November 15, 2017 / 9:54 PM / a year ago

Delta Air says tax cut would buy new planes, pay down debt

Passengers check in at a counter of Delta Air Lines in Mexico City, Mexico, August 8, 2016. REUTERS/Ginnette Riquelme

DETROIT (Reuters) - C(DAL.N) would use savings from a lower U.S. corporate tax rate to buy new equipment and pay down some of its debt, the carrier’s chief executive said on Wednesday, as congressional Republicans work to push forward a tax cut bill.

“We’ve had a philosophy - for every dollar of cash we make, we take 50 percent and put it back in the business. So investing in new equipment, investing in new airports, more airplanes for the airline,” Chief Executive Ed Bastian told reporters in Detroit.

Bastian said that additional relief from the current rate would “certainly enable us to pay our people more,” while the rest of the savings would be used to pay down some of the airline’s bills.

Delta and other companies have expressed support for Republican proposals to trim the corporate tax rate to 20 percent from 35 percent, which they say would allow them to create more jobs and invest more resources in employees.

Senate Republicans want to pass their tax bill by December, but are facing pushback from some of their own lawmakers.

After an industry period of financial turmoil marked by years of significant losses, Delta does not currently pay federal corporate taxes, but is due to become a full cash federal taxpayer in 2019, when it will have exhausted its deferrals.

Bastian said the savings would not be spent on investors in the form of share repurchases.

“We would put it to work,” Bastian said.

Pilots and flight attendants at the three largest U.S. airlines - Delta, United UAL.N and American (AAL.O) - are keeping a close eye on company plans for spending any tax windfall. Tensions between management and employees remain high on contract negotiations for salary and benefits.

Reporting by Alana Wise, Editing by Rosalba O'Brien

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