Delta Gets $600m Financing From Amex

[FWAAA]

Delta obtains $600 million in financing from AMEX; $100 million loan and $500 million pre-payment for SkyMiles (earned by AMEX cardholders):

Delta Air Lines Obtains Commitment for $600 Million Financing Transaction

Monday October 25, 2:00 pm ET

ATLANTA, Oct. 25 /PRNewswire-FirstCall/ -- Delta Air Lines (NYSE: DAL - News) today announced that it has entered into a commitment letter with American Express Travel Related Services Company, Inc. ("Amex") (NYSE: AXP - News) to provide up to $600 million of financing to Delta, subject to satisfaction of certain conditions.

Up to $100 million of the financing will be in the form of a loan from Amex as part of a new credit facility currently being negotiated with other lenders, for which a commitment has not yet been obtained from such other lenders, and $500 million of the amount will be in the form of a prepayment of SkyMiles. The prepayment by Amex to Delta will be made in two installments, each in an amount of $250 million, and each subject to significant conditions that are set forth in greater detail in the Form 8-K that Delta Air Lines filed today with the Securities and Exchange Commission. The first installment would be paid upon timely satisfaction of the conditions and the second installment would be paid, subject to the conditions, on a business day specified by Delta that is at least 90 days after the initial prepayment installment.

Both the credit facility and the prepayment facility would be fully collateralized by a pool of assets. The prepayment would be credited in equal monthly installments toward SkyMiles purchases to be made by Amex during the 24-month period beginning on the first anniversary of the initial prepayment installment and ending on the third anniversary of that installment.

Delta and its wholly owned subsidiary, Delta Loyalty Management Services, Inc., the manager of the Delta SkyMiles Program, also signed agreements with Amex for a multi-year extension of their co-branded credit card, Membership Rewards, and merchant services relationships.

"As our September quarter 2004 losses demonstrate, time is now very critical for Delta," said Gerald Grinstein, Delta's chief executive officer. "American Express' role in Delta's transformation process demonstrates the commitment and determination of one of our key stakeholders in helping to restructure the company."

http://biz.yahoo.com/prnews/041025/clm077_1.html

That's some serious jack for the SkyMiles. B)