Delta Air Lines Inc. is offering to buy back up to $1 billion of high-cost bonds issued at the height of the pandemic last year, as the company begins to look at ways to scale back its balance sheet.

The tender offer is for three bonds issued between April and September 2020, according to a news release. The airline raised cash to survive the crisis as travel collapsed worldwide amid lockdowns to try to contain the Covid-19 outbreak.

The notes are:

  • $3.5 billion 7% secured notes maturing in 2025, issued in April 2020
  • $1.25 billion 7.375% unsecured notes maturing in 2026, issued in June 2020
  • $2.5 billion 4.5% secured notes maturing 2025, issued in September 2020 and secured against the company’s SkyMiles rewards program

The offer, which investors can choose to accept or not, shows that the airline is beginning to chip away at its balance sheet that has seen debt swell over the last year.

Delta’s adjusted net debt was $18.3 billion through the June quarter, or $7.8 billion higher than December 2019, it said in a report earlier this week. The company finally reversed a cash burn and generated $1.5 billion of cash in the latest quarter.

“With improving financial performance and a strong liquidity position, we’re using cash to reduce leverage and non-operating expense while rebuilding unencumbered assets and managing our debt maturity profile,” said interim-Chief Financial Officer Gary Chase in an earnings call on Wednesday.

The 4.5% bonds included in Delta’s offer were part of a $9 billion deal, the industry’s largest debt sale at the time, secured by the company’s frequent-flier program and issued at a time when the airline was burning through $27 million a day. That followed United Airlines Holdings Inc., which issued the first-ever airline miles deal in July 2020.

Delta lost its investment-grade rating in 2020 due to the pandemic and is working to regain it. The company is rated BB by S&P Global Ratings, two steps into junk, and BB+ by Fitch Ratings, one step into junk. Only Moody’s Investors Service still rates the company in the lowest rung of investment grade at Baa3.

Investors that accept the tender offer will receive a premium ranging between 105 cents on the dollar to 118.125 cents, depending on the specific bond and whether holders agree by the early deadline of July 28 or the final deadline of Aug. 11.