(Bloomberg) – Delta Air Lines Inc. is poised to issue new debt with the support of its frequent-flyer program, the latest to use miles to boost liquidity amid the Covid-19 pandemic.
The airline is set to mark new loans and bonds secured by its loyalty program SkyMiles to the U.S. Labor Vacancy on September 7, according to people with knowledge of the business. The size of the deal and terms, including proceeds, are still being finalized and could change, one of the people said, asking not to be identified to discuss a private matter.
A Atlanta-based Delta spokesman declined to comment.
The deal follows the release of United Airlines Holdings Inc. of $ 6.8 billion in new loans secured by its MileagePlus program in June, a deal that raised it to $ 5 billion amid strong investor demand. The bond and loan package was rated as an investment grade by Moody’s Investors Service and Fitch Ratings despite the overall junk rating.
Delta shares rose 8% to $ 29.44 in New York at 1:48 a.m. Monday, amid optimism that the Trump administration could detect vaccines and treatments to fight the coronavirus. The Environmental Protection Agency also granted American Emergency approval from American Airlines Group to deploy a surface coating that kills coronaviruses for up to seven days, a step that could help restore public confidence in flying.
Delta said last week that it would reschedule 50 flights on international routes later this year. Still, in a sector lamented by the pandemic’s impact, Delta’s shares have halved almost a year to date, bringing it to a market capitalization of around $ 19 billion.
Delta ended the second quarter with $ 15.7 billion in liquidity through a combination of government and other financing, and had been considering since July whether an additional federal loan of $ 4.7 billion would be taken.
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