Delta raises cash and refinances debt to strengthen liquidity

Posted Sep 29th 2009 9:50AM by Mark Fightmaster
Filed under: Delta Air Lines (DAL)

Late Monday, Delta Air Lines (NYSE: DAL) announced it raised $600 million in cash and refinanced $1.5 billion in debt in order to help strengthen its liquidity position in 2010. DAL now believes its unrestricted cash balance will be $5.6 billion at the end of the quarter, adding that its refinancing has now addressed more than 40% of next year's loan maturities. The airliner stated that its refinancing has now addressed more than 40% of next year's loan maturities.

Strengthening liquidity is a smart move as it can help the airline conquer some of its technical hurdles. DAL is enjoying a bit of a rally thus far in the calendar year (after starting 2009 with a sharp drop), but I am a bit concerned about its current battle with the $10 level. This round-number level has acted as resistance during the past two weeks, and it could continue in this role. The shares could overcome this resistance with some help from its 10-week and 10-day moving averages.

Nevertheless, DAL's 20-month moving average looms overhead, ready to act as resistance when given the chance. In order to approach the $10 level, the stock will need to ascend through this trendline, which has not happened since the trendline's inception.

If you are looking for a potential bullish play in the airline sector, DAL could be worth a look. That said, I would wait and see if the stock can top both its 20-month trendline and the $10 level. If the shares can complete this move, we could see both prior levels of resistance act as support.

Tags: airline sector, airlines, AirlineSector, dal, inthenews, liquidity, refinancing, travel