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Rating Action:

MOODY'S ASSIGNS Aa3 TO Class A PASS-THRU CTFS OF NORTHWEST AIRLINES, INC., A2 TO THE CLASS B CERTIFICATES AND Baa2 TO THE CLASS C CERTIFICATES

23 May 2001
MOODY'S ASSIGNS Aa3 TO Class A PASS-THRU CTFS OF NORTHWEST AIRLINES, INC., A2 TO THE CLASS B CERTIFICATES AND Baa2 TO THE CLASS C CERTIFICATES

Approximately $581 Million of Debt Securities Affected.

New York, May 23, 2001 -- Moody's Investors Service has assigned the following ratings to Northwest Airlines, Inc. Pass Through Certificates Series 2001-1:

$201,112,000Series 2001-1, Class A1 Certificates:Aa3

$156,613,000Series 2001-1, Class A2 Certificates:Aa3

$116,500,000 Series 2001-1, Class B Certificates:A2

$106,820,000Series 2001-1, Class C Certificates:Baa2

Proceeds of the issue will be placed in an escrow account and used to purchase equipment notes (the "Notes") to be issued in conjunction with the separate financing of each aircraft as it is delivered. The provisions of the indenture allow for the aircraft to be owned by Northwest Airlines, Inc. ("Northwest") or leased in separate leveraged lease transactions. The aircraft to be financed will include a total of 14 aircraft: nine A319-100 aircraft, two B747-400 aircraft, and three B757-300 aircraft. Northwest will select the aircraft to be financed from among 15 Airbus A319-100 aircraft, six Boeing 757-300 aircraft and two Boeing 747-400 aircraft scheduled for delivery between February and December 2002.

The collateral includes both wide and narrow-bodied aircraft in wide use. The A319-100 is a well accepted medium sized narrow body aircraft flown principally in Europe and the US. The B757-300 is a large capacity narrow bodied aircraft used extensively by tour operators due to its low operating costs per seat mile. The, the B747-400 is expected to see continued wide use even after the launch of the A380, although Moody's believes that used values will decline a bit quicker as a result of the availability of the A380 alternative for some carriers.

The Class C Certificates benefit from the issuance of an unrated series of Class D Certificates which will be issued in a private placement for each of the aircraft except for the two B747-400's. The combination of the separate financing of each aircraft and the lack of cross collateralization of the Notes leaves the most junior tranche of the Certificates exposed to the first dollar loss on any individual aircraft financed. In general, Moody's views the existence of a subordinate tranche as a mitigating factor when considering potential loss severity for more senior tranches in EETC transactions.

In the event the B747-400 aircraft are leased, the equipment notes issued in conjunction with the leveraged lease transactions will not be obligations of, nor will they be guaranteed by, Northwest. However, the lease rentals payable by Northwest will be sufficient to pay in full all principal and interest on the equipment notes when due. The equipment notes are secured by an interest in the aircraft and by an assignment of the leases relating thereto. Equipment notes issued in conjunction with any owned aircraft are direct obligations of Northwest. It is the opinion of counsel to Northwest that the equipment notes associated with both the owned and leased aircraft will be entitled to benefits under section 1110 of the U.S. Bankruptcy Code. Payments by Northwest under the lease agreements and under the equipments notes will be unconditionally guaranteed by Northwest's parent, NWA Corp.

As additional security for the notes, irrevocable revolving credit agreements will be entered into providing for drawings to pay interest on the Class A-1, Class A-2, Class B and Class C Certificates on any three successive semi-annual payment dates. The liquidity facilities do not provide for drawings to pay for principal or premium on the certificates. There will not be a liquidity facility for the Class D Certificates. Drawings on the liquidity facilities, if any, will be senior in claim to all of the Certificates. The initial liquidity provider will be Citibank, N.A. rated Prime-1 by Moody's.

The ratings on the rated Certificates reflect the ability of the issuer to make timely payments of interest and ultimate payment of principal at a date no later than the legal final maturity date of the certificates. The ratings are based on the credit quality of Northwest, as obligor under the equipment notes and the leases, the credit quality of NWA Corp. as guarantor, the value of the aircraft pledged as security for the equipment notes and the credit support provided by the liquidity facilities. Any future changes in the underlying credit quality of Northwest and/or NWA Corp. and their ratings, and/or material changes in the value of aircraft pledged as collateral, and/or changes in the status of the liquidity facilities or the credit quality of the liquidity provider could cause a change in the ratings of any or all of the securities being offered.

Northwest Airlines, Inc. and NWA Corp. are headquartered in Eagan, MN.

New York
Michael J. Mulvaney
Managing Director
Corporate Finance
Moody's Investors Service
JOURNALISTS: (212) 553-0376
SUBSCRIBERS: (212) 553-1653

New York
Richard Bittenbender
VP - Senior Credit Officer
Corporate Finance
Moody's Investors Service
JOURNALISTS: (212) 553-0376
SUBSCRIBERS: (212) 553-1653

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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