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By clicking “I AGREE”, you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s information that becomes accessible to you (the “Information”). References herein to “Moody’s” include Moody’s Corporation. and each of its subsidiaries and affiliates..

 

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Related Issuers
Rating Action:

Moody's rates the B tranches of Delta's 2010 EETCs at Ba3

07 Feb 2011

Approximately $235 million of pass through certificates rated

New York, February 07, 2011 -- Moody's Investors Service assigned Ba3 ratings to the respective Class B Pass Through Certificates, Series 2010-1B of the 2010-1B Pass Through Trust and the Series 2010-2B of the 2010-2B Pass Through Trust (together, "Certificates", individually "Series") to be issued by Delta Air Lines, Inc. ("Delta"). At the same time, the Baa2 ratings previously assigned by Moody's to the respective Class A Pass Through Certificates , Series 2010-1A which Delta issued on July 2, 2010, and Series 2010-2A, which Delta issued on November 22, 2010, and all of Delta's other EETC and debt ratings, are affirmed by Moody's and remain in force.

RATINGS RATIONALE

A portion of the 2010-2B Certificates' proceeds will immediately fund the purchase of 12 Class B equipment notes that Delta will issue. The remaining proceeds will be held in escrow, and will fund the purchase of the remaining 16 Class B equipment notes of that Series to be issued by Delta for refinancings concluding with Delta's 2001-1 EETC that has a scheduled maturity in September 2011. The proceeds of the 2010-1B Series will fund the immediate purchase of the Class B equipment notes ("Notes") of that Series to be issued by Delta. The company will use the Notes proceeds for general corporate purposes. Please refer to our press releases dated June 28, 2010 and November 15, 2010 on www.moodys.com for descriptions of the aircraft that comprise the respective collateral for each of these EETCs. The Class B Certificates of each Series will generally be subordinated to the Class A Certificates of that Series for the distribution of scheduled principal and interest payments on the Notes, as well as for non-scheduled distributions, if any. Scheduled interest payments on the Class B Certificates are supported by separate Class B Liquidity Facilities, each sized to pay up to three respective consecutive semi-annual interest payments in the event Delta defaults on its obligations under the Notes.

Assignments:

..Issuer: Delta Air Lines, Inc.

....Series 2010-1B Senior Secured Enhanced Equipment Trust, Class B, Assigned Ba3

....Series 2010-2B Senior Secured Enhanced Equipment Trust, Class B, Assigned Ba3

The ratings of the Certificates consider the credit quality of Delta (Corporate Family Rating of B2, stable outlook) as obligor under the Notes, Moody's opinion of the collateral protection of the Notes, the credit support provided by the liquidity facilities, the cross-subordination provisions of the inter-creditor agreement and certain structural characteristics of the Notes such as the cross-collateralization and cross-default provisions and the applicability of Section 1110 of Title 11 of the United States Code (the "Code"). The assigned ratings reflect 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 dates of July 2, 2017 for 2010-1B and May 23, 2017 for 2010-2B.

Series 2010-1B

Moody's believes that affirmation of the 2010-1 Series under a bankruptcy scenario would be likely because the aircraft collateral represent some of the youngest vintages for the respective models in Delta's fleet. Additionally, the B777-200LR's are among the newest aircraft in the fleet and fill a key role in Delta's strategy to increase capacity on its longest-haul routes between the U.S. and Asia. The structure's cross-default feature further supports the anticipation of affirmation given the relatively younger age and relevance of the collateral to Delta's route network, even under a reorganization scenario.

Moody's estimates the peak loan-to-value inclusive of benefit for the cross-collateralization feature at above 70%. The resultant over-collateralization through the Class B Certificates obligation provides an adequate cushion to support recovery on the B tranche in the event of a bankruptcy filing by Delta during the upcoming five years, the tenor of the Class B obligations. The cross-collateralization of the aircraft securing each equipment note underlying the transaction could enhance the recovery for investors in the event Delta was to dis-affirm its obligations under the equipment notes under a bankruptcy filing by it and pursuant to the provisions of the Code.

Series 2010-2B

Moody's believes that affirmation of the 2010-2 Series under a bankruptcy scenario is also likely but possibly somewhat less so than that of the other three of Delta's EETC's including 2010-1 that provide cross-default and cross-collateralization of the respective underlying equipment notes. This is because of the few number of many models of aircraft in this financing transaction.

Moody's estimates the peak loan-to-value inclusive of the benefit for the cross-collateralization feature at above 75% initially. The resultant over-collateralization through the Class B Certificates obligation should provide an adequate cushion to support a good recovery on the B tranche in the event of a bankruptcy filing by Delta during the upcoming five years, the tenor of the Class B obligations. The cross-collateralization of the aircraft securing each equipment note underlying this Series could enhance the recovery for investors in the event Delta was to disaffirm its obligations under the equipment notes under a bankruptcy filing by it and pursuant to the provisions of the Code.

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 could cause Moody's' to change its ratings of the Certificates.

The last rating action was on November 15, 2010 when Moody's assigned a Baa2 rating to the $474 million of Class A Pass Through Certificates, Series 2010-2A of the 2010-2 Pass Through Trust issued by Delta.

The principal methodologies used in this rating were Enhanced Equipment Trust and Equipment Trust Certificates published in December 2010, and Global Passenger Airlines published in March 2009.

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 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.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's rates the B tranches of Delta's 2010 EETCs at Ba3
No Related Data.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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​
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