Business Context and Reporting Period
This Form 8-K Current Report was filed by Delta Air Lines, Inc. on March 13, 2019. The filing discloses the creation of a direct financial obligation through the issuance of equipment notes secured by specific aircraft assets.
Key Financial Metrics
- Total Principal Amount: $500,000,000 in Equipment Notes issued.
- Debt Structure:
- Series AA: $425,000,000 at 3.204% per annum.
- Series A: $75,000,000 at 3.404% per annum.
- Collateral: 14 aircraft delivered between May 2018 and December 2018, including two Airbus A220-100, six Airbus A321-211, two Airbus A350-941, and four Boeing 737-900ER.
- Maturity Date: April 25, 2024.
- Interest Payments: Semiannual payments beginning October 25, 2019.
- Liquidity Facility: Commonwealth Bank of Australia provided a liquidity facility sufficient to cover three semiannual interest distributions for each certificate class.
Material Changes
The filing represents a new debt obligation not present in prior periods. Delta entered into 14 separate Participation Agreements and Indentures to securitize the aircraft assets. The proceeds from the sale of Pass Through Certificates were used to purchase the Equipment Notes, which Delta will use to pay offering fees and for general corporate purposes.
Outlook, Risks, and Contingencies
- Use of Proceeds: Fees and expenses related to the offering and general corporate purposes.
- Default Risks: Maturity may be accelerated upon events of default, including failure to make payments, covenant breaches, or bankruptcy events.
- Security: Notes are secured by a lien on the specific aircraft and are cross-collateralized by the other aircraft in the pool.
- Underwriting: Credit Suisse Securities (USA) LLC acted as the representative for the underwriters.
Investor Verification Checklist
- Verify the specific registration numbers of the 14 aircraft serving as collateral.
- Confirm the terms of the liquidity facility provided by Commonwealth Bank of Australia.
- Review the full Indenture and Security Agreements for specific covenant details and default triggers.
- Assess the impact of the new debt on Delta's overall leverage ratios and liquidity position.