Business Context and Reporting Period
This Form 8-K Current Report was filed by Delta Air Lines, Inc. on February 14, 2011. The filing discloses the completion of a capital market transaction involving the issuance of Pass Through Certificates, Series 2010-1B (Class B Certificates) through a newly formed pass-through trust.
Key Financial Metrics
- Principal Amount Raised: $100,447,000
- Instrument Type: Series 2010-1B Pass Through Certificates (Class B Certificates) and Series B Equipment Notes.
- Interest Rate: 6.375% per annum.
- Interest Payment Schedule: Semiannually on January 2 and July 2, commencing July 2, 2011.
- Maturity Date: January 2, 2016.
- Collateral: The notes are secured by 24 aircraft (10 Boeing 737-832, 9 Boeing 757-232, 3 Boeing 767-332ER, and 2 Boeing 777-232LR).
- Use of Proceeds: Payment of offering fees and expenses, and general corporate purposes.
- Underwriters: Goldman, Sachs & Co., Deutsche Bank Securities Inc., and Morgan Stanley & Co. Incorporated.
Material Changes
The filing reports the execution of twenty-four separate participation agreement amendments and indenture amendments to existing agreements dated July 14, 2010, and December 17, 2010. These amendments facilitated the issuance of the Series B Equipment Notes. The Class B Certificates rank generally junior to the previously issued Class A Certificates (Series 2010-1A).
Outlook, Risks, and Contingencies
- Default Provisions: Maturity of the Series B Equipment Notes may be accelerated upon events of default, including failure to make payments when due, failure to comply with covenants, or certain bankruptcy events.
- Security Structure: The notes are cross-collateralized by all aircraft financed under the amended indentures.
- Liquidity: The transaction includes a Revolving Credit Agreement with Natixis S.A. acting as the Class B Liquidity Provider.
Investor Verification Checklist
- Verify the specific aircraft registration numbers and their current operational status as collateral.
- Review the Intercreditor Agreement to understand the subordination details between Class A and Class B Certificates.
- Confirm the impact of the 6.375% interest rate on the company's overall debt service obligations.
- Examine the "general corporate purposes" allocation of proceeds in subsequent financial statements.
- Check for any subsequent amendments to the covenants or liquidity agreements referenced in the filing.