Delta Seeking To Raise $6.5bn Through New Bonds And Loans Backed By Its SkyMiles Programme
Delta Air Lines has said that it is seeking to raise $6.5 billion through new bonds and loans backed by its SkyMiles loyalty programme, further bolstering liquidity to weather a drastic downturn in travel demand due to the COVID-19 pandemic.
Delta said that it has parked approximately 40% of its fleet and cut its capacity by approximately 60% in the September quarter from last year as it continues to burn through $27 million in cash each day.
With its latest financing deal, Delta said that it will not pursue a $4.6 billion federal loan available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, although it is continuing to lobby for a second round of federal payroll grants.
Delta is among the US airlines to have tapped funds under a $25 billion made available primarily in grants under the CARES Act to cover employees' payroll through September, but not a separate $25 billion package in secured loans.
The loan programme has attractive financing terms but restricts executive compensation and share buybacks.
The airline has said that it could furlough nearly 2,000 pilots in October without more federal aid, but believes that it can avoid any flight attendant furloughs through the winter thanks to strong demand for voluntary departures or leaves.
Delta had $15.7 billion in liquidity at the end of June, which it said equalled approximately 19 months of financial runway at a daily burn rate of $27 million.
It still has unencumbered assets worth $6 billion to $7 billion, primarily in the form of spare aircraft parts and engines, if needed, officials said.
Delta did not disclose the value of the loyalty programme, or the terms of the new financing.