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Delta taps $9 bln in financing against loyalty program

Credit: REUTERS/ELIJAH NOUVELAGE

Delta Air Lines said on Thursday it is raising $9 billion, $2.5 billion more than its previous estimates, through new bonds and loans backed by its SkyMiles loyalty program, as it attempts to strengthen its coronavirus-roiled finances.

Adds details on financing deal

Sept 17 (Reuters) - Delta Air Lines DAL.N said on Thursday it is raising $9 billion, $2.5 billion more than its previous estimates, through new bonds and loans backed by its SkyMiles loyalty program, as it attempts to strengthen its coronavirus-roiled finances.

U.S. airlines have cut costs and raised debt to survive what they call an unprecedented industry crisis and the situation is not expected to improve anytime soon.

The Atlanta-based company said on Thursday the total proceeds is being raised at a blended average annual rate of 4.75%.

Delta said on Monday that it is pledging its loyalty program to raise $6.5 billion comprising of $4 billion bonds and $2.5 billion loan, as it burns through $27 million a day.

Earlier this month, the carrier said it would not chase 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.

Smaller rival United Airlines UAL.O in June had pledged its loyalty program MileagePlus for a new $5 billion loan aimed at further buffering its liquidity.

(Reporting by Rachit Vats in Bengaluru; Editing by Amy Caren Daniel)

((Rachit.Vats@tr.com; within U.S. +1 646 223 8780, outside U.S. +91 80 61822828; Reuters Messaging: rachit.vats.thomsonreuters.com@reuters.net))

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