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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