Delta to Tap Jets for $1 Billion in Cash Amid Talks for U.S. Aid

15 Apr 2020, 04:05 AM IST

(Bloomberg) -- Delta Air Lines Inc. has agreed to sell and lease back aircraft in a deal valued at $1 billion, according to people with knowledge of the matter, as the company steps up efforts to raise cash while talks about U.S. government aid drag on.

The carrier will reap $750 million in proceeds from BBAM Aircraft Leasing & Management and $250 million from Altavair AirFinance as part of the transaction, said one of the people, who asked not be named because the matter is private. The agreement could be announced as soon as next week, the person said.

Delta is pushing to raise additional liquidity from the private sector and lessen its dependence on U.S. government rescue funds. The Atlanta-based company last month said it had obtained a new $2.6 billion term loan which can be upsized to $4 billion, and would draw $3 billion under existing revolving credit facilities.

The shares rose 8% to $25.10 at 9:56 a.m. in New York amid a broad market rally. Delta had fallen 60% this year through Monday as the Covid-19 pandemic battered travel demand, giving the airline a market value of about $14.9 billion.

Representatives for Delta and Altavair declined to comment. A representative for BBAM didn’t immediately comment.

Other airlines have leaned on sale-and-leaseback transactions to raise cash in recent weeks. Cathay Pacific Airways Ltd. in March announced an agreement to sell six jets to BOC Aviation Ltd. for $703.8 million.

BBAM, which had more than $28.7 billion in assets under management as of Dec. 31, partners with capital providers including Nomura Babcock & Brown Co., Fly Leasing Ltd. and Incline Aviation, according to its website.

Altavair, which focuses on the sale and leaseback of new and used commercial aircraft, has completed more than $9 billion in such transactions, its website shows. The company last year entered into a partnership with KKR & Co. to create a portfolio of leased aircraft.