Last Updated Sep 23, 2009 10:56 AM EDT
Delta opted to go the debt route. They'll be issuing $500 million in notes and the proceeds will be used for "general corporate purposes." What does that mean? It'll be used for anything they need it for. The debt will be secured by the Pacific routes. Does this sound familiar? It should. They announced another $500 million issue within the last week in order to retire some Northwest debt. Talk about a busy week for the finance guys.
US Airways, on the other hand, doesn't have many assets left to offer as collateral so they've gone the equity route. The airlines will issue a little more than 26 million shares. At today's closing price, that'll bring in well over $100 million, but of course, we won't know what that looks like until the day it happens.
So why are the airlines doing this now? Two reasons.
1) They need it 2) They can
We're heading into the slower winter season when a nice big cash cushion is always needed. So it's time to stash those acorns and huddle up.