United Airlines has announced it is issuing more than 39 million new shares of common stock in the hopes of raising $1 billion to cope with the crushing effects of the coronavirus.
The carrier said it has already filed a registration statement with the Securities and Exchange Commission (SEC) to offer the public 39,250,000 shares of underwritten stock at the price of $26.50 per share.
Morgan Stanley and Barclays are acting as the underwriters of the offering. The Company has also granted the underwriters a 30-day option to purchase up to 3,925,000 additional shares.
The proceeds from the offering will be used for general corporate purposes. Subject to the satisfaction of customary conditions, the offering is expected to close on April 24, 2020.
The move comes just a day after United reported a $2.1 billion loss in the first quarter, the airline's largest since the 2008 financial crisis. Overall, the industry has been decimated by the spread of the virus and the travel restrictions imposed in the U.S. and around the world.
United has applied for up to $4.5 billion in government loans in addition to $5 billion in federal payroll grants and loans as part of the CARES Act stimulus package, but the airline is the first major carrier to sell equity to bolster its bottom line - and to help survive a low demand for travel expected to continue into the second quarter.
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