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Rating Action:

Moody's assigns Baa2 rating to Delta's 2010-2 EETC

Global Credit Research - 15 Nov 2010

$474 million of pass-through certificates rated

New York, November 15, 2010 -- Moody's Investors Service assigned a Baa2 rating to the $474 million of Class A Pass Through Certificates of the 2010-2 Pass Through Trust (the "Certificates") to be issued by Delta Air Lines, Inc. ("Delta").

The Class A Equipment Notes ("Notes") issued by Delta and acquired with the proceeds of the Certificates will be the primary assets of the Pass Through Trust. The Certificates' proceeds will finance 28 aircraft, ten of which are presently financed by Delta's 2001-1 Enhanced Equipment Trust Certificates ("EETC's"); ten serve as collateral for various third party financing agreements and eight are presently unencumbered. The 2001-1 EETC matures in September 2011; the third-party financings have various maturity dates between 2015 and 2021.

The transaction documentation provides for the possible issuance of a subordinated B tranche of certificates at any time. The subordination provisions of the inter-creditor agreement provide for the payment of interest on the Class B Certificates, if issued, before payments of principal on the Class A Certificates. Amounts due under the Certificates will, in any event, be subordinated to any amounts due on the Class A Liquidity Facility ("Liquidity Facility").

Rating Rationale

The ratings of the Certificates consider the credit quality of Delta as obligor under the Notes, Moody's opinion of the collateral protection of the Notes, the credit support of the Liquidity Facility, and certain structural characteristics of the Notes such as the cross-collateralization and cross-default provisions and the protections of Section 1110 of Title 11 of the United States Code (the "Code"). The assigned rating reflects Moody's opinion of the ability of the Pass Through Trustees to make timely payment of interest and the ultimate payment of principal at a date no later than the Final Legal Distribution date of November 23, 2020. Ten aircraft models spanning seven types comprise the collateral. The average and median ages of the aircraft are 10 and 9.5 years, respectively. Moody's believes that under a reorganization scenario, the probability of Delta disaffirming its obligations under the related equipment notes of the 2010-2 EETC would be greater than that of the other three Delta EETC's that provide cross-default and cross-collateralization of the underlying equipment notes. This is because of the few number of many models of aircraft in this transaction. Nevertheless, Moody's concluded that a loan-to-value of below sixty percent provides sufficient cushion to support a Baa2 rating. The cross-collateralization of the equipment notes should enhance the recovery for investors in the event of the rejection of the aircraft by Delta in the event of a bankruptcy filing by it and pursuant to the provisions of the Code or in the event of a default on the Certificates.

Any combination of future changes in the underlying credit quality or ratings of Delta, unexpected material changes in the value of the aircraft pledged as collateral, and/or changes in the status or terms of the liquidity facilities or the credit quality of the liquidity provider could cause Moody's' to change its ratings of the Certificates.

General Structure of the Series 2010-2 EETC

The proceeds of the Certificates will initially be held in escrow and deposited with the Depositary, The Bank of New York Mellon (short-term rating of P-1), until the issuance of each of the twenty-eight Notes. The interest on these funds will be sufficient to pay accrued interest on the outstanding Certificates during the Deposit Period which expires on or before October 31, 2011.

The collateral pool consists of the following 28 aircraft as follows:

(i) two 2009 vintage B737-700's;

(ii) six 2000 vintage B737-800's;

(iii) six 1996 and one 2001 vintage B757-200's;

(iv) three 2003 vintage B757-300's;

(v) three 2000 vintage B767-300ERs

(vi) one 2009 vintage B777-200LR;

(vii) one 2003 vintage A320-200;

(viii) one 2004 vintage A330-200;

(ix) one 2005 vintage A330-300;

(x) and two 1996 and one 1997 vintage MD-90-30's.

The Certificates issued to finance the aircraft are not obligations of, nor are they guaranteed by Delta. However, the amounts payable by Delta under the Notes will be sufficient to pay in full all interest and principal on the Certificates when due. The Notes will be secured by a perfected security interest in the aircraft. It is the opinion of counsel to Delta that the Notes will be entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code. Scheduled interest payments on the Certificates will be supported by the Liquidity Facility sized to pay up to three respective consecutive semi-annual interest payments in the event Delta defaults on its obligations under the Notes. The liquidity facilities do not provide for payments of principal due, nor on interest on the Certificate proceeds held in escrow during the Deposit Period. Natixis S.A. via its New York Branch (Moody's short-term rating of P-1) will provide the Liquidity Facility. The liquidity provider has a priority claim on proceeds from liquidation of the aircraft or the Notes and other Trust collateral ahead of any of the holders of the Certificates and is also the controlling party following a default under the Notes.

Cross-Collateralization

The ratings of the 2010-2 Certificates benefit from the cross-collateralization of the Notes, a feature which Moody's believes can enhance recovery in the event of a default. The structure provides that for each aircraft sold following a default, the excess of sale proceeds above the payoff of the related equipment note are made available to cover shortfalls due under any other equipment note related to the sale of any other aircraft. Importantly, following a default, all excess proceeds are retained until the settlement at maturity of the last of the 28 equipment notes or the indentures are cancelled.

Moody's considers the number of aircraft and the number of different aircraft models that comprise the collateral pool when assessing the benefit of a cross-collateralized EETC. At 28 aircraft covering nine different models, the collateral pool is sizeable and diverse. A majority of the included models are utilized on a mix of Delta's domestic and longer-haul international routes but do not constitute a significant concentration in any particular aircraft type within its combined mainline fleet.

The last rating action was on June 28, 2010 when Moody's assigned a Baa2 rating to Delta's 2010-1 EETC.

The principal methodologies used in this rating were Global Passenger Airlines published in March 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009.

Assignments:

..Issuer: Delta Air Lines, Inc.

....Senior Secured Enhanced Equipment Trust, Assigned Baa2

Delta Air Lines, Inc., headquartered in Atlanta, Georgia, is the world's largest airline, providing scheduled air transportation for passengers and cargo throughout the U.S. and around the world.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of assigning/maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
Jonathan Root
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Michael J. Mulvaney
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.

Moody's assigns Baa2 rating to Delta's 2010-2 EETC
No Related Data.
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