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 programme, further bolstering liquidity to weather a drastic downturn in travel demand due to the Cvid-19 pandemic.
Atlanta-based Delta said it has parked about 40 per cent of its fleet and cut its capacity by about 60 per cent in the September quarter from last year as it continues to burn through $27 million in cash each day.
US airlines have cut costs and raised debt to survive what they call an unprecedented industry crisis. Travel demand is hovering around 30 per cent of last year’s levels and the situation is not expected to improve until there is a meaningful recovery in demand.
With its latest financing deal, Delta said it will not pursue a $4.6 billion federal loan available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, although it continues to lobby for a second round of federal payroll grants.
CARES Act funds
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 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 equalled 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.