Delta to mortgage SkyMiles program for up to $6.5 billion to help weather coronavirus hit
Delta Air Lines plans to mortgage its SkyMiles loyalty program for up to $6.5 billion, showing again that cash remains king as carriers seek to weather the coronavirus pandemic.
The private financing deal comes as the Atlanta-based carrier continues to lose as much as $27 million a day in cash amid an unprecedented drop in air travel due to COVID-19. Proceeds will be used to bolster the $15.7 billion in cash and short-term investments that Delta had at the end of June.
The transaction is not expected to have any impact on SkyMiles members or their earnings, redemptions and other activities. In its presentation to investors, Delta repeatedly called the program "core" to its business.
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The SkyMiles deal comes as U.S. airlines prepare for what is likely to be a tough winter with most business travel still all but grounded. Flyer numbers remain at roughly 30% of 2019 levels and airlines are preparing for significant staff furloughs on Oct. 1, barring an eleventh-hour extension of protections in the federal coronavirus aid package, or CARES Act.
“There are encouraging signs on the horizon… [but] this is going to be choppy," Delta chief financial officer Paul Jacobson said about the recovery on Sept. 9.
Leveraging lucrative frequent flyer programs for cash is the latest trend among carriers as they seek to raise funds. United Airlines was first with a mortgage of its MileagePlus program for up to $5 billion in debt in June; a deal that Jacobson gave United kudos for in July. Spirit Airlines has since closed a similar transaction and American Airlines plans to use its AAdvantage program as collateral for a federal CARES Act loan.
Related: United Airlines to mortgage MileagePlus for coronavirus funds
Funds from these frequent flyer program mortgages add much-needed cash to airlines' balance sheets. As of Oct. 13, major U.S. airlines had enough cash to pay their bills for as much as 26 months — or well into 2022 — or as little as 11 months, according to the analysis of the industry by analysts at Raymond James. Delta had enough to cover expenses until next September.
SkyMiles is a money-maker for Delta. The program brought in $6.1 billion in revenue — $2.4 billion after expenses — in 2019, the securities filing shows. And direct revenue is not the only benefit; Delta noted that top-tier Medallion members spend roughly one-and-a-half times that of standard members at the airline.
More: These are the long-haul international routes American, Delta and United plan for September
More than 100 million people are SkyMiles members. Travelers between 35 and 54 years old make up a plurality of 37% of members, while flyers under 34 years old are the second largest group at 33%.
The New York City area has the largest concentration of Delta flyers with 8% of SkyMiles members. This compares to just 6% in its Atlanta base while 68% of members live do not live near any of the airline's eight domestic hubs.
Related: Delta will block seats into January as it tries to boost traveler confidence
Top offers from our partners
How we chose these cards
TPG featured card
Rewards
| 3X | Earn 3X Miles on Delta purchases and purchases made directly with hotels. |
| 2X | Earn 2X Miles at restaurants worldwide, including takeout and delivery in the U.S. and at U.S. supermarkets. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
Build your loyalty to Delta by applying for the carrier's mid-tier card option, the Delta SkyMiles Platinum card. The annual fee is quickly recouped by the card's travel perks, such as an application credit to Global Entry or TSA Precheck, annual companion certificate and so much more. Plus you can fast-track to elite status simply through card spend.Pros
- Earn bonus Medallion® Qualification Miles (MQMs) and an Medallion Qualifying Dollar (MQD) waiver when you hit specific spending thresholds with your card within a calendar year
- Receive a Domestic Main Cabin round-trip companion certificate each year
- Statement credit for TSA PreCheck/Global Entry fee (up to $100)
- First checked bag free
Cons
- Doesn't make sense if you don't fly Delta
- SkyMiles aren't the most valuable airline currency
- Earn 90,000 bonus miles after you spend $4,000 in purchases on your new Card in your first 6 months.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. Payment of the government imposed taxes and fees of no more than $80 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights. Plus enjoy Main Cabin 1 Priority Boarding and settle into your seat sooner.
- New: Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide including takeout and delivery in the U.S., and at U.S. supermarkets.
- Earn 1X Mile on all other eligible purchases.
- Enjoy a per-visit rate of $50 per person for Card Members and up to two guests to enter the Delta Sky Club when traveling on a Delta flight.
- Fee Credit for Global Entry or TSA PreCheck® after you apply through any Authorized Enrollment Provider. If approved for Global Entry, at no additional charge, you will receive access to TSA PreCheck.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs up to two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees
Rewards Rate
| 3X | Earn 3X Miles on Delta purchases and purchases made directly with hotels. |
| 2X | Earn 2X Miles at restaurants worldwide, including takeout and delivery in the U.S. and at U.S. supermarkets. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Intro Offer
Earn 90,000 bonus miles after you spend $4,000 in purchases on your new Card in your first 6 months.Earn 90,000 Bonus Miles50,000 Bonus MilesAnnual Fee
$250Recommended Credit
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.670-850Excellent/Good
Why We Chose It
Build your loyalty to Delta by applying for the carrier's mid-tier card option, the Delta SkyMiles Platinum card. The annual fee is quickly recouped by the card's travel perks, such as an application credit to Global Entry or TSA Precheck, annual companion certificate and so much more. Plus you can fast-track to elite status simply through card spend.Pros
- Earn bonus Medallion® Qualification Miles (MQMs) and an Medallion Qualifying Dollar (MQD) waiver when you hit specific spending thresholds with your card within a calendar year
- Receive a Domestic Main Cabin round-trip companion certificate each year
- Statement credit for TSA PreCheck/Global Entry fee (up to $100)
- First checked bag free
Cons
- Doesn't make sense if you don't fly Delta
- SkyMiles aren't the most valuable airline currency
- Earn 90,000 bonus miles after you spend $4,000 in purchases on your new Card in your first 6 months.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. Payment of the government imposed taxes and fees of no more than $80 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights. Plus enjoy Main Cabin 1 Priority Boarding and settle into your seat sooner.
- New: Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide including takeout and delivery in the U.S., and at U.S. supermarkets.
- Earn 1X Mile on all other eligible purchases.
- Enjoy a per-visit rate of $50 per person for Card Members and up to two guests to enter the Delta Sky Club when traveling on a Delta flight.
- Fee Credit for Global Entry or TSA PreCheck® after you apply through any Authorized Enrollment Provider. If approved for Global Entry, at no additional charge, you will receive access to TSA PreCheck.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs up to two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees