e424b2
CALCULATION OF REGISTRATION FEE
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Proposed Maximum |
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Title of Each Class of Securities to be |
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Amount to be |
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Proposed Maximum |
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Aggregate Offering |
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Amount of |
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Registered |
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Registered |
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Offering Price Per Unit |
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Price |
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Registration Fee(1) |
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Pass Through Certificates, Series 2009-1A
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$ |
568,796,000 |
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100 |
% |
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$ |
568,796,000 |
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$ |
31,738.82 |
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Pass Through Certificates, Series 2009-1B
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$ |
119,944,000 |
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100 |
% |
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$ |
119,944,000 |
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$ |
6,692.88 |
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(1) |
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The total registration fee of $38,431.70 is calculated in
accordance with Rule 457(r) of the Securities Act of 1933, as amended. |
Filed Pursuant to
Rule 424(b)(2)
Registration No. 333-163173
PROSPECTUS
$688,740,000
2009-1
Pass Through Trusts
Pass Through Certificates,
Series 2009-1
Delta Air Lines, Inc. is creating two separate pass through
trusts that will issue Delta Air Lines, Inc. Class A and
Class B Pass Through Certificates,
Series 2009-1.
Each Certificate will represent an interest in the assets of the
related pass through trust. The proceeds from the sale of the
Certificates will initially be held in escrow and will
thereafter be used by the pass through trusts to acquire the
related series of equipment notes to be issued by Delta on a
full recourse basis. Payments on the equipment notes held in
each pass through trust will be passed through to the holders of
the Certificates of such trust. Distributions on the
Certificates will be subject to certain subordination provisions
described herein. The Certificates do not represent interests
in, or obligations of, Delta or any of its affiliates.
The Class A Certificates will rank generally senior to the
Class B Certificates, subject to the distribution
provisions described herein.
The equipment notes expected to be held by each pass through
trust will be issued for each of (a) ten Boeing
737-832
aircraft, nine Boeing
757-232
aircraft and three
767-332ER
aircraft, in each case delivered new to Delta from 1999 to 2000,
and (b) two Boeing
737-732
aircraft and three Boeing
777-232LR
aircraft, in each case delivered new to Delta in 2009. The
equipment notes issued for each aircraft will be secured by a
security interest in such aircraft. Interest on the equipment
notes will be payable semiannually on June 17 and December 17 of
each year, commencing on June 17, 2010, and principal on
the equipment notes is scheduled for payment on June 17 and
December 17 of certain years, commencing on June 17, 2010.
Natixis S.A., acting via its New York Branch, will provide a
separate liquidity facility for each of the Class A and
Class B Certificates, in each case in an amount sufficient
to make three semiannual interest distributions on the
outstanding balance of the Certificates of such Class.
The Certificates will not be listed on any national securities
exchange.
Investing in the Certificates involves risks. See Risk
Factors section beginning on page 19 of this
prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
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Aggregate Face
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Final Expected
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Price to
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Pass Through Certificates
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Amount
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Interest Rate
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Distribution Date
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Public(1)
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Class A
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$
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568,796,000
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7.75
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%
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December 17, 2019
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100
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%
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Class B
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$
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119,944,000
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9.75
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%
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December 17, 2016
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100
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%
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(1) |
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Plus accrued interest, if any, from the date of issuance. |
The underwriters will purchase all of the Certificates if any
are purchased. The aggregate proceeds from the sale of the
Certificates will be $688,740,000. Fees equal to 2.0% of the
aggregate face amount of the Certificates have been or will be
paid by Delta in respect of this offering. Such fees have been
or will be paid to the underwriters and certain bank lenders to
Delta pursuant to the arrangement described herein under
Underwriting. Delivery of the Certificates in
book-entry form will be made on or about November 24, 2009
against payment in immediately available funds.
Joint
Bookrunners & Joint Structuring Agents
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Goldman,
Sachs & Co. |
MORGAN
STANLEY |
The date of this prospectus is November 18, 2009.
You should rely only on the information contained in this
prospectus, any prospectus supplement, any related free writing
prospectus issued by us (which we refer to as a company
free writing prospectus) and the documents
incorporated by reference in this prospectus or to which we have
referred you. We have not, and Goldman, Sachs & Co.
and Morgan Stanley & Co. Incorporated have not,
authorized anyone to provide you with different information. If
anyone provides you with different or inconsistent information,
you should not rely on it. This prospectus, any prospectus
supplement and any related company free writing prospectus do
not constitute an offer to sell, or a solicitation of an offer
to purchase, the securities offered by this prospectus, any
prospectus supplement and any related company free writing
prospectus in any jurisdiction to or from any person to whom or
from whom it is unlawful to make such offer or solicitation of
an offer in such jurisdiction. You should not assume that the
information contained in this prospectus, any prospectus
supplement and any related company free writing prospectus or
any document incorporated by reference is accurate as of any
date other than the date on the front cover of the applicable
document. Neither the delivery of this prospectus, any
prospectus supplement and any related company free writing
prospectus nor any distribution of securities pursuant to this
prospectus shall, under any circumstances, create any
implication that there has been no change in our business,
financial condition, results of operations or prospects, or in
the affairs of the Trusts, the Depositary or the Liquidity
Provider, since the date of this prospectus.
TABLE OF
CONTENTS
Prospectus
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Page
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iii
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iii
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iii
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1
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1
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Page
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58
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Appendix I
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Appendix II
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Appendix III
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Appendix IV
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Appendix V
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ii
PRESENTATION OF
INFORMATION
In this prospectus, references to Delta, the
Company, we, us and
our refer to Delta Air Lines, Inc. and our
wholly-owned subsidiaries. With respect to information as of
dates prior to October 30, 2008, these references do not
include our wholly-owned subsidiary, Northwest Airlines
Corporation (Northwest ), and its
wholly-owned subsidiaries, including Northwest Airlines, Inc.
We have given certain capitalized terms specific meanings for
purposes of this prospectus. The Index of Defined
Terms attached as Appendix I to this prospectus lists
the page in this prospectus on which we have defined each such
term.
At varying places in this prospectus, we refer you to other
sections for additional information by indicating the caption
heading of such other sections. The page on which each principal
caption included in this prospectus can be found is listed in
the foregoing Table of Contents.
FORWARD-LOOKING
STATEMENTS
Statements in this prospectus, any prospectus supplement, any
related company free writing prospectus and the documents
incorporated by reference herein and therein (or otherwise made
by us or on our behalf) that are not historical facts, including
statements regarding our estimates, expectations, beliefs,
intentions, projections or strategies for the future may be
forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. When used in this
prospectus, any prospectus supplement, any related company free
writing prospectus and the documents incorporated herein and
therein by reference, the words expects,
believes, plans,
anticipates, and similar expressions are intended to
identify forward-looking statements. All forward-looking
statements involve a number of risks and uncertainties that
could cause actual results to differ materially from the
estimates, expectations, beliefs, intentions, projections and
strategies reflected in or suggested by the forward-looking
statements. These risks and uncertainties include, but are not
limited to the risk factors discussed below under the heading
Risk Factors. All forward-looking statements speak
only as of the date made, and we undertake no obligation to
publicly update or revise any forward-looking statements to
reflect events or circumstances that may arise after the date of
this prospectus.
WHERE YOU CAN
FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange
Commission (the SEC ). You may
read and copy this information at the SECs public
reference room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. Our SEC
filings are also available to the public from the SECs
website at
http://www.sec.gov
and at our website at
http://www.delta.com.
The contents of our website are not incorporated into this
prospectus.
This prospectus is part of a registration statement that we have
filed with the SEC relating to the securities to be offered.
This prospectus does not contain all of the information we have
included in the registration statement and the accompanying
exhibits and schedules in accordance with the rules and
regulations of the SEC, and we refer you to the omitted
information. The statements this prospectus makes pertaining to
the content of any contract, agreement or other document that is
an exhibit to the registration statement necessarily are
summaries of their material provisions and do not describe all
exceptions and qualifications contained in those contracts,
agreements or documents. You should read those contracts,
agreements or documents for information that may be important to
you. The registration statement, exhibits and schedules are
available at the SECs public reference room or through its
Internet site.
iii
We incorporate by reference in this prospectus
certain documents that we file with the SEC, which means:
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we can disclose important information to you by referring you to
those documents;
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information incorporated by reference is considered to be part
of this prospectus, even though it is not repeated in this
prospectus; and
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information that we file later with the SEC will automatically
update and supersede this prospectus.
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The following documents listed below that we have previously
filed with the SEC (Commission File Number
001-05424)
are incorporated by reference (other than reports or portions
thereof furnished under Items 2.02 or 7.01 of
Form 8-K):
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Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008;
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Quarterly Reports on
Form 10-Q
for the quarterly periods ended March 31, 2009,
June 30, 2009 and September 30, 2009;
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Current Reports on
Form 8-K
filed on January 23, 2009, May 1, 2009, June 8,
2009, August 12, 2009, September 16, 2009 and
September 22, 2009 (other than the portions of those
documents not deemed to be filed);
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Exhibit 99.4 to Current Report on
8-K filed on
October 31, 2008 and Exhibit 99.1 and
Exhibit 99.2 to the Current Report on
Form 8-K/A
filed on November 7, 2008; and
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Unaudited Pro Forma Condensed Combined Financial Information
included in Post-Effective Amendment No. 1 to the
Registration Statement on
Form S-8
(File
No. 333-154818)
filed on April 21, 2009.
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All documents filed by us under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the
Exchange Act ) (other than reports or
portions thereof furnished under Items 2.02 or 7.01 of
Form 8-K)
from the date of this prospectus and prior to the termination of
this offering shall also be deemed to be incorporated by
reference in this prospectus.
Any party to whom this prospectus is delivered may request a
copy of these filings (other than any exhibits unless
specifically incorporated by reference into this prospectus), at
no cost, by writing or telephoning Delta at Delta Air Lines,
Inc., Investor Relations, Dept. No. 829,
P.O. Box 20706, Atlanta, GA 30320, telephone no.
(404) 715-2600.
iv
SUMMARY
This summary highlights basic information about our company
and this offering. This summary may not contain all of the
information that may be important to you. You should read this
entire prospectus, any prospectus supplement and any related
company free writing prospectus carefully, including the section
entitled Risk Factors in this prospectus, as well as
the materials filed by Delta with the SEC that are considered to
be a part of this prospectus, any prospectus supplement and any
related company free writing prospectus before making an
investment decision. See Where You Can Find More
Information.
Summary of Terms
of Certificates
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Class A
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Class B
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Certificates
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Certificates
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Aggregate face amount
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$568,796,000
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$119,944,000
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Interest rate
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7.75%
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9.75%
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Ratings(1):
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Moodys
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Baa2
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Ba2
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Standard & Poors
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A-
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BBB-
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Initial loan to Aircraft value ratio
(cumulative)(2)(3)
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52.7%
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61.0%
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Expected maximum loan to Aircraft value ratio
(cumulative)(3)
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52.7%
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61.0%
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Expected principal distribution window (in years from Issuance
Date)
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0.6-10.1
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0.6-7.1
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Initial average life (in years from Issuance Date)
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6.1
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4.2
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Regular Distribution Dates
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June 17 and December 17
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June 17 and December 17
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Final expected Regular Distribution
Date(4)
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December 17, 2019
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December 17, 2016
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Final Legal Distribution
Date(5)
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June 17, 2021
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June 17, 2018
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Minimum
denomination(6)
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$2,000
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$2,000
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Section 1110 protection
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Yes
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Yes
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Liquidity Facility coverage
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3 semiannual interest
payments
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3 semiannual interest
payments
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(1) |
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A rating is not a recommendation to purchase, hold or sell the
Certificates, and such rating does not address market price or
suitability for a particular investor. There can be no assurance
that the ratings assigned to the Certificates on the Issuance
Date will not be lowered or withdrawn by one or more Rating
Agencies. See Risk Factors Risk Factors
Relating to the Certificates and the Offering The
ratings of the Certificates are not a recommendation to buy and
may be lowered or withdrawn in the future. |
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(2) |
|
These percentages are calculated assuming that each of the
aircraft listed under Equipment Notes and the
Aircraft in this summary has been subjected to an
Indenture and that the Trusts have purchased the related
Equipment Notes for each such aircraft as of June 17, 2011
(the first Regular Distribution Date that occurs after the
Outside Termination Date). In calculating these percentages, we
have assumed that the aggregate appraised value of all such
aircraft is $1,008,476,871 as of such date. The appraisal value
is only an estimate and reflects certain assumptions. See
Description of the Aircraft and the Appraisals
The Appraisals. |
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(3) |
|
See Loan to Aircraft Value Ratios in
this summary for the method and assumptions we used in
calculating the loan to Aircraft value ratios and a discussion
of certain ways that such loan to Aircraft value ratios could
change. |
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(4) |
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Each series of Equipment Notes will mature on the final expected
Regular Distribution Date for the Certificates issued by the
Trust that owns such Equipment Notes. |
1
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(5) |
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The Final Legal Distribution Date for each of the Class A
and Class B Certificates is the date which is
18 months from the final expected Regular Distribution Date
for that class of Certificates, which represents the period
corresponding to the applicable Liquidity Facility coverage of
three successive semiannual interest payments. |
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(6) |
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The Certificates will be issued in minimum denominations of
$2,000 (or such other denomination that is the lowest integral
multiple of $1,000 that is, at the time of issuance, equal to at
least 1,000 euros) and integral multiples of $1,000 in excess
thereof. |
2
Equipment Notes
and the Aircraft
The Trusts are expected to hold Equipment Notes for, and secured
by, each of (i) ten Boeing
737-832
aircraft, nine Boeing
757-232
aircraft and three
767-332ER
aircraft, in each case delivered new to Delta from 1999 to 2000
(such aircraft, collectively, the
2000-1
Aircraft ), and (ii) two Boeing
737-732
aircraft and three Boeing
777-232LR
aircraft, in each case delivered new to Delta in 2009 (such
aircraft, collectively, the 2009
Aircraft ). Each
2000-1
Aircraft and 2009 Aircraft (each such aircraft, an
Aircraft ) is owned and is being
operated by Delta. See Description of the Aircraft and the
Appraisals for a description of each Aircraft. Set forth
below is certain information about the Equipment Notes expected
to be held in the Trusts and each of the Aircraft expected to
secure such Equipment Notes.
On and subject to the terms and conditions of the Note Purchase
Agreement and the forms of financing agreements attached to the
Note Purchase Agreement, Delta agrees to enter into a secured
debt financing with respect to each
2000-1
Aircraft on or prior to December 31, 2010 and with respect
to each 2009 Aircraft within 90 days after the Issuance
Date.
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Initial Principal
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Amount of
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Registration
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Manufacturers
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Series A and B
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Appraised
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Aircraft Type
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Number
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Serial Number
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Month of Delivery
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Equipment Notes
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Value(1)
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Boeing
737-732
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N306DQ
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29633
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January 2009
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$
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26,034,000
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$
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38,854,667
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Boeing
737-732
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N307DQ
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29679
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January 2009
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26,040,000
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38,864,000
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Boeing
737-832
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N376DA
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29624
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January 1999
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14,760,000
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23,771,667
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Boeing
737-832
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N378DA
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30265
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August 1999
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15,238,000
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24,516,000
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Boeing
737-832
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N380DA
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30266
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September 1999
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15,269,000
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24,542,333
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Boeing
737-832
|
|
N382DA
|
|
|
30345
|
|
|
October 1999
|
|
|
15,963,000
|
|
|
|
25,656,667
|
|
Boeing
737-832
|
|
N384DA
|
|
|
30347
|
|
|
November 1999
|
|
|
16,019,000
|
|
|
|
25,747,667
|
|
Boeing
737-832
|
|
N386DA
|
|
|
30373
|
|
|
December 1999
|
|
|
16,040,000
|
|
|
|
25,780,667
|
|
Boeing
737-832
|
|
N388DA
|
|
|
30375
|
|
|
February 2000
|
|
|
15,946,000
|
|
|
|
25,628,333
|
|
Boeing
737-832
|
|
N390DA
|
|
|
30536
|
|
|
April 2000
|
|
|
16,609,000
|
|
|
|
26,669,000
|
|
Boeing
737-832
|
|
N392DA
|
|
|
30561
|
|
|
May 2000
|
|
|
16,223,000
|
|
|
|
26,049,667
|
|
Boeing
737-832
|
|
N394DA
|
|
|
30562
|
|
|
June 2000
|
|
|
16,852,000
|
|
|
|
27,060,000
|
|
Boeing
757-232
|
|
N696DL
|
|
|
29728
|
|
|
January 1999
|
|
|
12,479,000
|
|
|
|
20,098,000
|
|
Boeing
757-232
|
|
N698DL
|
|
|
29911
|
|
|
August 1999
|
|
|
12,819,000
|
|
|
|
20,622,000
|
|
Boeing
757-232
|
|
N6700
|
|
|
30337
|
|
|
September 1999
|
|
|
13,025,000
|
|
|
|
20,934,000
|
|
Boeing
757-232
|
|
N6702
|
|
|
30188
|
|
|
November 1999
|
|
|
12,957,000
|
|
|
|
20,824,000
|
|
Boeing
757-232
|
|
N6704Z
|
|
|
30396
|
|
|
April 2000
|
|
|
13,252,000
|
|
|
|
21,279,000
|
|
Boeing
757-232
|
|
N6706Q
|
|
|
30422
|
|
|
May 2000
|
|
|
13,260,000
|
|
|
|
21,293,000
|
|
Boeing
757-232
|
|
N6708D
|
|
|
30480
|
|
|
July 2000
|
|
|
13,428,000
|
|
|
|
21,561,000
|
|
Boeing
757-232
|
|
N6710E
|
|
|
30482
|
|
|
August 2000
|
|
|
13,603,000
|
|
|
|
21,843,000
|
|
Boeing
757-232
|
|
N6712B
|
|
|
30484
|
|
|
October 2000
|
|
|
13,744,000
|
|
|
|
22,050,000
|
|
Boeing
767-332ER
|
|
N1602
|
|
|
29694
|
|
|
January 1999
|
|
|
22,558,000
|
|
|
|
36,330,000
|
|
Boeing
767-332ER
|
|
N1604R
|
|
|
30180
|
|
|
April 1999
|
|
|
23,035,000
|
|
|
|
37,060,000
|
|
Boeing
767-332ER
|
|
N16065
|
|
|
30199
|
|
|
June 1999
|
|
|
23,370,000
|
|
|
|
37,600,000
|
|
Boeing
777-232LR
|
|
N705DN
|
|
|
29742
|
|
|
March 2009
|
|
|
96,754,000
|
|
|
|
144,408,000
|
|
Boeing
777-232LR
|
|
N706DN
|
|
|
30440
|
|
|
April 2009
|
|
|
96,752,000
|
|
|
|
144,405,000
|
|
Boeing
777-232LR
|
|
N707DN
|
|
|
39091
|
|
|
April 2009
|
|
|
96,711,000
|
|
|
|
144,343,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
|
$
|
688,740,000
|
|
|
$
|
1,067,790,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The appraised value of each
Aircraft set forth above is the lesser of the average and median
appraised value of such Aircraft as appraised by three
independent appraisal and consulting firms. Such appraisals
indicate appraised base value, adjusted for the maintenance
status of such Aircraft at or around the time of such appraisals
(but assuming the engines are in a half-time condition). The
appraisers based their appraisals on varying assumptions (which
may not reflect current market conditions) and methodologies.
