Originally Posted by mikea72580

-Why so much?

-Why bonds over loans?


Discuss....

Delta already has $15B liquidity and is raising another $9B. There is no business projection that indicates Delta needing $24B in liquidity to ride out the pandemic. I believe they are loading up on purchasing power to take advantage of opportunities over the next few years. They are looking past 2021, and want to eliminate the need to have financing contingencies for purchases of distressed assets from other airlines. Bonds probably cost them an extra 1-2% in interest over loans but allows them to push back maturity dates and to raise an even larger amount. Beginning in 2021, most airlines will be severely cash strapped and be ill equipped to generate loans. Few airlines have a compelling enough balance sheet to raise this kind of money, and it’s likely that Delta is leaning on that advantage. Only time will tell if the premium they are paying for these bonds will be offset by lucrative acquisitions down the road. One thing we know for sure now, Delta has the ability to raise any amount of money necessary to weather the pandemic, and with this bond offering would have enough money to last for years.