May 6 (Reuters) – Alaska Air said on Wednesday it would raise $500 million through a debt offering as the airline looks to bolster liquidity as a war-driven surge in jet fuel prices erodes margins.
The carrier said it will issue five-year debt securities that mature in 2031.
Airlines around the world have cut capacity, raised baggage fees and added fuel surcharges to weather skyrocketing fuel costs after Iran’s closure of the Strait of Hormuz drastically disrupted oil supplies.
Jet fuel prices, which typically form about a quarter of an airline’s operating expense, have nearly doubled since the U.S.-Israeli strikes against Iran on February 28.
The financial strain is more pronounced for carriers such as Alaska Air that are based on the U.S. West Coast, where pipeline and refining capacity remain limited, forcing airlines to rely on oil imports.
Last month, the airline said it was looking to raise the share of fuel it sources from Singapore to 30% to 40% over time, from about 20% currently.
Rivals American Airlines and JetBlue Airways also tapped into the debt market over the last month to battle the rising costs due to the Iran war.
American has raised $1.14 billion, while JetBlue raised $500 million.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Diti Pujara)
Comments