See Description of the Aircraft and the
Appraisals The Appraisals. An appraisal is
only an estimate of value and you should not rely on any
appraisal as a measure of realizable value. See Risk
Factors Risk Factors Relating to the Certificates
and the Offering Appraisals should not be relied
upon as a measure of realizable value of the Aircraft.
|
3
Loan to Aircraft
Value Ratios
The following table provides loan to Aircraft value ratios
(LTVs) for each class of Certificates,
assuming that each of the Aircraft has been subjected to an
Indenture and that the Trusts have purchased the related
Equipment Notes for each such Aircraft, as of June 17, 2011
(the first Regular Distribution Date that occurs after the
Outside Termination Date) and each Regular Distribution Date
thereafter. The LTVs for any period prior to June 17, 2011
are not included, since during such period all of the Equipment
Notes expected to be acquired by the Trusts and the related
Aircraft will not be included in the calculation. The table is
not a forecast or prediction of expected or likely LTVs, but
simply a mathematical calculation based upon one set of
assumptions. See Risk Factors Risk Factors
Relating to the Certificates and the Offering
Appraisals should not be relied upon as a measure of realizable
value of the Aircraft.
We compiled the following table on an aggregate
basis. However, the Equipment Notes issued under an
Indenture are entitled only to certain specified
cross-collateralization provisions as described under
Description of the Equipment Notes
Security. The relevant LTVs in a default situation for the
Equipment Notes issued under a particular Indenture would depend
on various factors, including the extent to which the debtor or
trustee in bankruptcy agrees to perform Deltas obligations
under the Indentures. Therefore, the following aggregate LTVs
are presented for illustrative purposes only and should not be
interpreted as indicating the degree of cross-collateralization
available to the holders of the Certificates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Pool
Balance(2)
|
|
|
LTV(3)
|
|
|
|
Assumed
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Date
|
|
Aircraft
Value(1)
|
|
|
Certificates
|
|
|
Certificates
|
|
|
Certificates
|
|
|
Certificates
|
|
|
June 17, 2011
|
|
$
|
1,008,476,871
|
|
|
$
|
531,726,709
|
|
|
$
|
83,450,714
|
|
|
|
52.7
|
%
|
|
|
61.0
|
%
|
December 17, 2011
|
|
|
988,705,606
|
|
|
|
498,973,577
|
|
|
|
66,379,759
|
|
|
|
50.5
|
|
|
|
57.2
|
|
June 17, 2012
|
|
|
968,934,341
|
|
|
|
467,145,909
|
|
|
|
63,981,106
|
|
|
|
48.2
|
|
|
|
54.8
|
|
December 17, 2012
|
|
|
949,163,075
|
|
|
|
436,237,174
|
|
|
|
61,630,346
|
|
|
|
46.0
|
|
|
|
52.5
|
|
June 17, 2013
|
|
|
929,391,810
|
|
|
|
406,247,370
|
|
|
|
59,327,479
|
|
|
|
43.7
|
|
|
|
50.1
|
|
December 17, 2013
|
|
|
909,620,545
|
|
|
|
377,176,498
|
|
|
|
57,072,504
|
|
|
|
41.5
|
|
|
|
47.7
|
|
June 17, 2014
|
|
|
889,250,775
|
|
|
|
348,806,703
|
|
|
|
54,818,738
|
|
|
|
39.2
|
|
|
|
45.4
|
|
December 17, 2014
|
|
|
868,006,567
|
|
|
|
321,091,402
|
|
|
|
52,548,801
|
|
|
|
37.0
|
|
|
|
43.0
|
|
June 17, 2015
|
|
|
845,554,404
|
|
|
|
294,415,203
|
|
|
|
49,822,802
|
|
|
|
34.8
|
|
|
|
40.7
|
|
December 17, 2015
|
|
|
821,943,117
|
|
|
|
268,434,208
|
|
|
|
47,103,587
|
|
|
|
32.7
|
|
|
|
38.4
|
|
June 17, 2016
|
|
|
798,180,803
|
|
|
|
242,681,481
|
|
|
|
44,469,133
|
|
|
|
30.4
|
|
|
|
36.0
|
|
December 17, 2016
|
|
|
774,418,490
|
|
|
|
218,054,484
|
|
|
|
0
|
|
|
|
28.2
|
|
|
|
0.0
|
|
June 17, 2017
|
|
|
750,656,176
|
|
|
|
194,553,219
|
|
|
|
0
|
|
|
|
25.9
|
|
|
|
0.0
|
|
December 17, 2017
|
|
|
726,893,862
|
|
|
|
172,177,684
|
|
|
|
0
|
|
|
|
23.7
|
|
|
|
0.0
|
|
June 17, 2018
|
|
|
703,131,548
|
|
|
|
150,927,880
|
|
|
|
0
|
|
|
|
21.5
|
|
|
|
0.0
|
|
December 17, 2018
|
|
|
679,369,234
|
|
|
|
130,803,806
|
|
|
|
0
|
|
|
|
19.3
|
|
|
|
0.0
|
|
June 17, 2019
|
|
|
655,736,327
|
|
|
|
111,820,086
|
|
|
|
0
|
|
|
|
17.1
|
|
|
|
0.0
|
|
December 17, 2019
|
|
|
632,414,899
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
|
(1)
|
|
In calculating the aggregate
Assumed Aircraft Value, we assumed that the appraised value of
each Aircraft determined as described under Description of
the Aircraft and the Appraisals declines in accordance
with the Depreciation Assumption described under
Description of the Equipment Notes Loan to
Value Ratios of Equipment Notes. Other rates or methods of
depreciation could result in materially different LTVs. We
cannot assure you that the depreciation rate and method assumed
for purposes of the above table are the ones most likely to
occur or predict the actual future value of any Aircraft. See
Risk Factors Risk Factors Relating to the
Certificates and the Offering Appraisals should not
be relied upon as a measure of realizable value of the
Aircraft.
|
|
(2)
|
|
The pool balance for
each class of Certificates indicates, as of any date, after
giving effect to any principal distributions expected to be made
on such date, the portion of the original face amount of such
class of
|
4
|
|
|
|
|
Certificates that has not been
distributed to Certificateholders and assumes that each of the
Aircraft has been subjected to an Indenture and that the Trusts
have purchased the related Equipment Notes for each such
Aircraft as of June 17, 2011 (the first Regular
Distribution Date that occurs after the Outside Termination
Date).
|
|
(3)
|
|
We obtained the LTVs for each class
of Certificates for each Regular Distribution Date by dividing
(i) the expected outstanding pool balance of such Class
(together, in the case of the Class B Certificates, with
the expected outstanding pool balance of the Class A
Certificates) after giving effect to the principal distributions
expected to be made on such date, by (ii) the aggregate
Assumed Aircraft Value of all of the Aircraft on such date based
on the assumptions described above. The outstanding pool
balances and LTVs will change if any Equipment Notes are
redeemed or purchased, if a default in payment on any Equipment
Notes occurs or if any Aircraft is not subjected to an Indenture
and the related Equipment Notes are not acquired by the Trusts.
|
5
Cash Flow
Structure
This diagram illustrates the structure for the offering of the
Certificates and certain cash flows.
|
|
|
(1) |
|
Delta will issue Series A and Series B Equipment Notes
in respect of each Aircraft. The Equipment Notes with respect to
each Aircraft will be issued under a separate Indenture. |
|
(2) |
|
The separate Liquidity Facility for each of the Class A and
Class B Certificates is expected to cover up to three
semiannual interest distributions on the Class A and
Class B Certificates, as the case may be, except that the
Liquidity Facilities will not cover interest on Deposits. |
|
(3) |
|
The proceeds of the offering of each class of Certificates will
initially be held in escrow and deposited with the Depositary,
pending the financing of each Aircraft under the related
Indenture. The Depositary will hold such funds as
interest-bearing Deposits. Each Trust will withdraw funds from
the Deposits relating to such Trust to purchase from Delta the
related series of Equipment Notes from time to time as each
Aircraft is subjected to an Indenture. The Scheduled Payments of
interest on the Equipment Notes and on the Deposits relating to
a Trust, taken together, will be sufficient to pay accrued
interest on the outstanding Certificates of such Trust. Under
certain circumstances, funds in Deposits relating to a Trust
will be withdrawn prior to the Delivery Period Termination Date
and distributed to the holders of Certificates of such Trust,
together with accrued and unpaid interest thereon, but without
any premium. See Description of the Deposit
Agreements Other Withdrawals and Return of
Deposits. If any funds remain as Deposits with respect to
any Trust as of the Delivery Period Termination Date, such
remaining funds will be distributed, with accrued and unpaid
interest on such remaining funds, but without any premium, to
the holders of the related class of Certificates. See
Description of the Deposit Agreements Other
Withdrawals and Return of Deposits. No interest will
accrue with respect to the Deposits after they have been fully
withdrawn. |
6
The
Offering
|
|
|
Trusts |
|
Each of the Class A Trust and Class B Trust will be
formed pursuant to a separate trust supplement entered into
between Delta and U.S. Bank Trust National Association to a
basic pass through trust agreement between Delta and U.S. Bank
Trust National Association (as successor trustee to State
Street Bank and Trust Company of Connecticut, National
Association), as Trustee under each Trust. Each class of
Certificates will represent fractional undivided interests in
the related Trust. |
|
Certificates Offered |
|
Class A Certificates.
|
|
|
|
Class B Certificates.
|
|
Use of Proceeds |
|
The proceeds from the sale of the Certificates of each Trust
will initially be held in escrow and deposited with the
Depositary, pending the financing of each Aircraft under an
Indenture. Each Trust will withdraw funds from the escrow
relating to such Trust to acquire from Delta the related series
of Equipment Notes to be issued as the Aircraft are subjected to
the related Indentures. |
|
|
|
The Equipment Notes will be full recourse obligations of Delta.
The Aircraft are currently subject to liens under existing
financings, including a prior Delta enhanced equipment trust
certificate transaction and other secured financings. After the
Aircraft are released from the liens of such existing
financings, the Aircraft are expected to be subjected to the
Indentures in connection with this offering. Delta will use the
proceeds from the issuance of the Equipment Notes issued with
respect to: (a) the 2009 Aircraft to reimburse itself for
the prepayment of the Mortgage Financings with respect to such
2009 Aircraft, and (b) the
2000-1
Aircraft to reimburse itself for the refinancing of such
2000-1
Aircraft after the maturity of the
2000-1 EETC
in November 2010. Delta will use any proceeds not used in
connection with the foregoing for general corporate purposes. |
|
Subordination Agent, Trustee, Paying Agent and Loan Trustee |
|
U.S. Bank Trust National Association. |
|
Escrow Agent |
|
U.S. Bank National Association. |
|
Depositary |
|
The Bank of New York Mellon. |
|
Liquidity Provider for the Class A and Class B
Certificates |
|
Initially, Natixis S.A., acting via its New York Branch. |
|
Trust Property |
|
The property of each Trust will include: |
|
|
|
subject to the Intercreditor Agreement, the
Equipment Notes acquired by such Trust under the Note Purchase
Agreement prior to the Delivery Period Termination Date, all
monies at any time paid thereon and all monies due and to become
due thereunder;
|
7
|
|
|
|
|
the rights of such Trust to acquire Equipment Notes
under the Note Purchase Agreement;
|
|
|
|
the rights of such Trust under the applicable Escrow
Agreement to request the Escrow Agent to withdraw from the
Depositary funds sufficient to enable such Trust to purchase the
related series of Equipment Notes upon the financing of an
Aircraft under the related Indenture prior to the Delivery
Period Termination Date;
|
|
|
|
the rights of such Trust under the Intercreditor
Agreement (including all monies receivable in respect of such
rights);
|
|
|
|
all monies receivable under the separate Liquidity
Facility for such Trust; and
|
|
|
|
funds from time to time deposited with the
applicable Trustee in accounts relating to such Trust.
|
|
Regular Distribution Dates |
|
June 17 and December 17 of each year, commencing on
June 17, 2010. |
|
Record Dates |
|
The fifteenth day preceding the related Distribution Date. |
|
Distributions |
|
The Trustee of each Trust will distribute payments of principal,
Make-Whole Amount (if any) and interest received on the
Equipment Notes held in such Trust to the holders of the
Certificates of such Trust, subject to the subordination
provisions set forth in the Intercreditor Agreement. |
|
|
|
Subject to the subordination provisions set forth in the
Intercreditor Agreement, |
|
|
|
Scheduled Payments of principal and interest made on
the Equipment Notes will be distributed on the applicable
Regular Distribution Dates; and
|
|
|
|
payments in respect of, or any proceeds of, any
Equipment Notes or the Collateral under any Indenture, including
payments resulting from any early redemption of such Equipment
Notes, will be distributed on a Special Distribution Date after
not less than 15 days notice to Certificateholders.
|
|
|
|
See Escrowed Funds and
Withdrawal and Return of Escrowed Funds
below for a description of various distributions relating to the
Deposits under certain circumstances. |
|
Intercreditor Agreement |
|
The Trustees, the Liquidity Providers and the Subordination
Agent will enter into the Intercreditor Agreement. The
Intercreditor Agreement prescribes how payments made on the
Equipment Notes held by the Subordination Agent and made under
each Liquidity Facility will be distributed. The Intercreditor
Agreement also sets forth agreements among the Trustees and the
Liquidity Providers relating to who will control the exercise of
remedies under the Equipment Notes and the Indentures. |
8
|
|
|
Subordination |
|
Under the Intercreditor Agreement, after payment of certain fees
and expenses, distributions on the Certificates generally will
be made in the following order: |
|
|
|
first, to the holders of the Class A
Certificates to make distributions in respect of interest on the
Class A Certificates.
|
|
|
|
second, to the holders of the Class B
Certificates to make distributions in respect of interest on the
Eligible B Pool Balance.
|
|
|
|
third, to the holders of the Class A
Certificates to make distributions in respect of the Pool
Balance of the Class A Certificates.
|
|
|
|
fourth, to the holders of the Class B
Certificates to make distributions in respect of interest on the
Pool Balance of the Class B Certificates not previously
distributed under clause second above.
|
|
|
|
fifth, to the holders of the Class B
Certificates to make distributions in respect of the Pool
Balance of the Class B Certificates.
|
|
|
|
Certain distributions to the Liquidity Providers will be made
prior to distributions on the Class A and Class B
Certificates, as discussed under Description of the
Intercreditor Agreement Priority of
Distributions. |
|
Control of Loan Trustee |
|
The holders of at least a majority of the outstanding principal
amount of Equipment Notes issued under each Indenture will be
entitled to direct the Loan Trustee under such Indenture in
taking action as long as no Indenture Event of Default has
occurred and is continuing thereunder. If an Indenture Event of
Default is continuing under an Indenture, subject to certain
conditions, the Controlling Party will be entitled to direct the
Loan Trustee under such Indenture in taking action (including in
exercising remedies, such as accelerating such Equipment Notes
or foreclosing the lien on the Aircraft with respect to which
such Equipment Notes were issued). |
|
|
|
The Controlling Party will be: |
|
|
|
if Final Distributions have not been paid in full to
the holders of the Class A Certificates, the Class A
Trustee;
|
|
|
|
if Final Distributions have been paid in full to the
holders of the Class A Certificates, but not to the holders
of the Class B Certificates, the Class B Trustee;
|
|
|
|
under certain circumstances, and notwithstanding the
foregoing, the Liquidity Provider with the largest amount owed
to it.
|
|
Limitation on Sale of Aircraft or Equipment Notes |
|
In exercising remedies during the nine months after the earlier
of (a) the acceleration of the Equipment Notes issued
pursuant to any Indenture and (b) the bankruptcy or
insolvency of Delta, the Controlling Party may not, without the |
9
|
|
|
|
|
consent of each Trustee (other than the Trustee of any Trust all
of the Certificates of which are held or beneficially owned by
Delta or Deltas affiliates), direct the sale of such
Equipment Notes or the Aircraft subject to the lien of such
Indenture for less than certain specified minimum amounts. See
Description of the Intercreditor Agreement
Intercreditor Rights Limitation on Exercise of
Remedies for a description of such minimum amounts and
certain other limitations on the exercise of remedies. |
|
Right to Buy Other Classes of Certificates |
|
If Delta is in bankruptcy and certain other specified events
have occurred: |
|
|
|
the Class B Certificateholders (other than
Delta or any of its affiliates) will have the right to purchase
all, but not less than all, of the Class A Certificates; and
|
|
|
|
if an additional class of junior certificates has
been issued, the holders (other than Delta or any of its
affiliates) of such additional junior certificates will have the
right to purchase all, but not less than all, of the
Class A and Class B Certificates.
|
|
|
|
The purchase price, in each case described above, will be the
outstanding Pool Balance of the applicable class of Certificates
plus accrued and undistributed interest, without any premium,
but including any other amounts then due and payable to the
Certificateholders of such class or classes, as applicable. |
|
Liquidity Facilities |
|
Under the Liquidity Facility for each of the Class A and
Class B Trusts, the applicable Liquidity Provider is
required, if necessary, to make advances in an aggregate amount
sufficient to pay interest distributions on the applicable
Certificates on up to three successive semiannual Regular
Distribution Dates (without regard to any expected future
distributions of principal on such Certificates) at the
applicable interest rate for such Certificates. Drawings under
the Liquidity Facilities cannot be used to pay any amount in
respect of the Certificates other than such interest and will
not cover interest payable on amounts held in escrow as Deposits
with the Depositary. |
|
|
|
Notwithstanding the subordination provisions under the
Intercreditor Agreement, the holders of the Certificates issued
by the Class A Trust or the Class B Trust will be
entitled to receive and retain the proceeds of drawings under
the Liquidity Facility for such Trust. |
|
|
|
Upon each drawing under any Liquidity Facility to pay interest
distributions on the related Certificates, the Subordination
Agent will be obligated to reimburse the applicable Liquidity
Provider for the amount of such drawing, together with interest
on that drawing. Such reimbursement obligation and all interest,
fees and other amounts owing to the Liquidity |
10
|
|
|
|
|
Provider under each Liquidity Facility and certain other
agreements will rank equally with comparable obligations
relating to the other Liquidity Facility and will rank senior to
all of the Certificates in right of payment. |
|
Escrowed Funds |
|
Funds in escrow for the Certificateholders of each Trust will be
held by the Depositary as Deposits relating to such Trust.
