Delta uses SkyMiles to raise funds
US carrier Delta Air Lines is using its frequent flyer programme as collateral to raise a further $6.5 billion.
It has turned SkyMiles into a separate subsidiary and is planning a private offering for senior secured notes and a senior secured term loan.
Rival US carriers United Airlines and Spirit Airlines have also used their own loyalty programmes to raise funds.
The subsidiary for the SkyMiles programme shows that in 2019 it made a net income of $2.5bn, which was more than half of the airline’s total earnings.
The subsidiary will be wholly-owned by Delta, with the airline providing a third of its revenue buying seats to reward SkyMiles members. The other two-thirds of its revenue will come from third parties.
Delta has already raised billions of dollars to keep it afloat since the start of the pandemic, including $5.4bn from the US government to cover salaries. The airline said it won’t take a second tranche of government funding, worth $4.6bn.
By Linsey McNeill, Editor (UK)
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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