Delta Air Lines has amended its US$2.65 billion credit facility agreement so that it now features a new standby letter of credit (L/C) facility.

Two other facilities will also secure the US airline's access to L/Cs as it seeks to recover from the drastic impact the coronavirus pandemic has had on the aviation industry.

Three facilities

The amended revolving credit facility agreed with JPMorgan Chase Bank contains a US$1.325 billion three-year facility, US$1.25 billion of which is a one year extension of a 2018 agreement with the bank. The facility now matures in April 2022.

Also contained in the new arrangements is a US$1.325 billion five-year facility, and a new US$216 million standby L/C facility.

L/C benefits

Up to US$250 million of each of the three-year and the five-year facilities can be used for the issuance of L/Cs.

Borrowings under the three-year and five-year facilities bear interest at a variable rate equal to Libor, or another index rate, in each case plus a specified margin.

Strict collateral and covenants

The amended revolving credit facility, which was previously unsecured, is now secured by a first lien on Delta's Pacific route authorities and certain related assets.

The airline also has the option of pledging aircraft, among other assets, as additional collateral.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.