Subject to certain conditions, each Trustee may withdraw these
funds from time to time to purchase the related series of
Equipment Notes in respect of an Aircraft prior to the Delivery
Period Termination Date. On each Regular Distribution Date, the
Depositary will pay interest accrued on the Deposits relating to
each Trust at a rate per annum equal to the interest rate
applicable to the Certificates issued by such Trust. The
Deposits relating to each Trust and interest paid thereon will
not be subject to the subordination provisions under the
Intercreditor Agreement. The Deposits cannot be used to pay any
other amount in respect of the Certificates. |
|
Withdrawal and Return of Escrowed Funds |
|
Under certain circumstances, less than all of the Deposits held
in escrow may have been used to purchase Equipment Notes to be
issued with respect to the Aircraft by the Delivery Period
Termination Date. This could occur because of delays in the
release of liens under the Existing Financings with respect to
the Aircraft or for other reasons. See Description of the
Certificates Obligation to Purchase Equipment
Notes. If any funds remain as Deposits with respect to any
Trust as of the Delivery Period Termination Date, such remaining
funds will be withdrawn by the Escrow Agent and distributed by
the Paying Agent, with accrued and unpaid interest on such
remaining funds, but without any premium, to the
Certificateholders of such Trust on a date no earlier than
15 days after the Paying Agent has received notice of the
event requiring such distribution or, under certain
circumstances, such remaining funds will be automatically
returned by the Depositary to the Paying Agent on the Outside
Termination Date, and the Paying Agent will distribute such
funds to such Certificateholders as promptly as practicable
thereafter. In addition, if a Triggering Event occurs prior to
the Delivery Period Termination Date, any Deposits held in
escrow will also be withdrawn and distributed to the applicable
Certificateholders. See Description of the Deposit
Agreements Other Withdrawals and Return of
Deposits. If any of certain events of loss occurs with
respect to an Aircraft before such Aircraft is financed pursuant
to this offering, any Deposits relating to such Aircraft held in
escrow with respect to each Trust will be similarly withdrawn
and distributed to the Certificateholders of such Trust. See
Description of the Deposit Agreements Other
Withdrawals and Return of Deposits. |
11
|
|
|
Obligation to Purchase Equipment Notes |
|
The Trustees will be obligated to purchase the Equipment Notes
issued with respect to each Aircraft prior to the Delivery
Period Termination Date pursuant to the terms and conditions of
the Note Purchase Agreement. On and subject to the terms and
conditions of the Note Purchase Agreement and the forms of
financing agreements attached to the Note Purchase Agreement,
Delta agrees to enter into a secured debt financing with respect
to each
2000-1
Aircraft on or prior to December 31, 2010 and with respect
to each 2009 Aircraft within 90 days after the Issuance
Date, in each case with the relevant parties pursuant to
financing agreements that are substantially in the forms
attached to the Note Purchase Agreement. Delta may use financing
agreements modified in any material respect from the forms
attached to the Note Purchase Agreement so long as Delta obtains
written confirmation from each Rating Agency that the use of
such modified financing agreements will not result in a
withdrawal, suspension or downgrading of the rating of each
class of Certificates then rated by such Rating Agency and that
remains outstanding. The terms of such financing agreements also
must in any event comply with the Required Terms set forth in
the Note Purchase Agreement. In addition, Delta, subject to
certain exceptions, is obligated to certify to the Trustees that
any substantive modifications do not materially and adversely
affect the Certificateholders or any Liquidity Provider. |
|
|
|
Under the Note Purchase Agreement, the Trustees will not be
obligated to purchase the Equipment Notes to be issued with
respect to any Aircraft if a Triggering Event occurs or certain
specified conditions have not been met. In addition, if any of
certain events of loss occurs with respect to an Aircraft before
such Aircraft is financed pursuant to this offering, the
Trustees will not obligated to purchase the Equipment Notes to
be issued with respect to such Aircraft. The Trustees will have
no right or obligation to purchase the Equipment Notes to be
issued with respect to any Aircraft after the Delivery Period
Termination Date. See Description of the
Certificates Obligation to Purchase Equipment
Notes. |
|
Issuances of Additional Certificates |
|
Under certain circumstances, additional pass through
certificates of one separate pass through trust, which will
evidence fractional undivided ownership interests in a single
new series of subordinated equipment notes with respect to some
or all of the Aircraft. Consummation of any such transaction
will be subject to satisfaction of certain conditions, including
receipt of confirmation from each Rating Agency that such
transaction will not result in a withdrawal, suspension or
downgrading of the rating for each class of Certificates then
rated by such Rating Agency and that remains outstanding. See
Possible Issuance of Additional Certificates and
Refinancing of Certificates. |
12
|
|
|
|
|
If any Additional Certificates are issued, under certain
circumstances, the holders of the Additional Certificates will
have certain rights to purchase the Class A and
Class B Certificates. See Description of the
Certificates Certificate Buyout Right of
Certificateholders. |
|
Equipment Notes |
|
|
|
(a) Issuer |
|
Under each Indenture, Delta will issue Series A and
Series B Equipment Notes, which will be acquired,
respectively, by the Class A and Class B Trusts. |
|
(b) Interest |
|
The Equipment Notes held in each Trust will accrue interest at
the rate per annum applicable to the Certificates issued by such
Trust set forth on the cover page of this prospectus. Interest
on the Equipment Notes will be payable on June 17 and
December 17, commencing on June 17, 2010 and will be
calculated on the basis of a
360-day year
consisting of twelve
30-day
months. |
|
(c) Principal |
|
Principal payments on the Series A and Series B
Equipment Notes are scheduled to be received in specified
amounts on June 17 and December 17 in certain years, commencing
on June 17, 2010 and ending on December 17, 2019 in
the case of the Series A Equipment Notes and
December 17, 2016 in the case of the Series B
Equipment Notes. |
|
(d) Rankings |
|
The following subordination provisions will be applicable to the
Equipment Notes issued under the Indentures: |
|
|
|
the indebtedness evidenced by the Series B
Equipment Notes issued under such Indenture will be, to the
extent and in the manner provided in such Indenture, subordinate
and subject in right of payment to the Series A Equipment
Notes issued under such Indenture;
|
|
|
|
if Delta issues any Additional Equipment Notes under
such Indenture, the indebtedness evidenced by such Additional
Equipment Notes will be, to the extent and in the manner
provided in such Indenture (as may be amended in connection with
any issuance of such Additional Equipment Notes), subordinate
and subject in right of payment to the Series A Equipment
Notes and the Series B Equipment Notes issued under such
Indenture. See Possible Issuance of Additional
Certificates and Refinancing of Certificates; and
|
|
|
|
the indebtedness evidenced by the Series A
Equipment Notes, the Series B Equipment Notes and any
Additional Equipment Notes issued under any Indenture will be,
to the extent and in the manner provided in the other
Indentures, subordinate and subject in right of payment to the
Equipment Notes issued under such other Indentures.
|
|
|
|
By virtue of the Intercreditor Agreement, all of the Equipment
Notes held by the Subordination Agent will be effectively
cross-subordinated. This means that payments received on a |
13
|
|
|
|
|
junior series of Equipment Notes issued in respect of one
Aircraft may be applied in accordance with the priority of
payment provisions set forth in the Intercreditor Agreement to
make distributions on a more senior class of Certificates. See
Description of the Intercreditor Agreement
Priority of Distributions. |
|
(e) Redemption |
|
Aircraft Event of Loss. Under an Indenture, if
an Event of Loss occurs with respect to an Aircraft, Delta will
either: |
|
|
|
substitute for such Aircraft under the related
financing agreements an aircraft meeting certain requirements; or
|
|
|
|
redeem all of the Equipment Notes issued with
respect to such Aircraft.
|
|
|
|
The redemption price in such case will be the unpaid principal
amount of such Equipment Notes to be redeemed, together with
accrued and unpaid interest, but without any premium. |
|
|
|
Optional Redemption. Delta may elect to redeem
at any time prior to maturity all of the Equipment Notes issued
with respect to an Aircraft; provided that all
outstanding Equipment Notes with respect to all other Aircraft
are simultaneously redeemed. In addition, Delta may elect to
redeem the Series B Equipment Notes with respect to all
Aircraft in connection with a refinancing of such series or
without refinancing. See Possible Issuance of Additional
Certificates and Refinancing Certificates
Refinancing of Certificates. The redemption price in each
such case will be the unpaid principal amount of such Equipment
Notes, together with accrued and unpaid interest, plus the
Make-Whole Amount (if any). See Description of the
Equipment Notes Redemption. |
|
(f) Security and cross-collateralization |
|
The Equipment Notes issued with respect to each Aircraft will be
secured by, among other things, a security interest in such
Aircraft. |
|
|
|
In addition, the Equipment Notes will be cross-collateralized to
the extent described under Description of the Equipment
Notes Security and Description of the
Equipment Notes Subordination. This means,
among other things, that any proceeds from the sale of any
Aircraft by the Loan Trustee or other exercise of remedies under
the related Indenture following an Indenture Event of Default
under such Indenture will (after all of the Equipment Notes
issued under such Indenture have been paid off, and subject to
the provisions of the U.S. Bankruptcy Code (the
Bankruptcy Code)) be available for
application to shortfalls with respect to the Equipment Notes
issued under the other Indentures and the other obligations
secured by the other Indentures that are due at the time of such
application. In the absence of any such shortfall at the time of
such application, excess proceeds will be held by the Loan
Trustee under such Indenture as |
14
|
|
|
|
|
additional collateral for the Equipment Notes issued under each
of the other Indentures and will be applied to the payments in
respect of the Equipment Notes issued under such other
Indentures as they come due. However, if any Equipment Note
ceases to be held by the Subordination Agent (as a result of
sale during the exercise of remedies by the Controlling Party or
otherwise), such Equipment Note will cease to be entitled to the
benefits of cross-collateralization. Any cash Collateral held as
a result of the cross-collateralization of the Equipment Notes
would not be entitled to the benefits of Section 1110 of
the Bankruptcy Code (Section 1110). |
|
|
|
If the Equipment Notes issued under any Indenture are repaid in
full in the case of an Event of Loss with respect to the
applicable Aircraft, the lien on such Aircraft under such
Indenture will be released. At any time on or after
December 17, 2019 (the Final Maturity
Date), if all obligations secured under all of the
Indentures that are then due have been paid, the liens on all
Aircraft under all Indentures will be released. Once the lien on
any Aircraft is released, such Aircraft will no longer secure
the amounts that may be owing under the Indentures. |
|
(g) Cross-default |
|
There will be cross-default provisions in the Indentures. This
means that if the Equipment Notes issued with respect to one
Aircraft are in a continuing default, the Equipment Notes issued
with respect to the remaining Aircraft will also be in default,
and remedies will be exercisable with respect to all Aircraft. |
|
(h) Section 1110 Protection |
|
Deltas internal counsel will provide an opinion to the
Trustees that the benefits of Section 1110 will be
available for each of the Aircraft. |
|
Certain U.S. Federal Income Tax Consequences |
|
The Trusts themselves will not be subject to U.S. federal income
tax. See Certain U.S. Federal Income Tax
Consequences. |
|
Certain ERISA Considerations |
|
Each person who acquires a Certificate or an interest therein
will be deemed to have represented that either: |
|
|
|
no assets of a Plan or of any trust established with
respect to a Plan have been used to acquire such Certificate or
an interest therein; or
|
|
|
|
the purchase and holding of such Certificate or an
interest therein by such person are exempt from the prohibited
transaction restrictions of ERISA and the Code or provisions of
Similar Law pursuant to one or more statutory or administrative
exemptions.
|
|
|
|
See Certain ERISA Considerations. |
15
|
|
|
Ratings of the Certificates |
|
It is a condition to the issuance of the Certificates that they
be rated by Moodys and Standard & Poors at
not less than the ratings set forth in the table below: |
|
|
|
|
|
Certificates
|
|
Moodys
|
|
Standard &
Poors
|
|
Class A
|
|
Baa2
|
|
A-
|
Class B
|
|
Ba2
|
|
BBB-
|
|
|
|
|
|
A rating is not a recommendation to purchase, hold or sell the
Certificates, and such rating does not address market price or
suitability for a particular investor. There can be no assurance
that such ratings will not be lowered or withdrawn by one or
more Rating Agencies. See Risk Factors Risk
Factors Relating to the Certificates and the
Offering The ratings of the Certificates are not a
recommendation to buy and may be lowered or withdrawn in the
future. |
|
Threshold Rating Requirement for the Depositary |
|
The threshold rating for the Depositary is a short-term
unsecured debt rating of
P-1 in the
case of Moodys and a short-term issuer credit rating of
A-1+ in the
case of Standard & Poors. |
|
Depositary Rating |
|
The Depositary currently meets the Depositary Threshold Rating
requirement. |
|
Threshold Rating Requirement for the Liquidity Provider |
|
The threshold rating for the Liquidity Provider is: (i) a
short-term senior unsecured debt rating of
P-1 in the
case of Moodys and a short-term issuer credit rating of
A-1 in the
case of Standard & Poors and (ii) for any
entity that does not have a short-term rating from any of such
Rating Agencies, then in lieu of such short-term rating from
such Rating Agency, a long-term senior unsecured debt rating of
A2 in the case of Moodys and a long-term issuer credit
rating of A in the case of Standard & Poors. |
|
Liquidity Provider Rating |
|
The Liquidity Provider currently meets the Liquidity Threshold
Rating requirement. |
|
Governing Law |
|
The Certificates and the Equipment Notes are governed by the
laws of the State of New York. |
16
Summary
Historical and Pro Forma Consolidated Financial and Operating
Data
The following tables present our summary historical and pro
forma consolidated financial and operating data. We derived the
statement of operations data for the year ended
December 31, 2008 from our audited consolidated financial
statements and the related notes thereto incorporated by
reference herein. We derived the statement of operations data
for the interim periods ended September 30, 2009 and 2008
from our unaudited condensed consolidated financial statements
for the quarter ended September 30, 2009 and the related
notes thereto incorporated by reference herein. The unaudited
statement of operations data for the interim periods may not be
indicative of results for the year as a whole. We derived the
summary pro forma statement of operations data for the year
ended December 31, 2008 from our unaudited pro forma
condensed combined financial statements and the related notes
thereto incorporated by reference herein.
On October 29, 2008, a subsidiary of Delta merged with and
into Northwest. Except for the unaudited pro forma condensed
combined statement of operations data discussed below, our
financial results include the results of Northwest for periods
after October 29, 2008, but not for periods before
October 30, 2008. Accordingly, our financial results under
United States generally accepted accounting principles
(GAAP) for the nine months ended
September 30, 2009 include the results of Northwest for the
entire period. In contrast, Deltas financial results under
GAAP for the year ended December 31, 2008 include the
results of Northwest only for the period from October 30 to
December 31, 2008. In addition, Deltas financial
results under GAAP for the nine months ended September 30,
2008 do not include the results of Northwest. Accordingly, this
impacts the comparability of our financial results under GAAP
for the periods presented.
The unaudited pro forma condensed combined statement of
operations data for the year ended December 31, 2008
combines the historical consolidated statements of operations of
Delta and Northwest, giving effect to the merger as if it had
occurred on January 1, 2008. The unaudited pro forma
condensed combined statement of operations data has been
developed from and should be read in conjunction with the
audited consolidated financial statements of Delta incorporated
by reference herein and of Northwest. The historical
consolidated financial statements have been adjusted to reflect
certain reclassifications to conform with Deltas current
financial statement presentation.
The unaudited pro forma condensed combined statement of
operations data is provided for illustrative purposes only and
does not purport to represent Deltas consolidated results
of operations had the merger occurred on the date assumed, nor
are these financial statements necessarily indicative of our
future consolidated results of operations. Additionally, the
unaudited pro forma condensed combined statement of operations
data does not reflect the costs of any integration activities,
benefits that may result from operating efficiencies or revenue
synergies expected to result from the merger.
You should read the following table in conjunction with
(1) Managements Discussion and Analysis of
Financial Condition and Results of Operations and the
consolidated financial statements and the related notes thereto
incorporated by reference herein from our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 and
(2) Managements Discussion and Analysis of
Financial Condition and Results of Operations and the
consolidated financial statements and the related notes thereto
incorporated by reference herein from our Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2009. See
Where You Can Find More Information in this
prospectus.
17
Statement of
Operations Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
Pro Forma Year
|
|
|
Year Ended
|
|
|
|
September 30,
|
|
|
Ended December 31,
|
|
|
December 31,
|
|
(In millions)
|
|
2009(1)
|
|
|
2008(2)
|
|
|
2008(3)
|
|
|
2008(4)
|
|
|
Operating revenue
|
|
$
|
21,258
|
|
|
$
|
15,984
|
|
|
$
|
34,288
|
|
|
$
|
22,697
|
|
Operating expense
|
|
|
21,536
|
|
|
|
23,201
|
|
|
|
47,784
|
|
|
|
31,011
|
|
Operating (loss) income
|
|
|
(278
|
)
|
|
|
(7,217
|
)
|
|
|
(13,496
|
)
|
|
|
(8,314
|
)
|
Interest expense, net
|
|
|
928
|
|
|
|
355
|
|
|
|
1,145
|
|
|
|
613
|
|
Net (loss) income
|
|
|
(1,212
|
)
|
|
|
(7,484
|
)
|
|
|
(14,706
|
)
|
|
|
(8,922
|
)
|
|
|
|
(1) |
|
Includes $286 million in restructuring and merger-related
charges associated with (a) integrating the operations of
Northwest into Delta, including costs related to information
technology, employee relocation and training, and re-branding of
aircraft and stations and (b) employee workforce reduction
programs. |
|
(2) |
|
Includes a $7.3 billion non-cash charge from an impairment
of goodwill and other intangible assets and $144 million in
primarily restructuring-related charges associated with
voluntary workforce reduction programs. |
|
(3) |
|
Includes an $11.0 billion non-cash charge from an
impairment of goodwill and other intangible assets and
$1.3 billion in primarily non-cash merger-related charges
relating to the issuance or vesting of employee equity awards in
connection with our merger with Northwest. |
|
(4) |
|
Includes a $7.3 billion non-cash charge from an impairment
of goodwill and other intangible assets and $1.1 billion in
primarily non-cash merger-related charges relating to the
issuance or vesting of employee equity awards in connection with
our merger with Northwest. |
Balance Sheet
Data
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
(In millions)
|
|
2009
|
|
|
2008
|
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
5,488
|
|
|
$
|
4,467
|
|
Restricted cash and cash equivalents (including noncurrent)
|
|
|
499
|
|
|
|
453
|
|
Total assets
|
|
|
44,853
|
|
|
|
45,084
|
|
Long-term debt and capital leases (including current maturities)
|
|
|
17,684
|
|
|
|
16,571
|
|
Stockholders equity
|
|
|
900
|
|
|
|
874
|
|
Other Financial
and Statistical Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
Revenue passenger miles
(millions)(1)
|
|
|
145,384
|
|
|
|
94,464
|
|
|
|
202,726
|
|
|
|
134,879
|
|
Available seat miles
(millions)(1)
|
|
|
177,003
|
|
|
|
115,198
|
|
|
|
246,164
|
|
|
|
165,639
|
|
Passenger mile
yield(1)
|
|
|
12.40
|
¢
|
|
|
14.66
|
¢
|
|
|
14.65
|
¢
|
|
|
14.52
|
¢
|
Passenger revenue per available seat
mile(1)
|
|
|
10.19
|
¢
|
|
|
12.02
|
¢
|
|
|
12.07
|
¢
|
|
|
11.82
|
¢
|
Operating cost per available seat
mile(1)
|
|
|
12.17
|
¢
|
|
|
20.14
|
¢
|
|
|
19.41
|
¢
|
|
|
18.72
|
¢
|
Passenger load
factor(1)
|
|
|
82.1
|
%
|
|
|
82.0
|
%
|
|
|
82.4
|
%
|
|
|
81.4
|
%
|
Fuel gallons consumed
(millions)(1)
|
|
|
2,951
|
|
|
|
1,896
|
|
|
|
4,158
|
|
|
|
2,740
|
|
Average price per fuel gallon, net of hedging
activity(1)
|
|
$
|
2.15
|
|
|
$
|
3.23
|
|
|
$
|
3.40
|
|
|
$
|
3.16
|
|
|
|
|
(1) |
|
Includes the operations under contract carrier agreements with
our regional air carriers, including non-owned carriers. |
18
RISK
FACTORS
In considering whether to purchase the Certificates, you
should carefully consider all of the information contained in or
incorporated by reference in this prospectus, any prospectus
supplement and any related company free writing prospectus and
other information which may be incorporated by reference in this
prospectus after the date hereof. In addition, you should
carefully consider the risk factors described below.
Risk Factors
Relating to Delta
Our business
and results of operations are dependent on the price and
availability of aircraft fuel. High fuel costs or cost increases
could have a materially adverse effect on our operating results.
Likewise, significant disruptions in the supply of aircraft fuel
would materially adversely affect our operations and operating
results.
Our operating results are significantly impacted by changes in
the price and availability of aircraft fuel. Fuel prices have
increased substantially in the last five years and spiked at
record high levels in 2008 before falling dramatically during
the latter part of 2008. In 2008, our average fuel price per
gallon rose 41% to $3.16, as compared to an average price of
$2.24 in 2007, which was 6% higher than our average price of
$2.12 in 2006 and significantly higher than fuel prices in the
earlier part of this decade. Fuel costs represented 38%, 31% and
30% of our operating expense in 2008, 2007 and 2006,
respectively. Total operating expense for 2008 reflects a
$7.3 billion non-cash charge from an impairment of goodwill
and other intangible assets and $1.1 billion in primarily
non-cash merger-related charges. Including these charges, fuel
costs accounted for 28% of total operating expense. Our average
fuel price per gallon was $2.15 for the first nine months of
2009, and fuel costs represented 29% of operating expense for
that period. Fuel costs have had a significant negative effect
on our results of operations and financial condition.
Our ability to pass along the increased costs of fuel to our
customers is limited by the competitive nature of the airline
industry. We often have not been able to increase our fares to
offset the effect of increased fuel costs in the past and we may
not be able to do so in the future.
In addition, our aircraft fuel purchase contracts do not provide
material protection against price increases or assure the
availability of our fuel supplies. We purchase most of our
aircraft fuel under contracts that establish the price based on
various market indices. We also purchase aircraft fuel on the
spot market, from offshore sources and under contracts that
permit the refiners to set the price. In an effort to manage our
exposure to changes in fuel prices, we use derivative
instruments, which are comprised of crude oil, heating oil and
jet fuel swap, collar and call option contracts, though we may
not be able to successfully manage this exposure. Depending on
the type of hedging instrument used, our ability to benefit from
declines in fuel prices may be limited.
We are currently able to obtain adequate supplies of aircraft
fuel, but it is impossible to predict the future availability or
price of aircraft fuel. Weather-related events, natural
disasters, political disruptions or wars involving oil-producing
countries, changes in governmental policy concerning aircraft
fuel production, transportation or marketing, changes in
aircraft fuel production capacity, environmental concerns and
other unpredictable events may result in additional fuel supply
shortages and fuel price increases in the future. Additional
increases in fuel costs or disruptions in fuel supplies could
have additional negative effects on us.
The global
economic recession has resulted in weaker demand for air travel
and may create challenges for us that could have a material
adverse effect on our business and results of
operations.
As the effects of the global economic recession have been felt
in our domestic and international markets, we are experiencing
significantly weaker demand for air travel. Our demand began to
slow during the December 2008 quarter and global economic
conditions in 2009 are substantially reducing
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U.S. airline industry revenues in 2009 compared to 2008. As
a result, we are reducing our consolidated capacity by 7 to 9%
in 2009 compared to the combined capacity of Delta and Northwest
during 2008 (which reflects planned domestic and international
capacity reductions of 7 to 9%). Demand for air travel could
remain weak or even continue to fall if the global economic
recession continues for an extended period, and overall demand
could fall lower than we are able prudently to reduce capacity.
The weakness in the United States and international economies is
having a significant negative impact on our results of
operations and could continue to have a significant negative
impact on our future results of operations.
The global
financial crisis may have an impact on our business and
financial condition in ways that we currently cannot
predict.
The credit crisis and related turmoil in the global financial
system has had and may continue to have an impact on our
business and our financial condition. For example, our ability
to access the capital markets may be severely restricted at a
time when we would like, or need, to do so, which could have an
impact on our flexibility to react to changing economic and
business conditions. In addition, the credit crisis could have
an impact on our fuel hedging contracts or our interest hedging
contracts if counterparties are forced to file for bankruptcy or
are otherwise unable to perform their obligations.
The financial crisis and economic downturn have also resulted in
broadly lower investment asset returns and values, including in
the defined benefit pension plans that we sponsor for eligible
employees and retirees. As of December 31, 2008, the
defined benefit pension plans had an estimated benefit
obligation of approximately $15.9 billion and were funded
through assets with a value of approximately $7.3 billion.
We estimate that our funding requirements for our defined
benefit pension plans, which are governed by ERISA and have been
frozen for future accruals, are approximately $200 million
in 2009 and $650 million in 2010. The significant increase
in required funding is due primarily to the decline in the
investment markets in 2008, which negatively affected the value
of our pension assets. Estimates of pension plan funding
requirements can vary materially from actual funding
requirements because the estimates are based on various
assumptions concerning factors outside our control, including,
among other things, the market performance of assets; statutory
requirements; and demographic data for participants, including
the number of participants and the rate of participant
attrition. Results that vary significantly from our assumptions
could have a material impact on our future funding obligations.
Our obligation
to post collateral in connection with our fuel hedge contracts
may have a substantial impact on our short-term
liquidity.
Under fuel hedge contracts that we may enter into from time to
time, counterparties to those contracts may require us to fund
the margin associated with any loss position on the contracts.
For example, at December 31, 2008, our counterparties
required us to fund $1.2 billion of fuel hedge margin. If
fuel prices fall significantly below the levels at the time we
enter into hedging contracts, we may be required to post a
significant amount of collateral, which could have an impact on
the level of our unrestricted cash and cash equivalents and
short-term investments.
Our
substantial indebtedness may limit our financial and operating
activities and may adversely affect our ability to incur
additional debt to fund future needs.
We have substantial indebtedness, which could:
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require us to dedicate a substantial portion of cash flow from
operations to the payment of principal, and interest on,
indebtedness, thereby reducing the funds available for
operations and future business opportunities;
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make it more difficult for us to satisfy our payment and other
obligations under our indebtedness;
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limit our ability to borrow additional money for working
capital, restructurings, capital expenditures, research and
development, investments, acquisitions or other purposes, if
needed, and increasing the cost of any of these borrowings;
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make us more vulnerable to economic downturns, adverse industry
conditions or catastrophic external events;
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limit our ability to withstand competitive pressures;
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reduce our flexibility in planning for or responding to changing
business and economic conditions; and/or
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limit our flexibility in responding to changing business and
economic conditions, including increased competition and demand
for new services, placing us at a disadvantage when compared to
our competitors that have less debt, and making us more
vulnerable than our competitors who have less debt to a downturn
in our business, industry or the economy in general.
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In addition, a substantial level of indebtedness, particularly
because substantially all of our assets are currently subject to
liens, could limit our ability to obtain additional financing on
acceptable terms or at all for working capital, capital
expenditures and general corporate purposes. We have
historically had substantial liquidity needs in the operation of
our business. These liquidity needs could vary significantly and
may be affected by general economic conditions, industry trends,
performance and many other factors not within our control.
Agreements
governing our debt, including credit agreements and indentures,
include financial and other covenants that impose restrictions
on our financial and business operations.
Our credit facilities and indentures for secured notes have
various financial and other covenants that require us to
maintain, depending on the particular agreement, minimum fixed
charge coverage ratios, minimum unrestricted cash reserves
and/or
minimum collateral coverage ratios. The value of the collateral
that has been pledged in each facility may change over time,
including due to factors that are not under our control,
resulting in a situation where we may not be able to maintain
the collateral coverage ratio. In addition, the credit
facilities and indentures contain other negative covenants
customary for such financings. If we fail to comply with these
covenants and are unable to obtain a waiver or amendment, an
event of default would result. These covenants are subject to
important exceptions and qualifications.
The credit facilities and indentures also contain other events
of default customary for such financings. If an event of default
were to occur, the lenders or the trustee could, among other
things, declare outstanding amounts due and payable, and our
cash may become restricted. We cannot provide assurance that we
would have sufficient liquidity to repay or refinance the
borrowings or notes under any of the credit facilities if such
amounts were accelerated upon an event of default. In addition,
an event of default or declaration of acceleration under any of
the credit facilities or the indentures could also result in an
event of default under other of our financing agreements.
Employee
strikes and other labor-related disruptions may adversely affect
our operations.
Our business is labor intensive, utilizing large numbers of
pilots, flight attendants and other personnel. As of
September 30, 2009, approximately 39% of our workforce was
unionized. Strikes or labor disputes with our unionized
employees may adversely affect our ability to conduct business.
Relations between air carriers and labor unions in the United
States are governed by the Railway Labor Act, which provides
that a collective bargaining agreement between an airline and a
labor union does not expire, but instead becomes amendable as of
a stated date. The Railway Labor Act generally prohibits strikes
or other types of self-help actions both before and after a
collective bargaining agreement becomes amendable, unless and
until the collective bargaining processes required by the
Railway Labor Act have been exhausted.
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In addition, if we or our affiliates are unable to reach
agreement with any of our unionized work groups on future
negotiations regarding the terms of their collective bargaining
agreements or if additional segments of our workforce become
unionized, we may be subject to work interruptions or stoppages,
subject to the requirements of the Railway Labor Act. Likewise,
if third party regional carriers with whom we have contract
carrier agreements are unable to reach agreement with their
unionized work groups on current or future negotiations
regarding the terms of their collective bargaining agreements,
those carriers may be subject to work interruptions or
stoppages, subject to the requirements of the Railway Labor Act,
which could have a negative impact on our operations.
The ability to
realize fully the anticipated benefits of our merger with
Northwest may depend on the successful integration of the
businesses of Delta and Northwest.
Our merger with Northwest involved the combination of two
companies which operated as independent public companies prior
to the merger. We are devoting significant attention and
resources to integrating our business practices and operations
in order to achieve the benefits of the merger, including
expected synergies. If we are unable to integrate our business
practices and operations in a manner that allows us to achieve
the anticipated revenue and cost synergies, or if achievement of
such synergies takes longer or costs more than expected, the
anticipated benefits of the merger may not be realized fully or
at all or may take longer to realize than expected. In addition,
it is possible that the integration process could result in the
loss of key employees, diversion of managements attention,
the disruption or interruption of, or the loss of momentum in
our ongoing businesses or inconsistencies in standards,
controls, procedures and policies, any of which could adversely
affect our ability to maintain relationships with customers and
employees or our ability to achieve the anticipated benefits of
the merger, or could reduce our earnings or otherwise adversely
affect our business and financial results. We expect to incur
total cash costs of approximately $500 million over
approximately three years to integrate the two airlines.
Completion of
the integration of the Delta and Northwest Airlines, Inc.
workforces may present significant challenges.
The successful integration of Delta and Northwest and
achievement of the anticipated benefits of the merger depend
significantly on integrating Deltas and Northwest
Airlines, Inc.s employee groups and on maintaining
productive employee relations. While integration of a number of
the workgroups (including pilots and aircraft maintenance
technicians) is proceeding, completion of the integration of
certain workgroups (including flight attendants, airport
employees and reservations employees) of the two pre-merger
airlines will require the resolution of potentially difficult
issues, including, but not limited to the process and timing for
determining whether the combined post-merger workgroups wish to
have union representation. Unexpected delay, expense or other
challenges to integrating the workforces could impact the
expected synergies from the combination of Delta and Northwest
and affect our financial performance.
Interruptions
or disruptions in service at one of our hub airports could have
a material adverse impact on our operations.
Our business is heavily dependent on our operations at the
Atlanta airport and at our other hub airports in Cincinnati,
Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake
City, Paris-Charles de Gaulle, Amsterdam and Tokyo-Narita. Each
of these hub operations includes flights that gather and
distribute traffic from markets in the geographic region
surrounding the hub to other major cities and to other Delta
hubs. A significant interruption or disruption in service at the
Atlanta airport or at one of our other hubs could have a serious
impact on our business, financial condition and results of
operations.
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We are
increasingly dependent on technology in our operations, and if
our technology fails or we are unable to continue to invest in
new technology or integrate the systems and technologies of
Delta and Northwest, our business may be adversely
affected.
We have become increasingly dependent on technology initiatives
to reduce costs and to enhance customer service in order to
compete in the current business environment. For example, we
have made significant investments in delta.com, check-in kiosks
and related initiatives. The performance and reliability of the
technology are critical to our ability to attract and retain
customers and our ability to compete effectively. These
initiatives will continue to require significant capital
investments in our technology infrastructure to deliver these
expected benefits. If we are unable to make these investments,
our business and operations could be negatively affected. In
addition, we may face challenges associated with integrating
complex systems and technologies that support the separate
operations of Delta and Northwest. If we are unable to manage
these challenges effectively, our business and results of
operations could be negatively affected.
In addition, any internal technology error or failure or large
scale external interruption in technology infrastructure we
depend on, such as power, telecommunications or the internet,
may disrupt our technology network. Any individual, sustained or
repeated failure of technology could impact our customer service
and result in increased costs. Our technology systems and
related data may be vulnerable to a variety of sources of
interruption due to events beyond our control, including natural
disasters, terrorist attacks, telecommunications failures,
computer viruses, hackers and other security issues. While we
have in place, and continue to invest in, technology security
initiatives and disaster recovery plans, these measures may not
be adequate or implemented properly to prevent a business
disruption and its adverse financial consequences to our
business.
If we
experience losses of senior management personnel and other key
employees, our operating results could be adversely
affected.
We are dependent on the experience and industry knowledge of our
officers and other key employees to execute our business plans.
If we experience a substantial turnover in our leadership and
other key employees, our performance could be materially
adversely impacted. Furthermore, we may be unable to attract and
retain additional qualified executives as needed in the future.
Our credit
card processors have the ability to take significant holdbacks
in certain circumstances. The initiation of such holdbacks
likely would have a material adverse effect on our
liquidity.
Most of the tickets we sell are paid for by customers who use
credit cards. Our credit card processing agreements provide that
no holdback of receivables or reserve is required except in
certain circumstances, including if we do not maintain a
required level of unrestricted cash. If circumstances were to
occur that would allow American Express or our Visa/MasterCard
processor to initiate a holdback, the negative impact on our
liquidity likely would be material.
We are at risk
of losses and adverse publicity stemming from any accident
involving our aircraft.
An aircraft crash or other accident could expose us to
significant tort liability. The insurance we carry to cover
damages arising from any future accidents may be inadequate. In
the event that the insurance is not adequate, we may be forced
to bear substantial losses from an accident. In addition, any
accident involving an aircraft that we operate or an aircraft
that is operated by an airline that is one of our codeshare
partners could create a public perception that our aircraft are
not safe or reliable, which could harm our reputation, result in
air travelers being reluctant to fly on our aircraft and harm
our business.
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Our ability to
use net operating loss carryforwards to offset future taxable
income for U.S. federal income tax purposes is subject to
limitation.
In general, under Section 382 of the Internal Revenue Code
of 1986, as amended, a corporation that undergoes an
ownership change is subject to limitations on its
ability to utilize its pre-change net operating losses
(NOLs), to offset future taxable income. In
general, an ownership change occurs if the aggregate stock
ownership of certain stockholders (generally 5% shareholders,
applying certain look-through rules) increases by more than
50 percentage points over such stockholders lowest
percentage ownership during the testing period (generally three
years).
As of September 30, 2009, Delta reported a consolidated
federal and state NOL carryforward of approximately
$16.5 billion. Both Delta and Northwest experienced an
ownership change in 2007 as a result of their respective plans
of reorganization under Chapter 11 of the
U.S. Bankruptcy Code. As a result of the merger, Northwest
experienced a subsequent ownership change. Delta also
experienced a subsequent ownership change on December 17,
2008 as a result of the merger, the issuance of equity to
employees in connection with the merger and other transactions
involving the sale of our common stock within the testing period.
The Delta and Northwest ownership changes resulting from the
merger could limit the ability to utilize pre-change NOLs that
were not subject to limitation, and could further limit the
ability to utilize NOLs that were already subject to limitation.
Limitations imposed on the ability to use NOLs to offset future
taxable income could cause U.S. federal income taxes to be
paid earlier than otherwise would be paid if such limitations
were not in effect and could cause such NOLs to expire unused,
in each case reducing or eliminating the benefit of such NOLs.
Similar rules and limitations may apply for state income tax
purposes. NOLs generated subsequent to December 17, 2008
are not limited.
Our merger
with Northwest affects the comparability of our historical
financial results.
On October 29, 2008, a subsidiary of Delta merged with and
into Northwest. Our historical financial results under GAAP
include the results of Northwest for periods after
October 29, 2008, but not for periods before
October 29, 2008. Accordingly, while our financial results
for the nine months ended September 30, 2009 include the
results of Northwest for the entire period, our financial
results for the year ended December 31, 2008 include the
results of Northwest only for the period from October 30 to
December 31, 2008. In addition, our financial results for
the nine months ended September 30, 2008 and all prior
periods do not include the results of Northwest. This
complicates your ability to compare our results of operations
and financial condition for periods that include
Northwests results with periods that do not.
Risk Factors
Relating to the Airline Industry
The airline
industry is highly competitive and, if we cannot successfully
compete in the marketplace, our business, financial condition
and operating results will be materially adversely
affected.
We face significant competition with respect to routes, services
and fares. Our domestic routes are subject to competition from
both new and established carriers, some of which have lower
costs than we do and provide service at low fares to
destinations served by us. In particular, we face significant
competition at our hub airports in Atlanta, Cincinnati, Detroit,
Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City,
Paris-Charles de Gaulle, Amsterdam and Tokyo-Narita either
directly at those airports or at the hubs of other airlines that
are located in close proximity to our hubs. We also face
competition in smaller to medium-sized markets from regional jet
operators.
Low-cost carriers, including Southwest, AirTran and JetBlue,
have placed significant competitive pressure on us in the United
States and on other network carriers in the domestic market. In
addition, other network carriers have also significantly reduced
their costs over the last several years. Our ability to compete
effectively depends, in part, on our ability to maintain a
competitive cost structure. If we cannot maintain our costs at a
competitive level, then our business, financial condition and
24
operating results could be materially adversely affected. In
light of increased jet fuel costs and other issues in recent
years, we expect consolidation to occur in the airline industry.
As a result of consolidation, we may face significant
competition from larger carriers that may be able to generate
higher amounts of revenue and compete more efficiently.
In addition, we compete with foreign carriers, both on interior
U.S. routes, due to marketing and codesharing arrangements,
and in international markets. Through marketing and codesharing
arrangements with U.S. carriers, foreign carriers have
obtained access to interior U.S. passenger traffic.
Similarly, U.S. carriers have increased their ability to
sell international transportation, such as transatlantic
services to and beyond European cities, through alliances with
international carriers. International marketing alliances formed
by domestic and foreign carriers, including the Star Alliance
(among United Airlines, Continental, Lufthansa German Airlines
and others) and the oneworld Alliance (among American Airlines,
British Airways and others) have also significantly increased
competition in international markets. The adoption of
liberalized Open Skies Aviation Agreements with an increasing
number of countries around the world, including in particular
the Open Skies agreement between the United States and the
Member States of the European Union, has accelerated this trend.
Negotiations are under way between the United States and other
countries, such as Japan, regarding similar agreements with
countries, which, if effectuated, could significantly increase
competition in these markets.
The rapid
spread of contagious illnesses can have a material adverse
effect on our business and results of operations.
The rapid spread of a contagious illness, such as the H1N1 flu
virus, can have a material adverse effect on the demand for
worldwide air travel and therefore have a material adverse
effect on our business and results of operations. Further
acceleration of the spread of H1N1 during the flu season in the
Northern Hemisphere could have a significant adverse impact on
the demand for air travel and as a result our financial results
in addition to the impact that we experienced during the spring
of 2009. Moreover, our operations could be negatively affected
if employees are quarantined as the result of exposure to a
contagious illness. Similarly, travel restrictions or
operational problems resulting from the rapid spread of
contagious illnesses in any part of the world in which we
operate may have a materially adverse impact on our business and
results of operations.
Terrorist
attacks or international hostilities may adversely affect our
business, financial condition and operating
results.
The terrorist attacks of September 11, 2001 caused
fundamental and permanent changes in the airline industry,
including substantial revenue declines and cost increases, which
resulted in industry-wide liquidity issues. Additional terrorist
attacks or fear of such attacks, even if not made directly on
the airline industry, would negatively affect us and the airline
industry. The potential negative effects include increased
security, insurance and other costs and lost revenue from
increased ticket refunds and decreased ticket sales. Our
financial resources might not be sufficient to absorb the
adverse effects of any further terrorist attacks or other
international hostilities involving the United States.
The airline
industry is subject to extensive government regulation, and new
regulations may increase our operating costs.
Airlines are subject to extensive regulatory and legal
compliance requirements that result in significant costs. For
instance, the Federal Aviation Administration
(FAA) from time to time issues directives and
other regulations relating to the maintenance and operation of
aircraft that necessitate significant expenditures. We expect to
continue incurring expenses to comply with the FAAs
regulations.
Other laws, regulations, taxes and airport rates and charges
have also been imposed from time to time that significantly
increase the cost of airline operations or reduce revenues. For
example, the
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Aviation and Transportation Security Act, which became law in
November 2001, mandates the federalization of certain airport
security procedures and imposes additional security requirements
on airports and airlines, most of which are funded by a per
ticket tax on passengers and a tax on airlines. The federal
government has on several occasions proposed a significant
increase in the per ticket tax. The proposed ticket tax
increase, if implemented, could negatively impact our revenues.
Proposals to address congestion issues at certain airports or in
certain airspace, particularly in the Northeast United States,
have included concepts such as congestion-based
landing fees, slot auctions or other alternatives
that could impose a significant cost on the airlines operating
in those airports or airspace and impact the ability of those
airlines to respond to competitive actions by other airlines.
Furthermore, events related to extreme weather delays have
caused Congress and the U.S. Department of Transportation
to consider proposals related to airlines handling of
lengthy flight delays during extreme weather conditions. The
enactment of such proposals could have a significant negative
impact on our operations. In addition, some states have also
enacted or considered enacting such regulations.
Future regulatory action concerning climate change and aircraft
emissions could have a significant effect on the airline
industry. For example, the European Commission is seeking to
impose an emissions trading scheme applicable to all flights
operating in the European Union, including flights to and from
the United States. Laws or regulations such as this emissions
trading scheme or other U.S. or foreign governmental
actions may adversely affect our operations and financial
results.
We and other U.S. carriers are subject to domestic and
foreign laws regarding privacy of passenger and employee data
that are not consistent in all countries in which we operate. In
addition to the heightened level of concern regarding privacy of
passenger data in the United States, certain European government
agencies are initiating inquiries into airline privacy
practices. Compliance with these regulatory regimes is expected
to result in additional operating costs and could impact our
operations and any future expansion.
Our insurance
costs have increased substantially as a result of the
September 11, 2001 terrorist attacks, and further increases
in insurance costs or reductions in coverage could have a
material adverse impact on our business and operating
results.
As a result of the terrorist attacks on September 11, 2001,
aviation insurers significantly reduced the maximum amount of
insurance coverage available to commercial air carriers for
liability to persons (other than employees or passengers) for
claims resulting from acts of terrorism, war or similar events.
At the same time, aviation insurers significantly increased the
premiums for such coverage and for aviation insurance in
general. Since September 24, 2001, the U.S. government
has been providing U.S. airlines with war-risk insurance to
cover losses, including those resulting from terrorism, to
passengers, third parties (ground damage) and the aircraft hull.
The coverage currently extends through August 31, 2010. The
withdrawal of government support of airline war-risk insurance
would require us to obtain war-risk insurance coverage
commercially, if available. Such commercial insurance could have
substantially less desirable coverage than that currently
provided by the U.S. government, may not be adequate to
protect our risk of loss from future acts of terrorism, may
result in a material increase to our operating expenses or may
not be obtainable at all, resulting in an interruption to our
operations.
Risk Factors
Relating to the Certificates and the Offering
Appraisals
should not be relied upon as a measure of realizable value of
the Aircraft.
Three independent appraisal and consulting firms have prepared
appraisals of the Aircraft. The appraisal letters provided by
these firms are annexed to this prospectus as Appendix II.
Such appraisals of the Aircraft are subject to a number of
significant assumptions and methodologies (which differ among
the appraisers) and were prepared without a physical inspection
of the Aircraft. The appraisals may not accurately reflect the
current market value of the Aircraft. The appraisals take into
account base value, which is the theoretical value
for an aircraft assuming a balanced market,
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while current market value is the value for an aircraft in the
actual market. Appraisals that are based on other assumptions
and methodologies (or a physical inspection of the Aircraft) may
result in valuations that are materially different from those
contained in such appraisals. In particular, the appraisals of
the Aircraft include adjustments for the maintenance status of
the Aircraft at or about the time of the appraisals (but
assuming the engines are in a half-time condition). See
Description of the Aircraft and the Appraisals
The Appraisals.
An appraisal is only an estimate of value. It does not
necessarily indicate the price at which an aircraft may be
purchased or sold in the market. In particular, the appraisals
of the Aircraft are estimates of the values of the Aircraft
assuming the Aircraft are in a certain condition, which may not
be the case. An appraisal should not be relied upon as a measure
of realizable value. The proceeds realized upon the exercise of
remedies with respect to any Aircraft, including a sale of such
Aircraft, may be less than its appraised value. The value of an
Aircraft if remedies are exercised under the applicable
Indenture will depend on various factors, including market,
economic and airline industry conditions; the supply of similar
aircraft; the availability of buyers; the condition of the
Aircraft; the time period in which the Aircraft is sought to be
sold; and whether the Aircraft is sold separately or as part of
a block.
As discussed under Risk Factors Relating to
the Airline Industry Terrorist attacks or
international hostilities may adversely affect our business,
financial condition and operating results, since
September 11, 2001, the airline industry has suffered
substantial losses. In response to adverse market conditions,
many U.S. air carriers and lessors have reduced the number
of aircraft in operation, and there may be further reductions,
particularly by air carriers in bankruptcy or liquidation. Any
such reduction of aircraft of the same models as the Aircraft
could adversely affect the value of the Aircraft.
Accordingly, we cannot assure you that the proceeds realized
upon any exercise of remedies with respect to the Aircraft would
be sufficient to satisfy in full payments due on the Equipment
Notes relating to the Aircraft or the full amount of
distributions expected on the Certificates.
If we fail to
perform maintenance responsibilities, the value of the Aircraft
may deteriorate.
To the extent described in the Indentures, we will be
responsible for the maintenance, service, repair and overhaul of
the Aircraft. If we fail to perform these responsibilities
adequately, the value of the Aircraft may be reduced. In
addition, the value of the Aircraft may deteriorate even if we
fulfill our maintenance responsibilities. As a result, it is
possible that upon a liquidation, there will be less proceeds
than anticipated to repay the holders of Equipment Notes. See
Description of the Equipment Notes Certain
Provisions of the Indentures Maintenance and
Operation.
Inadequate
levels of insurance may result in insufficient proceeds to repay
holders of related Equipment Notes.
To the extent described in the Indentures, we must maintain
all-risk aircraft hull insurance on the Aircraft. If we fail to
maintain adequate levels of insurance, the proceeds which could
be obtained upon an Event of Loss of an Aircraft may be
insufficient to repay the holders of the related Equipment
Notes. See Description of the Equipment Notes
Certain Provisions of the Indentures Insurance.
Repossession
of Aircraft may be difficult, time-consuming and
expensive.
There will be no general geographic restrictions on our ability
to operate the Aircraft. Although we do not currently intend to
do so, we are permitted to register the Aircraft in certain
foreign jurisdictions and to lease the Aircraft, and to enter
into interchange or pooling arrangements with respect to the
Aircraft, with unrelated third parties. It may be difficult,
time-consuming and expensive for the Loan Trustee under an
Indenture to exercise its repossession rights, particularly if
the related Aircraft is located outside the United States, is
registered in a foreign jurisdiction or is leased to or in the
possession of a foreign or domestic operator. Additional
difficulties may exist if such a lessee or
27
other operator is the subject of a bankruptcy, insolvency or
similar event. See Description of the Equipment
Notes Certain Provisions of the
Indentures Registration, Leasing and
Possession.
In addition, some jurisdictions may allow for other liens or
other third party rights to have priority over a Loan
Trustees security interest in an Aircraft. As a result,
the benefits of a Loan Trustees security interest in an
Aircraft may be less than they would be if the Aircraft were
located or registered in the United States.
Upon repossession of an Aircraft, the Aircraft may need to be
stored and insured. The costs of storage and insurance can be
significant and the incurrence of such costs could reduce the
proceeds available to repay the Certificateholders. In addition,
at the time of foreclosing on the lien on the Aircraft under the
related Indenture, an Airframe subject to such Indenture might
not be equipped with Engines subject to the same Indenture. If
Delta fails to transfer title to engines not owned by Delta that
are attached to repossessed Aircraft, it could be difficult,
expensive and time-consuming to assemble an Aircraft consisting
of an Airframe and Engines subject to the Indenture.
The Liquidity
Providers, the Subordination Agent and the Trustees will receive
certain payments before the Certificateholders do. In addition,
the Class B Certificates rank generally junior to the
Class A Certificates.
Under the Intercreditor Agreement, each Liquidity Provider will
receive payment of all amounts owed to it, including
reimbursement of drawings made to pay interest on the applicable
class of Certificates, before the holders of any class of
Certificates receive any funds. In addition, the Subordination
Agent and the Trustees will receive certain payments before the
holders of any class of Certificates receive distributions. See
Description of the Intercreditor Agreement
Priority of Distributions.
In addition, the Class B Certificates rank generally junior
to the Class A Certificates. Moreover, as a result of the
subordination provisions in the Intercreditor Agreement, in a
case involving the liquidation of substantially all of the
assets of Delta, the Class B Certificateholders may receive
a smaller distribution in respect of their claims than holders
of unsecured claims against Delta of the same amount.
Payments of principal on the Certificates are subordinated to
payments of interest on the Certificates, subject to certain
limitations and certain other payments. Consequently, a payment
default under any Equipment Note or a Triggering Event may cause
the distribution of interest on the Certificates or such other
amounts from payments received with respect to principal on one
or more series of Equipment Notes. If this occurs, the interest
accruing on the remaining Equipment Notes may be less than the
amount of interest expected to be distributed from time to time
on the remaining Certificates. This is because the interest on
the Certificates may be based on a Pool Balance that exceeds the
outstanding principal balance of the remaining Equipment Notes.
As a result of this possible interest shortfall, the holders of
the Certificates may not receive the full amount expected after
a payment default under any Equipment Note even if all Equipment
Notes are eventually paid in full. For a more detailed
discussion of the subordination provisions of the Intercreditor
Agreement, see Description of the Intercreditor
Agreement Priority of Distributions.
In addition, if Delta is in bankruptcy or other specified
defaults have occurred, the subordination provisions applicable
to the Certificates permit certain distributions to be made on
Class B Certificates prior to making distributions in full
on the Class A Certificates.
Certain
Certificateholders may not participate in controlling the
exercise of remedies in a default scenario.
If an Indenture Event of Default is continuing under an
Indenture, subject to certain conditions, the Loan Trustee under
such Indenture will be directed by the Controlling Party in
exercising remedies under such Indenture, including accelerating
the applicable Equipment Notes or foreclosing the lien on
28
the Aircraft with respect to which such Equipment Notes were
issued. See Description of the Certificates
Indenture Events of Default and Certain Rights Upon an Indenture
Event of Default.
The Controlling Party will be:
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if Final Distributions have not been paid in full to holders of
the Class A Certificates, the Class A Trustee;
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if Final Distributions have been paid in full to the holders of
Class A Certificates, but not to the holders of the
Class B Certificates, the Class B Trustee; and
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under certain circumstances, and notwithstanding the foregoing,
the Liquidity Provider with the largest amount owed to it.
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As a result of the foregoing, if the Trustee for a class of
Certificates is not the Controlling Party with respect to an
Indenture, the Certificateholders of that class will have no
rights to participate in directing the exercise of remedies
under such Indenture.
The proceeds
from the disposition of any Aircraft or Equipment Notes may not
be sufficient to pay all amounts distributable to the
Certificateholders.
During the continuation of any Indenture Event of Default under
an Indenture, the Equipment Notes issued under such Indenture or
the related Aircraft may be sold in the exercise of remedies
with respect to that Indenture, subject to certain limitations.
See Description of the Intercreditor Agreement
Intercreditor Rights Limitations on Exercise of
Remedies. The market for Aircraft or Equipment Notes
during the continuation of any Indenture Event of Default may be
very limited, and there can be no assurance as to whether they
could be sold or the price at which they could be sold. If any
Equipment Notes are sold for less than their outstanding
principal amount or any Aircraft are sold for less than the
outstanding principal amount of the related Equipment Notes,
certain Certificateholders will receive a smaller amount of
principal distributions than anticipated and will not have any
claim for the shortfall against Delta (except in the case that
Aircraft are sold for less than the outstanding principal amount
of the related Equipment Notes), any Liquidity Provider or any
Trustee.
The ratings of
the Certificates are not a recommendation to buy and may be
lowered or withdrawn in the future.
It is a condition to the issuance of the Certificates that the
Class A Certificates be rated not lower than Baa2 by
Moodys Investors Service, Inc.
(Moodys) and A- by Standard &
Poors Ratings Services, a Standard & Poors
Financial Services LLC business (Standard &
Poors, and together with Moodys, the
Rating Agencies) and that the Class B
Certificates be rated not lower than Ba2 by Moodys and
BBB- by Standard & Poors. Deltas corporate
credit ratings are currently carrying a negative outlook by the
Rating Agencies. A rating is not a recommendation to purchase,
hold or sell the Certificates, because such rating does not
address market price or suitability for a particular investor. A
rating may change during any given period of time and may be
lowered or withdrawn entirely by a Rating Agency if in its
judgment circumstances in the future (including the downgrading
of Delta, the Depositary or a Liquidity Provider) so warrant.
Moreover, any change in a Rating Agencys assessment of the
risks of aircraft-backed debt (and similar securities such as
the Certificates) could adversely affect the rating issued by
such Rating Agency with respect to the Certificates.
The ratings of the Certificates are based primarily on the
default risk of the Equipment Notes and the Depositary, the
availability of the Liquidity Facilities for the benefit of the
holders of the Class A and Class B Certificates, the
collateral value provided by the Aircraft relating to the
Equipment Notes, the cross-collateralization provisions
applicable to the Indentures and the subordination provisions
applicable to the Certificates under the Intercreditor
Agreement. These ratings address the likelihood of timely
payment of interest (at the applicable Stated Interest Rate and
without any premium) when due on the Certificates and the
ultimate payment of principal distributable
29
under the Certificates by the applicable Final Legal
Distribution Date. The ratings do not address the possibility of
certain defaults, optional redemptions or other circumstances
(such as an Event of Loss to an Aircraft), which could result in
the payment of the outstanding principal amount of the
Certificates prior to the final expected Regular Distribution
Date. Standard & Poors has indicated that its
rating applies to a unit consisting of Certificates representing
the Trust Property and Escrow Receipts initially
representing interests in $688,740,000 of Deposits. Amounts
deposited under the Escrow Agreements are not property of Delta
and are not entitled to the benefits of Section 1110 and
any default arising under an Indenture solely by reason of the
cross-default in such Indenture may not be of a type required to
be cured under Section 1110. Any cash collateral held as a
result of the cross-collateralization of the Equipment Notes
also would not be entitled to the benefits of Section 1110.
The Certificates and the related Escrow Receipts may not be
separately assigned or transferred.
The reduction, suspension or withdrawal of the ratings of the
Certificates will not, by itself, constitute an Indenture Event
of Default.
As a
Certificateholder, you will have no protection against our entry
into highly leveraged or extraordinary transactions, and there
are no financial or other covenants in the Certificates, the
Equipment Notes or the underlying agreements that impose
restrictions on our financial and business operations or our
ability to execute any such transaction.
The Certificates, the Equipment Notes and the underlying
agreements will not contain any financial or other covenants or
event risk provisions protecting the
Certificateholders in the event of a highly leveraged or other
extraordinary transaction affecting Delta or its affiliates. We
do from time to time analyze opportunities presented by various
types of transactions, and we may conduct our business in a
manner that could cause the market price or liquidity of the
Certificates to decline, could have a material adverse effect on
our financial condition or the credit rating of the Certificates
or otherwise could restrict or impair our ability to pay amounts
due under the Equipment Notes
and/or the
related agreements, including by entering into a highly
leveraged or other extraordinary transaction.
Escrowed funds
may be withdrawn and distributed to holders of Certificates
without purchase of Equipment Notes.
Under certain circumstances, less than all of the Deposits held
in escrow may have been used to purchase Equipment Notes to be
issued with respect to the Aircraft by the Delivery Period
Termination Date. This could occur because of delays in the
release of liens under the Existing Financings with respect to
the Aircraft or for other reasons. See Description of the
Certificates Obligation to Purchase Equipment
Notes. If any funds remain as Deposits with respect to any
Trust as of the Delivery Period Termination Date, such remaining
funds will be withdrawn by the Escrow Agent and distributed by
the Paying Agent, with accrued and unpaid interest on such
remaining funds, but without any premium, to the
Certificateholders of such Trust on a date no earlier than
15 days after the Paying Agent has received notice of the
event requiring such distribution or, under certain
circumstances, such remaining funds will be automatically
returned by the Depositary to the Paying Agent on the Outside
Termination Date, and the Paying Agent will distribute such
funds to such Certificateholders as promptly as practicable
thereafter. In addition, if a Triggering Event occurs prior to
the Delivery Period Termination Date, any Deposits held in
escrow will also be withdrawn and distributed to the
Certificateholders. See Description of the Deposit
Agreements Other Withdrawals and Return of
Deposits. If any of certain events of loss occurs with
respect to an Aircraft before such Aircraft is financed pursuant
to this offering, any Deposits relating to such Aircraft held in
escrow with respect to each Trust will be similarly withdrawn
and distributed to the Certificateholders of such Trust. See
Description of the Deposit Agreements Other
Withdrawals and Return of Deposits.
30
The holders of
the Certificates are exposed to the credit risk of the
Depositary.
The holders of the Certificates may suffer losses or delays in
repayment in the event that the Depositary fails to pay when due
the Deposits or accrued interest thereon for any reason,
including by reason of the insolvency of the Depositary. Delta
is not required to indemnify against any failure on the part of
the Depositary to repay the Deposits or accrued interest thereon
in full on a timely basis.
Because there
is no current market for the Certificates, you may have a
limited ability to resell Certificates.
Prior to this offering of the Certificates, there has been no
trading market for the Certificates. Neither Delta nor any Trust
intends to apply for listing of the Certificates on any
securities exchange. The Underwriters may assist in resales of
the Certificates, but they are not required to do so, and any
market-making activity may be discontinued at any time without
notice at the sole discretion of each Underwriter. A secondary
market for the Certificates therefore may not develop. If a
secondary market does develop, it might not continue or it might
not be sufficiently liquid to allow you to resell any of your
Certificates. If an active trading market does not develop, the
market price and liquidity of the Certificates may be adversely
affected.
The liquidity of, and trading market for, the Certificates also
may be adversely affected by general declines in the markets or
by declines in the market for similar securities. Such declines
may adversely affect such liquidity and trading markets
independent of Deltas financial performance and prospects.
The market for
Certificates could be negatively affected by regulatory
changes.
The Certificates of each Trust are sold to investors under an
exemption to the Investment Company Act of 1940, as amended,
that permits such Trust to issue the Certificates relating to
such Trust to investors generally without registering as an
investment company; provided that the Certificates of
such Trust have an investment grade rating at the time of
original sale. Recent events in the debt markets, including
defaults on asset-backed securities that had an investment grade
rating at the time of sale, have prompted broad based regulatory
reviews, including a review of the regulations that permit the
sale of certain asset-backed securities based upon the ratings
of such securities. In particular, the SEC has solicited
comments on proposed rule changes that would eliminate the
ability of the Trusts to sell the Certificates to investors
generally unless a different exemption is used. Currently, there
is no such exemption under which investors generally could
purchase the Certificates. If these rules are adopted or other
unforeseen regulatory changes are enacted that affect the
ability of the Trusts to issue the Certificates to investors
generally or affect the ability of such investors to continue to
hold or purchase Certificates, or to re-sell their Certificates
to other investors generally, the secondary market for the
Certificates could be negatively affected and, as a result, the
market price of the Certificates could decrease.
31
USE OF
PROCEEDS
The proceeds from the sale of the Certificates of each Trust
will initially be held in escrow and deposited with the
Depositary, pending the financing of each Aircraft under an
Indenture. Each Trust will withdraw funds from the escrow
relating to such Trust to acquire from Delta the related series
of Equipment Notes to be issued as the Aircraft are subjected to
the related Indentures. The Equipment Notes will be full
recourse obligations of Delta. Delta will use the proceeds from
the issuance of the Equipment Notes for the prepayment or
refinancing, as applicable, of the Existing Financings as
described below.
The Aircraft are currently subject to liens under existing
financings described below (collectively, the Existing
Financings ):
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the 2009 Aircraft are each subject to separate mortgage
financings which were entered into throughout 2009 to finance
the acquisition of such 2009 Aircraft (the Mortgage
Financings); and
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the 2000-1
Aircraft are subject to separate indentures (the
2000-1
Indentures) under an enhanced equipment trust
certificate transaction entered into by Delta in November 2000
(the
2000-1
EETC ).
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Each of the Mortgage Financings bears interest at a floating
rate measured by reference to LIBOR plus a borrowing margin and
is scheduled to mature in 2021. As of October 31, 2009, the
weighted average interest rate of the Mortgage Financings is
4.245% per annum. The
2000-1 EETC
consists of three separate tranches of certificates, each of
which bear interest at a fixed rate as follows: 7.379% with
respect to the
class A-1
certificates, 7.570% per annum with respect to the
class A-2
certificates, and 7.920% per annum with respect to the
class B certificates. A final distribution on such
class A-1
certificates is scheduled to occur in May 2010 and a final
distribution on such
class A-2
and class B certificates is scheduled to occur in November
2010. As of October 31, 2009, the weighted average interest
rate of the Existing Financings is 6.338% per annum.
After the Aircraft are released from the liens of the Existing
Financings, the Aircraft are expected to be subjected to the
Indentures in connection with this offering. Delta will use the
proceeds from the issuance of the Equipment Notes issued with
respect to: (a) the 2009 Aircraft to reimburse itself for
the prepayment of the Mortgage Financings with respect to such
2009 Aircraft, and (b) the
2000-1
Aircraft to reimburse itself for the refinancing of such
2000-1
Aircraft after the maturity of the
2000-1 EETC
in November 2010. Delta will use any proceeds not used in
connection with such prepayment or refinancing to pay fees and
expenses related to this offering and for general corporate
purposes.
32
RATIO OF EARNINGS
TO FIXED CHARGES
The ratio of earnings (loss) to fixed charges represents the
number of times that fixed charges are covered by earnings.
Earnings (loss) represents income (loss) before income taxes,
plus fixed charges, less capitalized interest. Fixed charges
include interest, whether expensed or capitalized, amortization
of debt costs, the portion of rent expense representative of the
interest factor and preferred stock dividends. For the nine
months ended September 30, 2009 and years ended
December 31, 2008, 2006, 2005 and 2004, earnings were not
sufficient to cover fixed charges by $1.2 billion,
$9.1 billion, $7.0 billion, $3.9 billion and
$4.0 billion, respectively.
References to Successor refer to Delta on or after
May 1, 2007, after giving effect to (1) the
cancellation of Delta common stock issued prior to the effective
date of Deltas emergence from bankruptcy on April 30,
2007; (2) the issuance of new Delta common stock and
certain debt securities in accordance with Deltas Joint
Plan of Reorganization; and (3) the application of fresh
start reporting. References to Predecessor refer to
Delta prior to May 1, 2007.
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Successor
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Predecessor
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Nine Months
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Eight Months
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Four Months
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Ended
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Year Ended
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Ended
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Ended
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September 30,
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December 31,
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December 31,
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April 30,
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Year Ended December 31,
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2009
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2008
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2007
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2007
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2006
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2005
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2004
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Ratio of earnings (loss) to fixed charges
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(0.16
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(10.19
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2.20
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5.53
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(6.19
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(2.04
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(2.55
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33
THE
COMPANY
We are the worlds largest airline, providing scheduled air
transportation for passengers and cargo throughout the United
States and around the world. On October 29, 2008, a
subsidiary of ours merged with and into Northwest Airlines
Corporation, creating the worlds largest airline.
Northwest and its subsidiaries, including Northwest Airlines,
Inc., became our wholly-owned subsidiaries. We believe the
merger better positions us to manage through economic cycles and
volatile fuel prices, invest in our fleet, improve services for
customers and achieve our strategic objectives.
Our global route network is centered around the hub system we
operate at airports in Atlanta, Cincinnati, Detroit, Memphis,
Minneapolis/St. Paul, New York-JFK, Salt Lake City,
Paris-Charles de Gaulle, Amsterdam and Tokyo-Narita. Each of
these hub operations includes flights that gather and distribute
traffic from markets in the geographic region surrounding the
hub to domestic and international cities and to other hubs. The
combination of Deltas operations in the south, mountain
west and northeast United States, Europe and Latin America and
NWAs operations in the midwest and northwest United States
and Asia gives us a diversified global network with a presence
in most major domestic and international markets. Our network is
supported by a fleet of aircraft that is varied in terms of size
and capabilities, giving us flexibility to adjust aircraft to
the network.
Other key characteristics of our route network include:
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our alliances with foreign airlines, including our membership in
SkyTeam, a global airline alliance;
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our transatlantic joint venture with Air France KLM;
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our domestic alliances, including our marketing alliance with
Alaska Airlines and Horizon Air, which we are enhancing to
expand our west coast service; and
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agreements with multiple domestic regional carriers, which
operate as Delta Connection, including our wholly-owned
subsidiaries, Comair, Inc., Compass Airlines, Inc. and Mesaba
Aviation, Inc.
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34
RECENT
DEVELOPMENTS
Delta/Northwest
Merger Integration Update
As a result of our integration efforts, we are targeting over
$700 million in synergy benefits in 2009 and continue to
target $2 billion in total annual synergy benefits by 2012.
Our ability to fully realize the targeted synergies is dependent
on achievement of three main goals: (1) receipt of a single
operating certificate from the Federal Aviation Administration,
which we expect to achieve by the end of 2009,
(2) integration of technologies of the two airlines, which
we expect to occur in the first half of 2010 and
(3) resolution of labor representation issues to allow
integration of workgroups.
The National Mediation Board recently issued a formal proposal
to change the voting rules for representation elections in the
airline industry to provide that a majority of votes cast
(rather than a majority of votes eligible to be cast) is
necessary to certify a union to represent a craft or class of
employees. Two pre-merger unions, the Association of Flight
Attendants-CWA, which represented flight attendants at
pre-merger Northwest Airlines, Inc., and the International
Association of Machinists, which represented various categories
of ground employees at pre-merger Northwest Airlines, Inc.,
withdrew applications that they had filed with the National
Mediation Board to resolve post-merger representation issues.
While it is unclear when representation issues will be resolved
in those workgroups, we plan to proceed with a substantial
portion of our operational integration after we receive the
single operating certificate from the Federal Aviation
Administration.
Other Financing
Initiatives
In addition to this offering of the Certificates, we plan to
enter into two additional financing transactions prior to the
end of 2009 that would positively impact our liquidity. These
transactions include issuing tax exempt debt through the Clayton
County, Georgia development authority in an aggregate principal
amount of up to $300 million and entering into a secured
revolving credit facility in a principal amount of up to
$120 million to replace an existing letter of credit
facility. While we currently anticipate completing both of these
transactions before the end of 2009, the completion of these
transactions is subject to documentation and other conditions,
including being able to complete these transactions on
acceptable terms.
Discussions with
Japan Airlines
We have discussed a possible marketing alliance and joint
venture with Japan Airlines covering routes between North
America and Asia, including a related capital investment in
Japan Airlines by us and one or more other members of the
SkyTeam airline alliance and other financial support by us to
Japan Airlines. We cannot currently predict the outcome of these
discussions or the timing of any possible transaction.
35
DESCRIPTION OF
THE CERTIFICATES
The following summary describes certain material terms of the
Certificates. The summary does not purport to be complete and is
qualified in its entirety by reference to all of the provisions
of the Basic Agreement, which was filed with the SEC as an
exhibit to Deltas Registration Statement on
Form S-4,
File
No. 333-106592,
and to all of the provisions of the Certificates, the
Trust Supplements, the Liquidity Facilities, the Deposit
Agreements, the Escrow Agreements, the Note Purchase Agreement
and the Intercreditor Agreement, copies of which will be filed
as exhibits to a Current Report on
Form 8-K
to be filed by Delta with the SEC.
Except as otherwise indicated, the following summary relates to
each of the Trusts and the Certificates issued by each Trust.
The terms and conditions governing each of the Trusts will be
substantially the same, except as described under
Subordination, below and elsewhere in
this prospectus, and except that the principal amount and
scheduled principal repayments of the Equipment Notes held by
each Trust and the interest rate and maturity date of the
Equipment Notes held by each Trust will differ.
General
Each pass through certificate (collectively, the
Certificates) will represent a fractional
undivided interest in one of two Delta Air Lines
2009-1 Pass
Through Trusts: the Class A Trust ,
and the Class B Trust , and,
collectively, the Trusts. The Trusts will be
formed pursuant to a pass through trust agreement between Delta
and U.S. Bank Trust National Association (as successor
trustee to State Street Bank and Trust Company of
Connecticut, National Association), as trustee, dated as of
November 16, 2000 (the Basic
Agreement ), and two separate supplements thereto
(each, a Trust Supplement and,
together with the Basic Agreement, collectively, the
Pass Through Trust Agreements). The
trustee under the Class A Trust and the Class B Trust
is referred to herein, respectively, as the
Class A Trustee and the
Class B Trustee and collectively as the
Trustees. The Certificates to be issued by
the Class A Trust and the Class B Trust are referred
to herein, respectively, as the Class A
Certificates and the Class B
Certificates. The Class A Trust will purchase all
of the Series A Equipment Notes and the Class B Trust
will purchase all of the Series B Equipment Notes. The
holders of the Class A Certificates and the Class B
Certificates are referred to herein, respectively, as the
Class A Certificateholders and the
Class B Certificateholders, and
collectively as the Certificateholders.
Assuming all of the Equipment Notes expected to be issued with
respect to the Aircraft are issued, the sum of the initial
principal balance of the Equipment Notes held by each Trust will
equal the initial aggregate face amount of the Certificates
issued by such Trust.
Each Certificate will represent a fractional undivided interest
in the Trust created by the applicable Pass Through
Trust Agreement. The property of each Trust (the
Trust Property) will consist of:
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subject to the Intercreditor Agreement, the Equipment Notes
acquired by such Trust under the Note Purchase Agreement prior
to the Delivery Period Termination Date, all monies at any time
paid thereon and all monies due and to become due thereunder;
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the rights of such Trust to acquire Equipment Notes under the
Note Purchase Agreement;
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the rights of such Trust under the applicable Escrow Agreement
to request the Escrow Agent to withdraw from the Depositary
funds sufficient to enable such Trust to purchase the related
series of Equipment Notes upon the financing of an Aircraft
under the related Indenture prior to the Delivery Period
Termination Date;
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the rights of such Trust under the Intercreditor Agreement
(including all rights to receive monies receivable in respect of
such rights);
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all monies receivable under the separate Liquidity Facility for
such Trust; and
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funds from time to time deposited with the applicable Trustee in
accounts relating to such Trust. (Trust Supplements,
Section 1.01)
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The Certificates represent fractional undivided interests in the
respective Trusts only, and all payments and distributions
thereon will be made only from the Trust Property of the
related Trust. (Basic Agreement, Sections 2.01 and 3.09;
Trust Supplements, Section 3.01) The Certificates do
not represent indebtedness of the Trusts, and references in this
prospectus to interest accruing on the Certificates are included
for purposes of computation only. (Trust Supplements,
Section 3.01) The Certificates do not represent an interest
in or obligation of Delta, the Trustees, the Subordination
Agent, any of the Loan Trustees or any affiliate of any thereof.
Each Certificateholder by its acceptance of a Certificate agrees
to look solely to the income and proceeds from the
Trust Property of the related Trust for payments and
distributions on such Certificate. (Basic Agreement,
Section 3.09)
Pursuant to the Escrow Agreement applicable to each Trust, the
Certificateholders of such Trust, as holders of the Escrow
Receipts affixed to each Certificate issued by such Trust, are
entitled to certain rights with respect to the Deposits relating
to such Trust. Accordingly, any transfer of a Certificate will
have the effect of transferring the corresponding rights with
respect to the Deposits, and rights with respect to the Deposits
may not be separately transferred by the Certificateholders.
(Escrow Agreements, Section 1.03) Rights with respect to
the Deposits and the Escrow Agreement relating to a Trust,
except for the right to direct withdrawals for the purchase of
related Equipment Notes, will not constitute
Trust Property. (Trust Supplements, Section 1.01)
Payments to the Certificateholders in respect of the Deposits
and the Escrow Receipts relating to a Trust will constitute
payments to such Certificateholders solely in their capacity as
holders of the related Escrow Receipts.
The Certificates of each Trust will be issued in fully
registered form only and will be subject to the provisions
described below under Book-Entry Registration;
Delivery and Form. The Certificates will be issued only in
minimum denominations of $2,000 (or such other denomination that
is the lowest integral multiple of $1,000, that is, at the time
of issuance, equal to at least 1,000 euros) and integral
multiples of $1,000 in excess thereof, except that one
Certificate of each class may be issued in a different
denomination. (Trust Supplements, Section 4.01(a))
Payments and
Distributions
The following description of distributions on the Certificates
should be read in conjunction with the description of the
Intercreditor Agreement because the Intercreditor Agreement may
alter the following provisions in a default situation. See
Subordination and Description of
the Intercreditor Agreement.
Payments of interest on the Deposits with respect to each Trust
and payments of principal, Make-Whole Amount (if any) and
interest on the Equipment Notes or with respect to other
Trust Property held in each Trust will be distributed by
the Paying Agent (in the case of Deposits) or by the Trustee (in
the case of Trust Property of such Trust) to
Certificateholders of such Trust on the date receipt of such
payment is confirmed, except in the case of certain types of
Special Payments.
June 17 and December 17 of each year are referred to herein as
Regular Distribution Dates (each Regular
Distribution Date and Special Distribution Date, a
Distribution Date).
Interest
The Deposits held with respect to each Trust and the Equipment
Notes held in each Trust will accrue interest at the applicable
rate per annum for the Certificates to be issued by such Trust,
payable on each Regular Distribution Date commencing on
June 17, 2010 (or in the case of Equipment Notes issued
after such date, commencing with the first Regular Distribution
Date to occur after such Equipment Notes are issued). The rate
per annum for the Certificates is set forth on the cover page of
this prospectus; provided that the interest rate
applicable to any new Class B
37
Certificates issued in connection with the issuance of any
series B equipment notes issued as described in
Possible Issuance of Additional Certificates and
Refinancing of Certificates Refinancing of
Certificates may differ. The interest rate applicable to
each class of Certificates, as shown on the cover page of this
prospectus, is referred to as the Stated Interest
Rate for such Trust. Interest payments will be
distributed to Certificateholders of such Trust on each Regular
Distribution Date until the final Distribution Date for such
Trust, subject to the Intercreditor Agreement. Interest on the
Deposits and on the Equipment Notes will be calculated on the
basis of a
360-day
year, consisting of twelve
30-day
months.
Distributions of interest on the Class A and Class B
Certificates will be supported by a separate Liquidity Facility
to be provided by the applicable Liquidity Provider for the
benefit of the holders of such Certificates, each of which is
expected to provide an aggregate amount sufficient to distribute
interest on the Pool Balance thereof at the Stated Interest Rate
for such Certificates on up to three successive semiannual
Regular Distribution Dates (without regard to any future
distributions of principal on such Certificates), except that no
Liquidity Facility will cover interest payable by the Depositary
on the Deposits. The Liquidity Facility for any class of
Certificates does not provide for drawings thereunder to pay for
principal or Make-Whole Amount with respect to such
Certificates, any interest with respect to such Certificates in
excess of their Stated Interest Rate, or, notwithstanding the
subordination provisions of the Intercreditor Agreement,
principal, interest, or Make-Whole Amount with respect to the
Certificates of any other class. Therefore, only the holders of
the Class A and Class B Certificates will be entitled
to receive and retain the proceeds of drawings under the
applicable Liquidity Facility. See Description of the
Liquidity Facilities.
Principal
Payments of principal on the Series A and Series B
Equipment Notes are scheduled to be received in specified
amounts on June 17 and December 17 in certain years, commencing
on June 17, 2010 and ending on December 17, 2019 in
the case of Series A Equipment Notes and December 17,
2016 in the case of Series B Equipment Notes.
Distributions
Payments of interest on the Deposits (other than as part of any
withdrawals described in Description of the Deposit
Agreements Other Withdrawals and Return of
Deposits) and payments of interest on or principal of the
Equipment Notes (including drawings made under a Liquidity
Facility in respect of a shortfall of interest payable on any
Certificate) scheduled to be made on a Regular Distribution Date
are referred to herein as Scheduled Payments.
See Description of the Equipment Notes
Principal and Interest Payments. The Final Legal
Distribution Date for the Class A Certificates is
June 17, 2021 and for the Class B Certificates is
June 17, 2018.
The Paying Agent with respect to each Escrow Agreement will
distribute on each Regular Distribution Date to the
Certificateholders of the Trust to which such Escrow Agreement
relates all Scheduled Payments received in respect of the
related Deposits, the receipt of which is confirmed by the
Paying Agent on such Regular Distribution Date. Subject to the
Intercreditor Agreement, on each Regular Distribution Date, the
Trustee of each Trust will distribute to the Certificateholders
of such Trust all Scheduled Payments received in respect of the
Equipment Notes held on behalf of such Trust, the receipt of
which is confirmed by such Trustee on such Regular Distribution
Date. Each Certificateholder of each Trust will be entitled to
receive its proportionate share, based upon its fractional
interest in such Trust, of any distribution in respect of
Scheduled Payments of interest on Deposits relating to such
Trust, and, subject to the Intercreditor Agreement, each
Certificateholder of each Trust will be entitled to receive its
proportionate share, based upon its fractional interest in such
Trust, of any distribution in respect of Scheduled Payments of
principal of or interest on the Equipment Notes held on behalf
of such Trust. Each such distribution of Scheduled Payments will
be made by the applicable Paying Agent or the applicable
Trustee, as the case may be, to the Certificateholders of record
of the relevant Trust on the record date applicable to such
Scheduled Payment (generally,
38
15 days prior to each Regular Distribution Date), subject
to certain exceptions. (Basic Agreement, Sections 1.01 and
4.02(a); Escrow Agreements, Section 2.03(a)) If a Scheduled
Payment is not received by the applicable Paying Agent or the
applicable Trustee, as the case may be, on a Regular
Distribution Date but is received within five days thereafter,
it will be distributed on the date received to such holders of
record. If it is received after such
five-day
period, it will be treated as a Special Payment and distributed
as described below. (Intercreditor Agreement, Section 1.01;
Escrow Agreements, Section 2.03(d))
Any payment in respect of, or any proceeds of, any Equipment
Note or the collateral under any Indenture (the
Collateral ) other than a Scheduled
Payment (each, a Special Payment ) will
be distributed on, in the case of an early redemption or a
purchase of any Equipment Note, the date of such early
redemption or purchase (which will be a Business Day), and
otherwise on the Business Day specified for distribution of such
Special Payment pursuant to a notice delivered by each Trustee
(as described below) as soon as practicable after the Trustee
has received notice of such Special Payment, or has received the
funds for such Special Payment (each, a Special
Distribution Date ). Any such distribution will
be subject to the Intercreditor Agreement. (Basic Agreement,
Sections 4.02(b) and (c); Trust Supplements,
Section 7.01(d))
Any Deposits withdrawn because a Triggering Event occurs, and
any unused Deposits remaining as of the Delivery Period
Termination Date, will be distributed, together with accrued and
unpaid interest thereon, but without any premium (each, also a
Special Payment ), on a date no earlier
than 15 days after the Paying Agent has received notice of
the event requiring such distribution (also, a Special
Distribution Date ). However, if the day
scheduled for such withdrawal is within 10 days before or
after a Regular Distribution Date, the Escrow Agent will request
that such withdrawal be made on such Regular Distribution Date.
