonstrates Alaska Air Group’s unwavering commitment to maintaining a competitive edge in the airline industry and enhancing its long-term financial flexibility.
