Delta taps $1 billion loan ahead of Northwest merger: report
NEW YORK (Reuters) - Delta Air Lines Inc (DAL.N) said it tapped a $1 billion loan ahead of its planned merger with Northwest Airlines Corp NWA.N and renegotiated its credit-card agreement to ensure revenue is turned over in a timely manner, the Wall Street Journal reported on Monday.
Citing a letter Ed Bastian, Delta's president and chief financial officer, sent to employees, the Journal reported that the drawn money will help Delta "increase our cash balance as we approach the closing of the merger."
The memo said the company is comfortable with its liquidity through the end of the year, the Journal reported.
In an interview with the Journal, Bastian said the decision to tap the credit line "was not for any operating need" but rather to ensure "full financial flexibility" to move forward with the Northwest merger and the alignment of the two airlines' credit agreements.
Delta on Monday also told employees it had renegotiated its credit-card agreements through 2011 to ensure that credit-card processors don't begin to hold back any revenue they collect from the airline's ticket sales, the Journal reported.
Concern about the processors holding back money has grown in the industry since discounter Frontier Airlines blamed new restrictions from its processors as a major reason when it filed for Chapter 11 in April, the Journal said.
Delta and Northwest announced in April that they plan to merge, forming the world's largest carrier. They hope to close the deal by the end of the year. The combined airline would be known as Delta and be based in Atlanta.
(Reporting by Ilaina Jonas; Editing by Gary Hill)
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