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.

Bloomberg reported investors had placed about USD16 billion of orders for the bonds and around USD10 billion for the loan, rating it as the industry’s largest debt deal ever. United Airlines (UA, Chicago O'Hare) previously set that record with a USD6.8 billion sale of bonds and loans in June 2020. Bloomberg reported investors placed three times as many orders as bonds and loans available for sale, which allowed Delta to boost the size of the deal from an original USD6.5 billion.

Delta earlier announced it would avoid involuntary furloughs for its flight attendants and ground-based frontline employees in the US, having effectively managed its staffing between now and the start of peak summer 2021 travel.

Bastian said this was thanks to sacrifices made by staff. Some 40,000 voluntarily signed up for short- and long-term unpaid leave; 20% opted for early retirement and voluntary departure, and 25% of ground-based employees had their work hours reduced. Bastian himself forfeited his salary until year-end, and all officers' salaries were reduced by 50% for the same period.

CNBC reported that Delta would delay its decision to furlough pilots until November 1 as the company negotiates cost-cutting measures with the pilots' union. Previously, Delta had planned to furlough 1,941 pilots in October. This number was reduced to 1,721 when a tentative agreement was reached between the airline and the pilots' union.