AIRLINK 74.12 Decreased By ▼ -0.17 (-0.23%)
BOP 4.94 Decreased By ▼ -0.01 (-0.2%)
CNERGY 4.35 Decreased By ▼ -0.02 (-0.46%)
DFML 39.10 Increased By ▲ 0.30 (0.77%)
DGKC 85.20 Increased By ▲ 0.38 (0.45%)
FCCL 21.20 Decreased By ▼ -0.01 (-0.05%)
FFBL 33.95 Decreased By ▼ -0.17 (-0.5%)
FFL 9.65 Decreased By ▼ -0.05 (-0.52%)
GGL 10.40 Decreased By ▼ -0.02 (-0.19%)
HBL 112.90 Decreased By ▼ -0.10 (-0.09%)
HUBC 136.98 Increased By ▲ 0.78 (0.57%)
HUMNL 11.97 Increased By ▲ 0.07 (0.59%)
KEL 4.72 Increased By ▲ 0.01 (0.21%)
KOSM 4.49 Increased By ▲ 0.05 (1.13%)
MLCF 37.75 Increased By ▲ 0.10 (0.27%)
OGDC 137.31 Increased By ▲ 1.11 (0.81%)
PAEL 25.25 Increased By ▲ 0.15 (0.6%)
PIAA 20.30 Increased By ▲ 1.06 (5.51%)
PIBTL 6.66 Decreased By ▼ -0.05 (-0.75%)
PPL 122.38 Increased By ▲ 0.28 (0.23%)
PRL 26.68 Increased By ▲ 0.03 (0.11%)
PTC 13.75 Decreased By ▼ -0.18 (-1.29%)
SEARL 57.72 Increased By ▲ 0.50 (0.87%)
SNGP 67.24 Decreased By ▼ -0.36 (-0.53%)
SSGC 10.31 Increased By ▲ 0.06 (0.59%)
TELE 8.37 Decreased By ▼ -0.03 (-0.36%)
TPLP 11.18 Increased By ▲ 0.05 (0.45%)
TRG 63.03 Increased By ▲ 0.22 (0.35%)
UNITY 26.60 Increased By ▲ 0.10 (0.38%)
WTL 1.41 Increased By ▲ 0.06 (4.44%)
BR100 7,807 Decreased By -3.1 (-0.04%)
BR30 25,233 Increased By 82.5 (0.33%)
KSE100 74,904 Decreased By -52.7 (-0.07%)
KSE30 24,069 Decreased By -13.8 (-0.06%)
Business & Finance

Delta launches $6.5 billion debt deal backed by frequent flyer program

  • The airline said it would use the loyalty program as collateral to secure the new loans and issuance, as it continues to burn through about $27 million in cash each day.
  • US airlines have cut costs and raised debt to survive what they call an unprecedented industry crisis.
Published September 14, 2020

CHICAGO: Delta Air Lines said on Monday it is seeking to raise $6.5 billion through new bonds and loans backed by its SkyMiles loyalty program, further bolstering liquidity to weather a drastic downturn in travel demand due to the COVID-19 pandemic.

The airline said it would use the loyalty program as collateral to secure the new loans and issuance, as it continues to burn through about $27 million in cash each day.

US airlines have cut costs and raised debt to survive what they call an unprecedented industry crisis. The situation is not expected to improve until there is a meaningful recovery in demand.

With its latest financing deal, Delta will not pursue a $4.6 billion federal loan available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, officials said, even as it continues to lobby for a second round of federal payroll grants.

Atlanta-based Delta is among 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 program has attractive financing terms but restricts executive compensation and share buybacks.

The airline has said it could furlough nearly 2,000 pilots in October without more federal aid, but believes 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 equaled about 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 program or the terms of the new financing, which mirrors a debt deal by United Airlines in June backed by its $20 billion MileagePlus program.

Delta's shares, which have lost about 46% this year, closed at $31.70 on Friday.

Comments

Comments are closed.