Delta raises $9bn in largest ever debt deal

Delta Air Lines (DL, Atlanta Hartsfield Jackson) raised at least USD9 billion in what is reported to be the largest ever debt deal for a commercial airliner. The financing transaction – secured by Delta’s wholly-owned subsidiary SkyMiles IP Ltd. frequent-flier programme – is critical to the airline’s long-term recovery and protecting employees’ jobs, according to a memo issued by Chief Executive Officer Ed Bastian. He said the airline was burning USD750 million in cash a month as passenger volumes had dropped 30% on last year. “Our ability to raise money in private markets means we do not intend to take an additional loan backed by the US government under the CARES Act secured loan programme,” he said. The airline in a statement said an aggregate of USD2.5 billion in principal amount of 4.5% senior secured notes due 2025 and an aggregate of USD3.5 billion in principal amount of 4.75% senior secured notes due 2028 would be issued on September 23, 2020, subject to customary closing conditions. The notes would be issued at a price to investors of 100% of their principal amount. Concurrently with the issuance of the bonds, Delta and SkyMiles IP Ltd. would enter into a credit agreement providing for a USD3 billion term loan facility, also subject to customary closing conditions. “In total, the notes and new credit facility will provide gross proceeds of USD9 billion, an increase of USD2.5 billion from the anticipated original USD6.5 billion deal size, at a blended average annual rate of 4.75%,” the airline said.