Any such distribution will not be subject to the Intercreditor
Agreement. (Escrow Agreements, Sections 1.02(f), 2.03(b)
and 2.06)
Triggering Event means (i) the
occurrence of an Indenture Event of Default under all of the
Indentures resulting in a PTC Event of Default with respect to
the most senior class of Certificates then outstanding,
(ii) the acceleration of all of the outstanding Equipment
Notes (provided that, with respect to the period prior to
the Delivery Period Termination Date, the aggregate principal
amount thereof exceeds $330 million) or (iii) certain
bankruptcy or insolvency events involving Delta. (Intercreditor
Agreement, Section 1.01)
Any Deposits withdrawn because an Aircraft suffers an Event of
Loss or an Existing Financing Event of Loss (or an event that
would constitute such an Event of Loss or Existing Financing
Event of Loss but for the requirement that notice be given or
time elapse or both), as the case may be, before such Aircraft
is financed pursuant to this offering will be distributed,
together with accrued and unpaid interest thereon, but without
any premium (each, also a Special Payment),
on a date no earlier than 15 days after the Paying Agent
has received notice of the event requiring such distribution
(also, a Special Distribution Date). Any such
distribution will not be subject to the Intercreditor Agreement.
(Escrow Agreements, Sections 1.02(e), 2.03(b) and 2.07)
Each Paying Agent, in the case of the Deposits, and each
Trustee, in the case of the Trust Property, will mail a
notice to the Certificateholders of the applicable Trust stating
the scheduled Special Distribution Date, the related record
date, the amount of the Special Payment and, in the case of a
distribution under the applicable Pass Through
Trust Agreement, the reason for the Special Payment. In the
case of a redemption or purchase of the Equipment Notes held in
the related Trust or any withdrawal or return of Deposits
described under Description of the Deposit
Agreements Other Withdrawals and Return of
Deposits, such notice will be mailed not less than
15 days prior to the date such Special Payment is scheduled
to be distributed, and in the case of any other Special Payment,
such notice will be mailed as soon as practicable after the
Trustee has confirmed that it has received funds for such
Special Payment. (Basic Agreement, Section 4.02(c);
Trust Supplements, Section 7.01(d); Escrow Agreements,
Sections 2.06 and 2.07) Each distribution of a Special
Payment, other than a Final Distribution, on a Special
Distribution Date for any Trust will be made by the Paying
39
Agent or the Trustee, as applicable, to the Certificateholders
of record of such Trust on the record date applicable to such
Special Payment. (Basic Agreement, Section 4.02(b); Escrow
Agreements, Section 2.03(b)) See
Indenture Events of Default and Certain Rights
Upon an Indenture Event of Default and Description
of the Equipment Notes Redemption.
Each Pass Through Trust Agreement requires that the Trustee
establish and maintain, for the related Trust and for the
benefit of the Certificateholders of such Trust, one or more
non-interest bearing accounts (the Certificate
Account ) for the deposit of payments
representing Scheduled Payments received by such Trustee. (Basic
Agreement, Section 4.01) Each Pass Through
Trust Agreement requires that the Trustee establish and
maintain, for the related Trust and for the benefit of the
Certificateholders of such Trust, one or more accounts (the
Special Payments Account ) for the
deposit of payments representing Special Payments received by
such Trustee, which will be non-interest bearing except in
certain limited circumstances where the Trustee may invest
amounts in such account in certain Permitted Investments. (Basic
Agreement, Section 4.01; Trust Supplements,
Section 7.01(c)) Pursuant to the terms of each Pass Through
Trust Agreement, the Trustee is required to deposit any
Scheduled Payments relating to the applicable Trust received by
it in the Certificate Account of such Trust and to deposit any
Special Payments so received by it in the Special Payments
Account of such Trust. (Basic Agreement, Section 4.01;
Trust Supplements, Section 7.01(c)) All amounts so
deposited will be distributed by the Trustee on a Regular
Distribution Date or a Special Distribution Date, as
appropriate. (Basic Agreement, Section 4.02)
Each Escrow Agreement requires that the Paying Agent establish
and maintain, for the benefit of the applicable Receiptholders,
an account (the Paying Agent Account ),
which will be non-interest bearing, and the Paying Agent is
under no obligation to invest any amounts held in the Paying
Agent Account. (Escrow Agreements, Section 2.02) Pursuant
to the terms of the Deposit Agreements, the Depositary agrees to
pay, subject to certain exceptions, interest payable on Deposits
and amounts withdrawn from the Deposits as described under
Description of the Deposit Agreements Other
Withdrawals and Return of Deposits, in accordance with the
applicable Deposit Agreement, directly into the related Paying
Agent Account. (Deposit Agreements, Section 4) All
amounts so deposited in the Paying Agent Accounts will be
distributed by the Paying Agent on a Regular Distribution Date
or Special Distribution Date, as appropriate. See
Description of the Deposit Agreements.
The Final Distribution for each Trust will be made only upon
presentation and surrender of the Certificates for such Trust at
the office or agency of the Trustee specified in the notice
given by the Trustee of such Final Distribution. (Basic
Agreement, Section 11.01) See Termination
of the Trusts below. Distributions in respect of
Certificates issued in global form will be made as described in
Book-Entry Registration; Delivery and
Form below.
If any Regular Distribution Date or Special Distribution Date is
not a Business Day, distributions scheduled to be made on such
Regular Distribution Date or Special Distribution Date will be
made on the next succeeding Business Day and interest will not
be added for such additional period. (Basic Agreement,
Section 12.11; Trust Supplements,
Sections 3.02(c) and 3.02(d))
Business Day means, with respect to
Certificates of any class, any day (a) other than a
Saturday, a Sunday or a day on which commercial banks are
required or authorized to close in New York, New York,
Atlanta, Georgia, Wilmington, Delaware, or, so long as any
Certificate of such class is outstanding, the city and state in
which the Trustee, the Subordination Agent or any related Loan
Trustee maintains its corporate trust office or receives and
disburses funds, and (b) solely with respect to drawings
under any Liquidity Facility, which is also a Business
Day as defined in such Liquidity Facility. (Intercreditor
Agreement, Section 1.01)
Subordination
The Certificates are subject to subordination terms set forth in
the Intercreditor Agreement. See Description of the
Intercreditor Agreement Priority of
Distributions.
40
Pool
Factors
The Pool Balance of the Certificates issued
by any Trust indicates, as of any date, the original aggregate
face amount of the Certificates of such Trust less the aggregate
amount of all distributions made as of such date in respect of
the Certificates of such Trust or in respect of Deposits
relating to such Trust, other than distributions made in respect
of interest or Make-Whole Amount or reimbursement of any costs
and expenses incurred in connection therewith. The Pool Balance
of the Certificates issued by any Trust as of any date will be
computed after giving effect to any distribution with respect to
unused Deposits, payment of principal, if any, on the Equipment
Notes or payment with respect to other Trust Property held
in such Trust and the distribution thereof to be made on such
date. (Trust Supplements, Section 1.01; Intercreditor
Agreement, Section 1.01)
The Pool Factor for each Trust as of any
Distribution Date is the quotient (rounded to the seventh
decimal place) computed by dividing (i) the Pool Balance of
such Trust by (ii) the original aggregate face amount of
the Certificates of such Trust. The Pool Factor for each Trust
as of any Distribution Date will be computed after giving effect
to any distribution with respect to unused Deposits, payment of
principal, if any, on the Equipment Notes or payments with
respect to other Trust Property held in such Trust and the
distribution thereof to be made on that date.
(Trust Supplements, Section 1.01) The Pool Factor of
each Trust will be 1.0000000 on the date of issuance of the
Certificates (the Issuance Date );
thereafter, the Pool Factor for each Trust will decline as
described herein to reflect reductions in the Pool Balance of
such Trust. The amount of a Certificateholders pro rata
share of the Pool Balance of a Trust can be determined by
multiplying the original denomination of the
Certificateholders Certificate of such Trust by the Pool
Factor for such Trust as of the applicable Distribution Date.
Notice of the Pool Factor and the Pool Balance for each Trust
will be mailed to Certificateholders of such Trust on each
Distribution Date. (Trust Supplements, Section 5.01(a))
The following table sets forth the expected aggregate principal
amortization schedule (the Assumed Amortization
Schedule ) for the Equipment Notes held in each
Trust and resulting Pool Factors with respect to such Trust,
assuming that all of the Aircraft have been subjected to
Indentures and that all of the related Equipment Notes have been
acquired by such Trust before the Outside Termination Date. The
actual aggregate principal amortization schedule applicable to a
Trust and the resulting Pool Factors with respect to such Trust
may differ from the Assumed Amortization Schedule because the
scheduled distribution of principal payments for any Trust may
be affected if, among other things, any Equipment Notes held in
such Trust are redeemed or purchased, if a default in payment on
any Equipment Note occurs, or if any Aircraft is not subjected
to an Indenture and the related Equipment Notes are not acquired
by such Trust.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
Class B
|
|
|
|
Scheduled
|
|
|
Expected
|
|
|
Scheduled
|
|
|
Expected
|
|
|
|
Principal
|
|
|
Pool
|
|
|
Principal
|
|
|
Pool
|
|
Date
|
|
Payments
|
|
|
Factor
|
|
|
Payments
|
|
|
Factor
|
|
|
Issuance Date
|
|
$
|
0.00
|
|
|
|
1.0000000
|
|
|
$
|
0.00
|
|
|
|
1.0000000
|
|
June 17, 2010
|
|
|
9,322,664.42
|
|
|
|
0.9836098
|
|
|
|
5,968,579.80
|
|
|
|
0.9502386
|
|
December 17, 2010
|
|
|
4,210,984.45
|
|
|
|
0.9762065
|
|
|
|
5,810,577.40
|
|
|
|
0.9017945
|
|
June 17, 2011
|
|
|
23,535,642.19
|
|
|
|
0.9348285
|
|
|
|
24,714,129.01
|
|
|
|
0.6957473
|
|
December 17, 2011
|
|
|
32,753,131.51
|
|
|
|
0.8772452
|
|
|
|
17,070,954.60
|
|
|
|
0.5534229
|
|
June 17, 2012
|
|
|
31,827,667.99
|
|
|
|
0.8212890
|
|
|
|
2,398,652.78
|
|
|
|
0.5334248
|
|
December 17, 2012
|
|
|
30,908,735.89
|
|
|
|
0.7669484
|
|
|
|
2,350,760.15
|
|
|
|
0.5138260
|
|
June 17, 2013
|
|
|
29,989,803.76
|
|
|
|
0.7142233
|
|
|
|
2,302,867.60
|
|
|
|
0.4946265
|
|
December 17, 2013
|
|
|
29,070,871.65
|
|
|
|
0.6631138
|
|
|
|
2,254,975.01
|
|
|
|
0.4758262
|
|
June 17, 2014
|
|
|
28,369,795.34
|
|
|
|
0.6132369
|
|
|
|
2,253,765.79
|
|
|
|
0.4570361
|
|
December 17, 2014
|
|
|
27,715,300.98
|
|
|
|
0.5645107
|
|
|
|
2,269,936.48
|
|
|
|
0.4381111
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
Class B
|
|
|
|
Scheduled
|
|
|
Expected
|
|
|
Scheduled
|
|
|
Expected
|
|
|
|
Principal
|
|
|
Pool
|
|
|
Principal
|
|
|
Pool
|
|
Date
|
|
Payments
|
|
|
Factor
|
|
|
Payments
|
|
|
Factor
|
|
|
June 17, 2015
|
|
|
26,676,198.66
|
|
|
|
0.5176112
|
|
|
|
2,725,999.82
|
|
|
|
0.4153839
|
|
December 17, 2015
|
|
|
25,980,995.54
|
|
|
|
0.4719341
|
|
|
|
2,719,214.21
|
|
|
|
0.3927132
|
|
June 17, 2016
|
|
|
25,752,727.06
|
|
|
|
0.4266582
|
|
|
|
2,634,454.08
|
|
|
|
0.3707491
|
|
December 17, 2016
|
|
|
24,626,996.36
|
|
|
|
0.3833615
|
|
|
|
44,469,133.28
|
|
|
|
0.0000000
|
|
June 17, 2017
|
|
|
23,501,265.63
|
|
|
|
0.3420439
|
|
|
|
0.00
|
|
|
|
0.0000000
|
|
December 17, 2017
|
|
|
22,375,534.82
|
|
|
|
0.3027055
|
|
|
|
0.00
|
|
|
|
0.0000000
|
|
June 17, 2018
|
|
|
21,249,804.13
|
|
|
|
0.2653462
|
|
|
|
0.00
|
|
|
|
0.0000000
|
|
December 17, 2018
|
|
|
20,124,073.41
|
|
|
|
0.2299661
|
|
|
|
0.00
|
|
|
|
0.0000000
|
|
June 17, 2019
|
|
|
18,983,719.70
|
|
|
|
0.1965908
|
|
|
|
0.00
|
|
|
|
0.0000000
|
|
December 17, 2019
|
|
|
111,820,086.49
|
|
|
|
0.0000000
|
|
|
|
0.00
|
|
|
|
0.0000000
|
|
If the Pool Factor and Pool Balance of a Trust differ from the
Assumed Amortization Schedule for such Trust, notice thereof
will be provided to the Certificateholders of such Trust as
described hereafter. The Pool Factor and Pool Balance of each
Trust will be recomputed if there has been an early redemption,
purchase or default in the payment of principal or interest in
respect of one or more of the Equipment Notes held in a Trust,
as described in Indenture Events of Default
and Certain Rights Upon an Indenture Event of Default,
Possible Issuance of Additional Certificates and
Refinancing of Certificates and Description of the
Equipment Notes Redemption, or a special
distribution of unused Deposits attributable to (a) the
occurrence of an Event of Loss or an Existing Financing Event of
Loss (or an event that would constitute such an Event of Loss or
Existing Financing Event of Loss but for the requirement that
notice be given or time elapse or both), as the case may be,
with respect to an Aircraft before such Aircraft is financed
pursuant to this offering, (b) the occurrence of a
Triggering Event or (c) unused Deposits remaining after the
Delivery Period Termination Date, in each case as described in
Description of the Deposit Agreements Other
Withdrawals and Return of Deposits. If the aggregate
principal payments scheduled for a Regular Distribution Date
prior to the Delivery Period Termination Date will not be as set
forth in the Assumed Amortization Schedule for a Trust, notice
thereof will be mailed to the Certificateholders of such Trust
by no later than the 15th day prior to such Regular
Distribution Date. Promptly following (i) the Delivery
Period Termination Date or, if applicable, the date any unused
Deposits are withdrawn following the Delivery Period Termination
Date, if there has been, on or prior to such date, (x) any
change in the Pool Factor and the scheduled payments from the
Assumed Amortization Schedule or (y) any such redemption,
purchase, default or special distribution and (ii) the date
of any such redemption, purchase, default or special
distribution occurring after the Delivery Period Termination
Date or, if applicable the date any unused Deposits are
withdrawn following the Delivery Period Termination Date, the
Pool Factor, Pool Balance and expected principal payment
schedule of each Trust will be recomputed after giving effect
thereto and notice thereof will be mailed to the
Certificateholders of such Trust. (Trust Supplements,
Sections 5.01(c) and 5.01(d)) See Reports
to Certificateholders, Certificate
Buyout Right of Certificateholders, and Description
of the Deposit Agreements.
Reports to
Certificateholders
On each Distribution Date, the applicable Trustee will include
with each distribution by it of a Scheduled Payment or Special
Payment to the Certificateholders of the related Trust a
statement, giving effect to such distribution to be made on such
Distribution Date, setting forth the following
42
information (per $1,000 aggregate principal amount of
Certificates as to items (2), (3), (4) and (5) below):
(1) the aggregate amount of funds distributed on such
Distribution Date under the related Pass Through
Trust Agreement and under the related Escrow Agreement,
indicating the amount, if any, allocable to each source,
including any portion thereof paid by the applicable Liquidity
Provider;
(2) the amount of such distribution under the related Pass
Through Trust Agreement allocable to principal and the amount
allocable to Make-Whole Amount (if any);
(3) the amount of such distribution under the related Pass
Through Trust Agreement allocable to interest, indicating any
portion thereof paid by the applicable Liquidity Provider;
(4) the amount of such distribution under the related
Escrow Agreement allocable to interest, if any;
(5) the amount of such distribution under the related
Escrow Agreement allocable to unused Deposits, if any; and
(6) the Pool Balance and the Pool Factor for such Trust.
(Trust Supplements, Section 5.01)
As long as the Certificates are registered in the name of The
Depository Trust Company (DTC ) or
its nominee (including Cede & Co.
(Cede )), on the record date prior to
each Distribution Date, the applicable Trustee will request that
DTC post on its Internet bulletin board a securities position
listing setting forth the names of all DTC Participants
reflected on DTCs books as holding interests in the
applicable Certificates on such record date. On each
Distribution Date, the applicable Trustee will mail to each such
DTC Participant the statement described above and will make
available additional copies as requested by such DTC Participant
for forwarding to Certificate Owners. (Trust Supplements,
Section 5.01(a))
In addition, after the end of each calendar year, the applicable
Trustee will furnish to each person who at any time during the
preceding calendar year was a Certificateholder of record a
report containing the sum of the amounts determined pursuant to
clauses (1), (2), (3), (4) and (5) above with respect
to the applicable Trust for such calendar year or, if such
person was a Certificateholder during only a portion of such
calendar year, for the applicable portion of such calendar year,
and such other items as are readily available to such Trustee
and which a Certificateholder reasonably requests as necessary
for the purpose of such Certificateholders preparation of
its U.S. federal income tax returns or foreign income tax
returns. (Trust Supplements, Section 5.01(b)) Such
report and such other items will be prepared on the basis of
information supplied to the applicable Trustee by the DTC
Participants and will be delivered by such Trustee to such DTC
Participants to be available for forwarding by such DTC
Participants to Certificate Owners. (Trust Supplements,
Section 5.01(b))
At such time, if any, as Certificates are issued in the form of
Definitive Certificates, the applicable Trustee will prepare and
deliver the information described above to each
Certificateholder of record of the applicable Trust as the name
and period of record ownership of such Certificateholder appears
on the records of the registrar of the applicable Certificates.
Indenture Events
of Default and Certain Rights Upon an Indenture Event of
Default
Since the Equipment Notes issued under an Indenture will be held
in more than one Trust, a continuing Indenture Event of Default
would affect the Equipment Notes held by each such Trust. See
Description of Equipment Notes Indenture
Events of Default, Notice and Waiver for a list of
Indenture Events of Default.
If the same institution acts as Trustee of multiple Trusts, such
Trustee could be faced with a potential conflict of interest
upon an Indenture Event of Default. In such event, each Trustee
has indicated that it would resign as Trustee of one or all such
Trusts, and a successor trustee would be
43
appointed in accordance with the terms of the applicable Pass
Through Trust Agreement. U.S. Bank Trust National
Association will be the initial Trustee under each Trust. (Basic
Agreement, Sections 7.08 and 7.09)
Upon the occurrence and during the continuation of an Indenture
Event of Default under an Indenture, the Controlling Party may
direct the Loan Trustee under such Indenture to accelerate the
Equipment Notes issued thereunder and may direct the Loan
Trustee under such Indenture in the exercise of remedies
thereunder and may sell all (but not less than all) of such
Equipment Notes or foreclose and sell the Collateral under such
Indenture to any person, subject to certain limitations. See
Description of the Intercreditor Agreement
Intercreditor Rights Limitations on Exercise of
Remedies. The proceeds of any such sale will be
distributed pursuant to the provisions of the Intercreditor
Agreement. Any such proceeds so distributed to any Trustee upon
any such sale will be deposited in the applicable Special
Payments Account and will be distributed to the
Certificateholders of the applicable Trust on a Special
Distribution Date. (Basic Agreement, Sections 4.01 and
4.02; Trust Supplements, Sections 7.01(c) and 7.01(d))
The market for Aircraft or Equipment Notes during the
continuation of any Indenture Event of Default may be limited
and there can be no assurance as to whether they could be sold
or the price at which they could be sold. If any Equipment Notes
are sold for less than their outstanding principal amount, or
any Aircraft are sold for less than the outstanding principal
amount of the related Equipment Notes, certain
Certificateholders will receive a smaller amount of principal
distributions than anticipated and will not have any claim for
the shortfall against Delta (except in the case that Aircraft
are sold for less than the outstanding principal amount of the
related Equipment Notes), any Liquidity Provider or any Trustee.
