Long-Term Debt

9 Months Ended

Sep. 30, 2020

Long-Term Debt

Long-Term Debt

Note 9 — Long-Term Debt

Long-term debt consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):

	September 30, 2020		December 31, 2019
Current portion of long-term debt	$	364,193	$	367,954
Current portion of unamortized debt issue cost, net		(3,905)		(3,828)
Current portion of long-term debt, net of debt issue costs	$	360,288	$	364,126
Long-term debt, net of current maturities	$	2,737,464	$	2,649,569
Long-term portion of unamortized debt issue cost, net		(29,695)		(20,580)
Long-term debt, net of current maturities and debt issue costs	$	2,707,769	$	2,628,989
Total long-term debt (including current portion)	$	3,101,657	$	3,017,523
Total unamortized debt issue cost, net		(33,600)		(24,408)
Total long-term debt, net of debt issue costs	$	3,068,057	$	2,993,115

During the nine months ended September 30, 2020, the Company took delivery of two new E175 aircraft that the Company financed through $36.1 million of long-term debt. The debt associated with the two E175 aircraft has a 12-year term, is due in quarterly installments with fixed annual interest rates of 2.3% and is secured by the E175 aircraft.

During the nine months ended September 30, 2020, in connection with the CARES Act payroll support program, the Company issued to Treasury a promissory note for an aggregate principal amount of $105.2 million and issued warrants to purchase 370,720 shares of the Company’s common stock. The Company has recorded the value of the promissory note and warrants on a relative fair value basis as $105.2 million of long-term debt and $5.0 million in common stock, respectively. These warrants have an exercise price of $28.38 per share and a five-year term from the date of issuance. See Note 2, “Impact of the COVID-19 Pandemic,” for further discussion of the terms of the payroll support program loan and warrants.

Additionally, during the nine months ended September 30, 2020, in connection with the CARES Act, the Company entered into the Loan Agreement with Treasury and the Bank of New York Mellon which permits the Company to borrow up to $573 million. Subsequently, on October 28, 2020, the Company entered into an amendment to the Loan Agreement that permits the Company to borrow up to $725 million in the aggregate. As of September 30, 2020, the Company has drawn $60 million under the agreement and issued warrants to purchase 211,416 shares of the Company’s common stock. The Loan Agreement is secured by aircraft engines and aircraft parts. The Company may, at its option, borrow additional amounts in up to two subsequent borrowings until March 26, 2021. The proceeds will be used for certain general corporate purposes and operating expenses in accordance with the terms and conditions of the Loan Agreement and the applicable provisions of the CARES Act. The Company has recorded the value of the promissory note and warrants on a relative fair value basis as $60 million of long-term debt and $3.2 million in common stock, respectively. These warrants have an exercise price of $28.38 per share and a five-year term from the date of issuance. See Note 2, “Impact of the COVID-19 Pandemic,” for further discussion of the terms of the payroll support program loan and warrants.

As of September 30, 2020, and December 31, 2019, the Company had $64.6 million and $61.7 million, respectively, in letters of credit and surety bonds outstanding with various banks and surety institutions.

As of September 30, 2020, SkyWest Airlines had a $75 million line of credit. The line of credit includes minimum liquidity and profitability covenants and is secured by certain assets. As of September 30, 2020, SkyWest Airlines had no amount outstanding under the facility. However, at September 30, 2020 SkyWest Airlines had $35.2 million in letters of credit issued under the facility, which reduced the amount available under the facility to $39.8 million. The Company obtained waivers under the line of credit to allow the Company to receive funding under the CARES Act and to waive compliance with minimum profitability covenants through June 30, 2021.