Delta Air Suspends Dividend, Buybacks With Cash Burn Worsening

(Bloomberg) -- Delta Air Lines Inc. is suspending its dividend and share repurchase program as U.S. carriers seek a $58 billion government bailout.

The airline also entered into a $2.6 billion secured credit facility, enhancing liquidity amid a daily cash burn of $50 million as travel demand collapses because of the coronavirus pandemic. The company is also drawing $3 billion under its existing revolving credit facilities.

“Our revenue outlook continues to deteriorate in the short term with the decline in travel demand,” Chief Executive Officer Ed Bastian said in a memo to employees. “We’re now projecting our June quarter revenues will be down by $10 billion compared to a year ago -- an 80% reduction. It’s also clear, given the underlying damage the virus has created to the overall economy, that demand recovery will take an extended period once the virus is contained.”

Delta suspended stock buybacks hours after President Donald Trump said he wants a ban on share repurchases for companies receiving federal aid. A Senate Republican proposal responding to the fast-spreading economic devastation includes $50 billion for loans to airlines, with $8 billion for cargo carriers. But Airlines for America, a trade group, says loans aren’t enough and has called for a “worker payroll assistance program and targeted tax relief.”

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