Beleaguered Delta Air Lines gets $500 million
Delta Air Lines Inc. signed a commitment letter from GE Commercial Finance for $500 million in financing, another positive step in the airline’s fight to avoid bankruptcy.
Delta said $300 million of the financing will be in the form of a senior secured revolving credit facility and $200 million will be a senior secured term loan. As much as $100 million of the financing will be provided by American Express Travel Related Services Co. under a previously announced commitment.
Delta said part of its accounts receivable will serve as collateral for the revolving credit facility, and a pool of the airline’s remaining assets will be collateral for the term loan.
The credit line will mature within three years, and the term loan will be payable in 12 equal monthly installments, beginning two years after closing.
The airline is hoping its pilots’ union will approve a steep pay cut to help it avoid bankruptcy.
“While there is a significant amount of work yet to be accomplished, these developments will make a meaningful contribution to the massive company-wide effort underway to transform our airline,” said Delta CFO Michael Palumbo.
Delta pilots, currently among the highest paid in the nation with salaries that average between $100,000 and $300,000 a year, began voting on the contract proposal Monday.
The agreement would cut their salaries by nearly a third and would provide no raises for the remainder of the five-year pact.
Company officials say the pilots’ potential $1 billion in concessions would give the nation’s third-largest carrier some much-needed breathing room in its attempt to restructure its financial problems.
The voting is expected to close on Nov. 11.
Report by David Wilkening
David
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