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

by
https://img-s-msn-com.akamaized.net/tenant/amp/entityid/BB16Ikpu.img?h=500&w=800&m=6&q=60&o=f&l=f
© Provided by CNBC
Delta Air Lines passenger planes are seen parked due to flight reductions made to slow the spread of coronavirus disease (COVID-19), at Birmingham-Shuttlesworth International Airport in Birmingham, Alabama, March 25, 2020.

Delta Air Lines on Monday said that it will borrow $6.5 billion backed by its frequent-flyer program, the third airline to tap its loyalty platform to shore up liquidity amid the coronavirus crisis.

Popular Searches

APPLE INC.
AAPL

112.00
-1.49
-1.31%
CONSTELLATION BRANDS, INC.
STZ

188.81
+0.08
+0.04%
TESLA, INC.
TSLA

372.72
+1.38
+0.37%
AMAZON.COM, INC.
AMZN

3,116.22
-58.89
-1.85%

The airline plans to sell senior secured notes and enter into a new credit facility, both backed by its SkyMiles program. SkyMiles will lend the net proceeds of the bond offering to Delta, although a portion will go to a reserve account.

United Airlines in June announced it would use its frequent-flyer program, MileagePlus, to back a $5 billion loan. American Airlines has said it also plans to use its program to as collateral for a nearly $5 billion federal loan.

Delta shares were up 1.9% in premarket trading after it announced the new debt plan. 

The Atlanta-based airline and its rivals have scrambled to shore up liquidity as the coronavirus pandemic devastated demand this year. The $2 trillion CARES Act in March set aside $25 billion in payroll support for airlines as well as $25 billion in federal loans. Delta said it doesn't plan to pursue the loan, joining Southwest Airlines in sticking with other sources of liquidity.