Delta Air Lines to Raise $9 billion Against SkyMiles Loyalty Program

Delta Air Lines, which provides scheduled air transportation for passengers and cargo throughout the United States and across the world, said on Thursday that it will upsize SkyMiles financing to $9 billion, $2.5 billion higher than previously anticipated deal size.

The Atlanta-based company said on Thursday the total proceeds are being raised at a blended average annual rate of 4.75%. Delta said on Monday that it is pledging its loyalty program to raise $6.5 billion, comprising of $4 billion bonds and $2.5 billion loans, as it burns through $27 million a day, Reuters reported.

Delta Air Lines’s shares closed 1.76% lower at $33.96 on Thursday; the stock is down over 40% so far this year.

Delta Air Lines stock forecast

Nine analysts forecast the average price in 12 months at $39.17 with a high forecast of $50.00 and a low forecast of $32.00. The average price target represents a 15.34% increase from the last price of $33.96. From those nine equity analysts, six rated “Buy”, three rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a target price of $50 with a high of $80 under a bull-case scenario and $22 under the worst-case scenario. BofA Global Research raised their price objective to $36 from $31.

Other equity analysts also recently updated their stock outlook. Stifel cuts price target to $44 from $45; Cowen and Company lowered their stock price forecast to $32 from $33; Berenberg cuts target price to $32 from $35, while JP Morgan and Citigroup raised their target price to $45 from $41 and $38 from $30, respectively.

Analyst views

“DAL has some of the strongest customer satisfaction numbers among the other Legacy peers, while also commanding a higher PRASM, making it our preferred Legacy carrier. With ample liquidity we see limited liquidity risk here. Additionally, we continue to see DAL’s international alliances and partnerships as strategic assets, despite recent writedowns,” said Ravi Shanker, equity analyst at Morgan Stanley.

Forward Outlook

2021 planning is expected to be one of the toughest on record. DAL sees 2021 being anywhere from 25-40% down vs. 2019 levels. Longer-term, they ultimately don’t expect the environment to look much different than pre-COVID with similar network patterns once things have returned to normal, according to Morgan Stanley.

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