Delta Looking to Raise US$3 Billion

Delta Air Lines is looking to raise US$3 billion in debt as it tries to survive the almost complete slowdown in air travel caused by the COVID19 pandemic.

The airline has unveiled plans to commence a private offering to eligible purchasers of US$1.5 billion in aggregate principal amount of senior secured notes due 2025, subject to market and other conditions.

The company also intends to enter into a new US$1.5 billion term loan B facility due 2023 concurrently with the closing of the offering of the notes.

The net proceeds from the offering of the notes and borrowings under the new credit facility would be used for "general corporate purposes" and to bolster Delta's liquidity position.

The notes and new credit facility will be pari passu obligations secured on a first priority basis by a diverse pool of slots, gates and routes collateral comprised of domestic slots at New York-JFK, New York-LaGuardia and Reagan National Airport, slots at Heathrow, London routes, other European and Latin American routes.

When announcing its financial results for the March quarter 2020 on Wednesday, Ed Bastian, Delta’s chief executive officer, said, “These are truly unprecedented times for all of us, including the airline industry. Government travel restrictions and stay-at-home orders have been effective in slowing the spread of the virus, but have also severely impacted near-term demand for air travel, reducing our expected June quarter revenues by 90 percent, compared to a year ago.”

Paul Jacobson, Delta's chief financial officer, said, “With the significant impact of COVID19 on Delta’s revenue, we were burning $100 million per day at the end of March. Through our decisive actions, we expect that cash burn to moderate to approximately $50 million per day by the end of the June quarter. The decade of work we put into the balance sheet to lower debt and build unencumbered assets has been critical to our success in raising capital and we expect to end the June quarter with approximately $10 billion in liquidity.”

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