Delta Secures $2.1 Billion in Financing

Delta Airlines has managed to secure a $2.1 billion line of credit secured by its Pacific route authorities, gate leases, and slots, the company reporting that it managed to close the deal on Monday. Delta says that it will use the money to address its 2010 debt maturities and to increase the company’s liquidity.

The transaction will reportedly generate $600 million in liquidity after Delta refinances $1.5 billion from Northwest’s bank credit, increasing Delta’s unrestricted liquidity to $5.6 billion. In all, the transaction should have a total effective yield of 9.2 percent, meaning that Delta will essentially make a 9.2 percent profit off of the transaction.

According to Delta’s president, Ed Bastian, the fact that Delta was able to secure this loan in the midst of a weak financial market and a rash of tight-fisted lenders speaks to Delta’s strength as a company and to market interest in Delta. The credit crunch has left many airlines struggling and competing against each other for valuable financing in order to increase their liquidity.

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