Delta to borrow $13 billion in largest airline debt deal ever


Delta Air Lines is raising $9 billion (NZ$13 billion) in the largest debt deal ever in the aviation industry, as the carrier garners massive investor support to make its way through the pandemic.

That’s up from an original $6.5 billion (NZ$9.5 billion), which was comprised of $4 billion (NZ$6 billion) of bonds and $2.5 billion (NZ$3.5 billion) of loans. Both will be backed by Delta’s frequent-flier program, a popular collateral pledge inspired by United Airlines Holdings Inc.

The debt will help boost Delta’s liquidity as it burns about $750 million (NZ$1 billion) in cash a month, and passenger volumes are only 30 per cent of what they were this time last year, according to a memo by Chief Executive Officer Ed Bastian on Tuesday.

With the new financing, Delta doesn’t intend to take an additional loan backed by the US government under the CARES Act.

READ MORE:
* American Airlines warns 25,000 workers they could lose jobs
* Coronavirus: South America’s biggest airline files for bankruptcy
* Coronavirus: Major European airline ‘running out of money’

Delta is looking to borrow bonds maturing in five years that may yield around 4.75 per cent, and another portion due in eight years that is being marketed near 5 per cent, according to a person with knowledge of the matter.

Delta Air Lines is raising $13 billion in the largest debt deal ever in the aviation industry, as the carrier garners massive investor support to make its way through the pandemic.

Patrick T. Fallon/Bloomberg

Delta Air Lines is raising $13 billion in the largest debt deal ever in the aviation industry, as the carrier garners massive investor support to make its way through the pandemic.

They carry investment-grade ratings and are expected to price on Wednesday, the person said, who asked not to be identified as the details are private.

Goldman Sachs is lead manager on the bond sale, while Barclays Plc is leading the loan component. Those commitments are due on Wednesday.