Alaska Air Group Terminates Agreement, Incurs New Obligation

Ticker: ALK · Form: 8-K · Filed: Sep 24, 2024 · CIK: 766421

Sentiment: neutral

Topics: agreement-termination, financial-obligation

Related Tickers: ALK

TL;DR

Alaska Air Group terminated one deal and entered into another that creates a financial obligation. Details to follow.

AI Summary

On September 24, 2024, Alaska Air Group, Inc. reported the termination of a material definitive agreement and the creation of a direct financial obligation. The earliest event reported was on September 20, 2024. The company is incorporated in Delaware and headquartered in Seattle, Washington.

Why It Matters

This filing indicates a significant change in Alaska Air Group's contractual and financial standing, potentially impacting its operational and financial strategies.

Risk Assessment

Risk Level: medium — The termination of a material agreement and the creation of a new financial obligation can signal shifts in business strategy or financial health, warranting closer scrutiny.

Key Players & Entities

FAQ

What was the material definitive agreement that was terminated?

The filing does not specify the details of the terminated material definitive agreement.

What is the nature of the new direct financial obligation incurred by Alaska Air Group?

The filing does not provide specific details regarding the nature or amount of the direct financial obligation.

What is the significance of the earliest event reported on September 20, 2024?

The filing does not elaborate on the specific events that occurred on September 20, 2024, other than it being the earliest reported event.

What are the primary business activities of Alaska Air Group, Inc.?

Alaska Air Group, Inc. is engaged in scheduled air transportation, as indicated by its Standard Industrial Classification code [4512].

Where are Alaska Air Group's principal executive offices located?

Alaska Air Group's principal executive offices are located at 19300 International Boulevard, Seattle, Washington 98188.

Filing Stats: 2,328 words · 9 min read · ~8 pages · Grade level 14 · Accepted 2024-09-24 08:50:31

Key Financial Figures

Filing Documents

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement On September 20, 2024, Alaska Air Group, Inc. (the " Company "), entered into an amended and restated credit agreement (the " Revolving Credit Facility ") with Alaska Airlines, Inc. (" Alaska "), as borrower, the lenders party thereto and Citibank, N.A. acting as the administrative agent (the " Administrative Agent "), for an initial commitment amount of $850 million, subject to borrowing base availability. The Revolving Credit Facility contains an accordion feature under which the aggregate commitments can be increased up to $1.25 billion upon our request and subject to certain conditions. The Company and its wholly-owned indirect subsidiary, Hawaiian Airlines, Inc. (" Hawaiian ") act as guarantors under the Revolving Credit Facility. The Revolving Credit Facility amends and restates in its entirety Alaska's existing credit agreement, dated as of March 31, 2010 (as amended from time to time). The Revolving Credit Facility will mature on September 20, 2029. Alaska has not drawn under the Revolving Credit Facility as of the date of this report. Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to Term SOFR (as defined in the Revolving Credit Facility), or another market rate, in each case plus a variable margin based on a corporate ratings grid ranging from 1.00% to 1.625%, in the case of Term SOFR loans, and 0.0% to 0.625%, in the case of loans at other market rates. The Company and its subsidiaries may pledge the following types of assets as collateral (" Collateral ") to secure Alaska's obligations under the Revolving Credit Facility: (i) route authorities to operate scheduled service between any international airport located in the United States and any international airport located in any country other than the United States, (ii) take-off and landing rights at foreign and domestic airports, including at John F. Kennedy International Airport, LaGuardia Airport and Ro

02 Termination of a Material Definitive Agreement

Item 1.02 Termination of a Material Definitive Agreement. On September 20, 2024, the Company terminated the HA Revolving Credit Facility (as defined herein) in connection with the Company's entry into the Revolving Credit Facility. The information set forth in Item 2.03 of this Current Report on Form 8-K relating to the HA Revolving Credit Facility is incorporated by reference into this Item 1.02. Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant As previously disclosed, on December 2, 2023, Alaska entered into an Agreement and Plan of Merger (the " Merger Agreement ") with Hawaiian Holdings, Inc., a Delaware corporation (" Hawaiian Holdings "), and Marlin Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Alaska (" Merger Sub "). On September 18, 2024, pursuant to the Merger Agreement, Merger Sub merged with and into Hawaiian (the " Merger "), with Hawaiian surviving as a wholly owned subsidiary of Alaska. As a result of the consummation of the Merger, on a consolidated basis, the Company's indebtedness includes (i) all of Hawaiian's obligations under the Amended and Restated Credit and Guaranty Agreement (the " HA Revolving Credit Facility ") dated as of August 17, 2022 among Hawaiian, as borrower, Hawaiian Holdings, as guarantor, the lenders named therein and Citibank, N.A., as administrative agent, which was undrawn as of September 18, 2024 and (ii) all of Hawaiian's outstanding $6.3 million aggregate principal amount of 5.750% Senior Secured Notes due 2026 (the " 2026 Notes ") and $984.9 million aggregate principal amount of 11.000% Senior Secured Notes due 2029 (the " 2029 Notes " and together with the 2026 Notes, the " Hawaiian Loyalty Notes "). The description of the Hawaiian Loyalty Notes provided in Item 1.01 of Hawaiian Holdings' Current Report on Form 8-K filed on July 26, 2024 is incorporated by reference into this Item 2.03. The description of the

01 Other Events

Item 8.01 Other Events On September 23, 2024, the Company issued a press release announcing that it launched a proposed senior secured term loan facility and that it intends to issue additional pari passu senior secured debt (collectively, the " Mileage Plan Financing "). The aggregate principal amount of the Mileage Plan Financing is expected to be $1.5 billion. The borrower under the Mileage Plan Financing is AS Mileage Plan IP Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands and an indirect, wholly owned subsidiary of the Company. The Mileage Plan Financing will be (i) fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by Alaska and AS Mileage Plan Holdings Ltd. (" HoldCo ") and on an unsecured basis by the Company (together, the " Guarantors ") and (ii) secured, on a first-priority basis, by the Guarantors' right, title and interest in certain collateral associated with Alaska's customer loyalty program, Alaska Airlines Mileage Plan. A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference. In addition, on September 24, 2024, the Company issued a lender presentation in connection with the Mileage Plan Financing. A copy of the lender presentation is furnished herewith as Exhibit 99.2 and is incorporated herein by reference.

01 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits (d) Exhibits Exhibit 99.1 Press Release of the Company announcing the Mileage Plan Financing, dated September 23, 2024. Exhibit 99.2 Lender Presentation, dated September 24, 2024. 104 Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Forward-Looking Statements

Forward-Looking Statements Forward-Looking Statements in this report and certain oral statements made from time to time by representatives of the Company contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. Forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. All statements other than statements of historical facts are "forward-looking statements" for purposes of these provisions. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "project," "predict," "potential," and similar expressions intended to identify forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding revenues as well as statements regarding the Mileage Plan Financing described in this report. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors include, among others, risks include competition, labor costs, relations and availability, general economic conditions including those associated with pandemic recovery, increases in operating costs including fuel, inability to meet cost reduction, ESG and other strategic goals, seasonal fluctuations in demand and financial results, supply chain risks, events that negatively impact aviation safety and security, and changes in laws and regulations that impact our business and other factors, as described in the Company's filings with the Securities and Exch

View Full Filing

View this 8-K filing on SEC EDGAR

View on Read The Filing