Delta will use frequent-flyer program to again $6.5 billion in debt

Delta Air Lines passenger planes are seen parked because of flight reductions made to sluggish the unfold of coronavirus illness (COVID-19), at Birmingham-Shuttlesworth International Airport in Birmingham, Alabama, March 25, 2020.

Elijah Nouvelage | Reuters

Delta Air Lines on Monday stated that it’ll borrow $6.5 billion backed by its frequent-flyer program, the third airline to faucet its loyalty platform to shore up liquidity amid the coronavirus disaster.

The airline plans to promote senior secured notes and enter into a brand new credit score facility, each backed by its SkyMiles program. SkyMiles will lend the web proceeds of the bond providing to Delta, though a portion will go to a reserve account.

United Airlines in June introduced it will use its frequent-flyer program, MileagePlus, to again a $5 billion mortgage. American Airlines has stated it additionally plans to make use of its program to as collateral for a virtually $5 billion federal mortgage.

Delta shares had been up 1.9% in premarket buying and selling after it introduced the brand new debt plan. 

The Atlanta-based airline and its rivals have scrambled to shore up liquidity because the coronavirus pandemic devastated demand this 12 months. The $2 trillion CARES Act in March put aside $25 billion in payroll assist for airways in addition to $25 billion in federal loans. Delta stated it does not plan to pursue the mortgage, becoming a member of Southwest Airlines in sticking with different sources of liquidity.

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