Delta Air Lines: Navigating the COVID-19 Storm

This case examines Delta Air Lines’ response as demand for its services plummeted in the face of the COVID-19 pandemic, with a focus on the company’s funding needs and capital structure. Following a series of initial actions, the company’s cash “burn” had reduced from $100 million per day at the start of the pandemic to approximately $27 million per day by the summer of 2020; in addition, Delta had amassed significant liquidity and amended its financial covenants. However, the company’s shares were trading at roughly half their pre-crisis levels, rating agencies had downgraded Delta’s credit rating to “junk” status, and a second wave of coronavirus infections was underway in the United States. Now, management would have to determine if Delta was sufficiently well-positioned to survive and eventually compete in the post-COVID recovery … or if they needed to take further action to prepare for a prolonged crisis. How should the company manage its capital structure in the face of such industry uncertainty? What actions should be pursued to mitigate the financial and operational risks? Should the company raise additional funding, and if so, of what kind and from whom? How should various stakeholders’ concerns be prioritized and reconciled, ranging from shareholders to employees to government?