By Tracy Rucinski
CHICAGO (Reuters) – Delta Air Lines
Atlanta-based Delta said it has parked about 40% of its fleet and cut its capacity by about 60% in the September quarter from last year as it continues to burn through $27 million in cash each day.
U.S. airlines have cut costs and raised debt to survive what they call an unprecedented industry crisis. Travel demand is hovering around 30% 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.
Delta is among U.S. 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 loan program has attractive financing terms but restricts executive compensation and share buybacks.
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 equaled 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.
Delta did not disclose the value of the loyalty program, or the terms of the new financing, which mirrors a debt deal by United Airlines
Delta’s shares, which have lost about 46% this year, closed at $31.70 on Friday.
(Reporting by Tracy Rucinski; Editing by Ana Nicolaci da Costa and Nick Zieminski)