Neither the Trustee of the Trust holding such Equipment Notes
nor the Certificateholders of such Trust, furthermore, could
take action with respect to any remaining Equipment Notes held
in such Trust as long as no Indenture Event of Default existed
with respect thereto.
Any amount, other than Scheduled Payments received on a Regular
Distribution Date or within five days thereafter, distributed to
the Trustee of any Trust by the Subordination Agent on account
of the Equipment Notes or other Trust Property held in such
Trust following an Indenture Event of Default under any
Indenture will be deposited in the Special Payments Account for
such Trust and will be distributed to the Certificateholders of
such Trust on a Special Distribution Date. (Basic Agreement,
Section 4.02(b); Trust Supplements, Sections 1.01
and 7.01(c); Intercreditor Agreement, Sections 1.01 and
2.04)
Any funds representing payments received with respect to any
defaulted Equipment Notes, or the proceeds from the sale of any
Equipment Notes, held by the Trustee in the Special Payments
Account for such Trust will, to the extent practicable, be
invested and reinvested by such Trustee in certain Permitted
Investments pending the distribution of such funds on a Special
Distribution Date. (Basic Agreement, Section 4.04)
Permitted Investments are defined as
obligations of the United States or agencies or
instrumentalities thereof the payment of which is backed by the
full faith and credit of the United States and which mature in
not more than 60 days after they are acquired or such
lesser time as is required for the distribution of any Special
Payments on a Special Distribution Date. (Basic Agreement,
Section 1.01)
Each Pass Through Trust Agreement provides that the Trustee
of the related Trust will, within 90 days after the
occurrence of a default (as defined below) known to it, notify
the Certificateholders of such Trust by mail of such default,
unless such default has been cured or waived; provided
that, (i) in the case of defaults not relating to the
payment of money, such Trustee will not give notice until the
earlier of the time at which such default becomes an Indenture
Event of Default and the expiration of 60 days from the
occurrence of such default, and (ii) except in the case of
default in a payment of principal, Make-Whole Amount (if any),
or interest on any of the Equipment Notes held in such Trust,
the applicable Trustee will be protected in withholding such
notice if it in good faith determines that the withholding of
such notice is in the interests of such Certificateholders.
(Basic Agreement,
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Section 7.02) For the purpose of the provision described in
this paragraph only, the term default with respect
to a Trust means an event that is, or after notice or lapse of
time or both would become, an event of default with respect to
such Trust or a Triggering Event under the Intercreditor
Agreement, and the term event of default with
respect to a Trust means an Indenture Event of Default under any
Indenture pursuant to which Equipment Notes held by such Trust
were issued.
Each Pass Through Trust Agreement contains a provision
entitling the Trustee of the related Trust, subject to the duty
of such Trustee during a default to act with the required
standard of care, to be offered reasonable security or indemnity
by the holders of the Certificates of such Trust before
proceeding to exercise any right or power under such Pass
Through Trust Agreement or the Intercreditor Agreement at
the request of such Certificateholders. (Basic Agreement,
Section 7.03(e))
Subject to certain qualifications set forth in each Pass Through
Trust Agreement and to certain limitations set forth in the
Intercreditor Agreement, the Certificateholders of each Trust
holding Certificates evidencing fractional undivided interests
aggregating not less than a majority in interest in such Trust
will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee with respect to such Trust or pursuant to the terms of
the Intercreditor Agreement or the applicable Liquidity
Facility, or exercising any trust or power conferred on such
Trustee under such Pass Through Trust Agreement, the
Intercreditor Agreement, or such Liquidity Facility, including
any right of such Trustee as Controlling Party under the
Intercreditor Agreement or as a Noteholder. (Basic Agreement,
Section 6.04)
Subject to the Intercreditor Agreement, the holders of the
Certificates of a Trust evidencing fractional undivided
interests aggregating not less than a majority in interest of
such Trust may on behalf of the holders of all of the
Certificates of such Trust waive any past Indenture Event of
Default or default under the related Pass Through
Trust Agreement and its consequences or, if the Trustee of
such Trust is the Controlling Party, may direct such Trustee to
so instruct the applicable Loan Trustee; provided,
however, that the consent of each holder of a Certificate of
a Trust is required to waive (i) a default in the deposit
of any Scheduled Payment or Special Payment or in the
distribution thereof, (ii) a default in payment of the
principal, Make-Whole Amount (if any) or interest with respect
to any of the Equipment Notes held in such Trust and
(iii) a default in respect of any covenant or provision of
the related Pass Through Trust Agreement that cannot be modified
or amended without the consent of each Certificateholder of such
Trust affected thereby. (Basic Agreement, Section 6.05)
Each Indenture will provide that, with certain exceptions, the
holders of the majority in aggregate unpaid principal amount of
the Equipment Notes issued thereunder may on behalf of all such
holders waive any past default or Indenture Event of Default
thereunder. Notwithstanding such provisions of the Indentures,
pursuant to the Intercreditor Agreement only the Controlling
Party will be entitled to waive any such past default or
Indenture Event of Default. See Description of the
Intercreditor Agreement Intercreditor
Rights Controlling Party.
Certificate
Buyout Right of Certificateholders
After the occurrence and during the continuation of a
Certificate Buyout Event, with ten days prior written
irrevocable notice to the Class A Trustee, the Class B
Trustee and each other Class B Certificateholder, and so
long as no holder of Additional Certificates (if any) shall have
elected to exercise its Additional Holder Buyout Right and given
notice of such election, the Class B Certificateholders
(other than Delta or any of its affiliates) will have the right
(the Class B Buyout Right ) to
purchase all, but not less than all, of the Class A
Certificates on the third Business Day next following the expiry
of such
ten-day
notice period; provided that, with respect to such
Certificate Buyout Event, such Class B Buyout Right shall
terminate upon notification of an election to exercise an
Additional Holder Buyout Right, but shall be revived if the
exercise of such Additional Holder Buyout Right is not
consummated on the purchase date proposed therefor.
If any Additional Certificates are issued, the holders of such
Additional Certificates (other than Delta or any of its
affiliates) will have the right (the Additional Holder
Buyout Right ) regardless of
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the exercise of purchase rights by any Class B
Certificateholder to purchase all but not less than
all of the Class A and Class B Certificates. If
Refinancing Certificates are issued, holders of such Refinancing
Certificates will have the same right (subject to the same terms
and conditions) to purchase Certificates as the holders of the
Certificates that such Refinancing Certificates refinanced. See
Possible Issuance of Additional Certificates and
Refinancing of Certificates.
In each case, the purchase price will be equal to the Pool
Balance of the relevant class or classes of Certificates plus
accrued and unpaid interest thereon to the date of purchase,
without any premium, but including any other amounts then due
and payable to the Certificateholders of such class or classes
under the related Pass Through Trust Agreement, the
Intercreditor Agreement, the related Escrow Agreement, any
Equipment Note held as part of the related Trust Property
or the related Indenture and Participation Agreement or on or in
respect of such Certificates; provided, however,
that if such purchase occurs after (i) a record date
specified in the related Escrow Agreement relating to the
distribution of unused Deposits
and/or
accrued and unpaid interest on Deposits and prior to or on the
related distribution date under such Escrow Agreement, such
purchase price will be reduced by the aggregate amount of unused
Deposits
and/or
interest to be distributed under such Escrow Agreement (which
deducted amounts will remain distributable to, and may be
retained by, the Certificateholders of such class or classes as
of such record date), or (ii) the record date under the
related Pass Through Trust Agreement relating to any
Distribution Date, such purchase price will be reduced by the
amount to be distributed thereunder on such related Distribution
Date (which deducted amounts will remain distributable to, and
may be retained by, the Certificateholders of such class or
classes as of such record date). Such purchase right may be
exercised by any Certificateholder of the class or classes
entitled to such right.
In each case, if prior to the end of the
ten-day
notice period, any other Certificateholder(s) of the same class
notifies the purchasing Certificateholder that such other
Certificateholder(s) want(s) to participate in such purchase,
then such other Certificateholder(s) may join with the
purchasing Certificateholder to purchase the applicable senior
Certificates pro rata based on the interest in the Trust
with respect to such class held by each Certificateholder of
such class. Upon consummation of such a purchase, no other
Certificateholder of the same class as the purchasing
Certificateholder will have the right to purchase the
Certificates of the applicable class or classes during the
continuance of such Certificate Buyout Event. If Delta or any of
its affiliates is a Certificateholder, it will not have the
purchase rights described above. (Trust Supplements,
Section 6.01)
A Certificate Buyout Event means that a Delta
Bankruptcy Event has occurred and is continuing and either of
the following events has occurred: (A) (i) the
60-day
period specified in Section 1110(a)(2)(A) of the Bankruptcy
Code (the
60-Day
Period ) has expired and (ii) Delta
has not entered into one or more agreements under
Section 1110(a)(2)(A) of the Bankruptcy Code to perform all
of its obligations under all of the Indentures and has not cured
defaults thereunder in accordance with
Section 1110(a)(2)(B) of the Bankruptcy Code or, if it has
entered into such agreements, has at any time thereafter failed
to cure any default under any of the Indentures in accordance
with Section 1110(a)(2)(B) of the Bankruptcy Code; or
(B) if prior to the expiry of the
60-Day
Period, Delta will have abandoned any Aircraft. (Intercreditor
Agreement, Section 1.01)
PTC Event of
Default
A PTC Event of Default with respect to each
Pass Through Trust Agreement and the related class of
Certificates means the failure to distribute within ten Business
Days after the applicable Distribution Date either:
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the outstanding Pool Balance of such class of Certificates on
the Final Legal Distribution Date for such class; or
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the interest scheduled for distribution on such class of
Certificates on any Distribution Date (unless the Subordination
Agent has made an Interest Drawing, or a withdrawal from the
Cash Collateral Account for such class of Certificates, in an
aggregate amount sufficient to pay such
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interest and has distributed such amount to the Trustee entitled
thereto). (Intercreditor Agreement, Section 1.01)
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Any failure to make expected principal distributions with
respect to any class of Certificates on any Regular Distribution
Date (other than the Final Legal Distribution Date) will not
constitute a PTC Event of Default with respect to such
Certificates.
A PTC Event of Default with respect to the most senior
outstanding class of Certificates resulting from an Indenture
Event of Default under all Indentures will constitute a
Triggering Event.
Merger,
Consolidation and Transfer of Assets
Delta will be prohibited from consolidating with or merging into
any other entity where Delta is not the surviving entity or
conveying, transferring, or leasing substantially all of its
assets as an entirety to any other entity unless:
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the successor or transferee entity is organized and validly
existing under the laws of the United States or any state
thereof or the District of Columbia;
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the successor or transferee entity is, if and to the extent
required under Section 1110 in order that the Loan Trustee
continues to be entitled to any benefits of Section 1110
with respect to an Aircraft, a citizen of the United
States (as defined in Title 49 of the United
States Code relating to aviation (the Transportation
Code )) holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant
to Chapter 447 of the Transportation Code;
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the successor or transferee entity expressly assumes all of the
obligations of Delta contained in the Basic Agreement and any
Trust Supplement, the Note Purchase Agreement, the
Equipment Notes, the Indentures and the Participation Agreements;
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if the Aircraft are, at the time, registered with the FAA or
such person is located in a Contracting State (as
such term is used in the Cape Town Treaty), the transferor or
successor entity makes such filings and recordings with the FAA
pursuant to the Transportation Code and registrations under the
Cape Town Treaty, or, if the Aircraft are, at the time, not
registered with the FAA, the transferor or successor entity
makes such filings and recordings with the applicable aviation
authority, as are necessary to evidence such consolidation,
merger, conveyance, transfer or lease; and
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Delta has delivered a certificate and an opinion or opinions of
counsel indicating that such transaction, in effect, complies
with such conditions.
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In addition, after giving effect to such transaction, no
Indenture Event of Default shall have occurred and be
continuing. (Basic Agreement, Section 5.02;
Trust Supplements, Section 8.01; Participation
Agreements, Section 6.02(e); Note Purchase Agreement,
Section 4(a)(iii))
None of the Certificates, Equipment Notes or underlying
agreements will contain any covenants or provisions which may
afford the applicable Trustee or Certificateholders protection
in the event of a highly leveraged transaction, including
transactions effected by management or affiliates, which may or
may not result in a change in control of Delta.
Modification of
the Pass Through Trust Agreements and Certain Other
Agreements
Each Pass Through Trust Agreement contains provisions
permitting Delta and the Trustee thereof to enter into one or
more agreements supplemental to such Pass Through
Trust Agreement or, at the request of Delta, permitting or
requesting the execution of amendments or agreements
supplemental to the related Deposit Agreement, the related
Escrow Agreement, the Intercreditor Agreement, the Note Purchase
Agreement, any of the Participation Agreements or any Liquidity
47
Facility, without the consent of the holders of any of the
Certificates of such Trust to, among other things:
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evidence the succession of another corporation or entity to
Delta and the assumption by such corporation or entity of the
covenants of Delta contained in such Pass Through Trust
Agreement or of Deltas obligations under the Intercreditor
Agreement, the Note Purchase Agreement, any Participation
Agreement or any Liquidity Facility;
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add to the covenants of Delta for the benefit of holders of any
Certificates or surrender any right or power conferred upon
Delta in such Pass Through Trust Agreement, the
Intercreditor Agreement, the Note Purchase Agreement, any
Participation Agreement or any Liquidity Facility;
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cure any ambiguity or correct any mistake or inconsistency
contained in the Basic Agreement, any related
Trust Supplement, the related Deposit Agreement, the
related Escrow Agreement, the Intercreditor Agreement, the Note
Purchase Agreement, any Participation Agreement or any Liquidity
Facility;
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make or modify any other provision with respect to matters or
questions arising under the Basic Agreement, any related
Trust Supplement, the related Deposit Agreement, the
related Escrow Agreement, the Intercreditor Agreement, the Note
Purchase Agreement, any Participation Agreement or any Liquidity
Facility as Delta may deem necessary or desirable and that will
not materially adversely affect the interests of the holders of
the related Certificates;
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comply with any requirement of the SEC, any applicable law,
rules or regulations of any exchange or quotation system on
which any Certificates are listed (or to facilitate any listing
of any Certificates on any exchange or quotation system) or any
requirement of DTC or like depositary or of any regulatory body;
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modify, eliminate or add to the provisions of such Pass Through
Trust Agreement, the related Deposit Agreement, the related
Escrow Agreement, the Intercreditor Agreement, the Note Purchase
Agreement, any Participation Agreement or any Liquidity
Facility, to the extent necessary to establish or continue the
qualification of such Pass Through Trust Agreement (including
any supplemental agreement), the related Deposit Agreement, the
related Escrow Agreement, the Intercreditor Agreement, the Note
Purchase Agreement, any Participation Agreement or any Liquidity
Facility under the Trust Indenture Act of 1939, as amended
(the Trust Indenture Act ), or
under any similar federal statute enacted after the date of such
Pass Through Trust Agreement, and with certain exceptions,
add to such Pass Through Trust Agreement, the related Deposit
Agreement, the related Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement, any Participation
Agreement or any Liquidity Facility, such other provisions as
may be expressly permitted by the Trust Indenture Act;
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(i) evidence and provide for a successor Trustee under such
Pass Through Trust Agreement, the related Deposit Agreement, the
related Escrow Agreement, the Intercreditor Agreement, the Note
Purchase Agreement, any Participation Agreement, any Indenture
or any Liquidity Facility with respect to one or more Trusts,
(ii) evidence the substitution of a Liquidity Provider with
a replacement liquidity provider or to provide for any
Replacement Facility, all as provided in the Intercreditor
Agreement, (iii) evidence the substitution of the
Depositary with a replacement depositary or provide for a
replacement deposit agreement, all as provided in the Note
Purchase Agreement, (iv) evidence and provide for a
successor Escrow Agent or Paying Agent under the related Escrow
Agreement or (v) add to or change any of the provisions of
such Pass Through Trust Agreement, the related Deposit
Agreement, the related Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement, any Participation
Agreement or any Liquidity Facility as necessary to provide for
or facilitate the administration of
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the Trust under such Pass Through Trust Agreement by more
than one trustee or to provide multiple liquidity facilities for
one or more Trusts;
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provide certain information to the Trustee as required in such
Pass Through Trust Agreement;
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add to or change any provision of such Pass Through
Trust Agreement or any Trust Supplement to the extent
necessary to facilitate the issuance of such Certificates in
bearer form or to facilitate or provide for the issuance of such
Certificates in global form in addition to or in place of
Certificates in certificated form;
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provide for the delivery of any agreement supplemental to such
Pass Through Trust Agreement or any Certificates in or by means
of any computerized, electronic or other medium, including by
computer diskette;
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correct or supplement the description of any property of such
Trust;
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modify, eliminate or add to the provisions of the Basic
Agreement or any Trust Supplement to reflect the substitution of
a substitute aircraft for any Aircraft; or
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make any other amendments or modifications to the Basic
Agreement; provided that such amendments or modifications
will only apply to Certificates of one class or more to be
hereafter issued;
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provided, however, that, no such supplemental agreement
shall cause any Trust to become an association taxable as a
corporation for U.S. federal income tax purposes. (Basic
Agreement, Section 9.01; Trust Supplements,
Section 8.02)
Each Pass Through Trust Agreement also contains provisions
permitting Delta and the related Trustee to enter into one or
more agreements supplemental to such Pass Through
Trust Agreement or, at the request of Delta, permitting or
requesting the execution of amendments or agreements
supplemental to any other Pass Through Trust Agreement, the
related Deposit Agreement, the related Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement, any
Certificate, any Participation Agreement, any other operative
document with respect to any Aircraft or any Liquidity Facility,
without the consent of the Certificateholders of the related
Trust, to provide for the issuance of Additional Certificates or
Refinancing Certificates, the formation of related trusts, the
purchase by such trusts of the related equipment notes, the
establishment of certain matters with respect to such Additional
Certificates or Refinancing Certificates, and other matters
incidental thereto or as otherwise contemplated by the Basic
Agreement, all as provided in, and subject to certain terms and
conditions set forth in, the Note Purchase Agreement and the
Intercreditor Agreement. (Trust Supplements,
Section 8.02) See Possible Issuance of Additional
Certificates and Refinancing of Certificates.
Each Pass Through Trust Agreement also contains provisions
permitting the execution, with the consent of the holders of the
Certificates of the related Trust evidencing fractional
undivided interests aggregating not less than a majority in
interest of such Trust, of supplemental agreements adding any
provisions to or changing or eliminating any of the provisions
of such Pass Through Trust Agreement, the related Deposit
Agreement, the related Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or any Liquidity Facility
to the extent applicable to such Certificateholders or modifying
the rights of such Certificateholders under such Pass Through
Trust Agreement, the related Deposit Agreement, the related
Escrow Agreement, the Intercreditor Agreement, the Note Purchase
Agreement or any Liquidity Facility, except that no such
supplemental agreement may, without the consent of the holder of
each outstanding Certificate adversely affected thereby:
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reduce in any manner the amount of, or delay the timing of, any
receipt by the related Trustee (or, with respect to the
Deposits, the Receiptholders) of payments on the Equipment Notes
held in such Trust, or distributions in respect of any
Certificate of such Trust (or, with respect to the Deposits,
payments upon the Deposits), or change the date or place of any
payment on any such Certificate or change the coin or currency
in which any such Certificate is payable, or
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impair the right of any Certificateholder of such Trust to
institute suit for the enforcement of any such payment or
distribution when due;
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permit the disposition of any Equipment Note held in such Trust
or otherwise deprive such Certificateholder of the benefit of
the ownership of the Equipment Notes in such Trust, except as
provided in such Pass Through Trust Agreement, the
Intercreditor Agreement or any applicable Liquidity Facility;
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alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the
interests of any holders of any outstanding Certificates;
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modify certain amendment provisions in such Pass Through
Trust Agreement, except to increase the percentage of the
aggregate fractional undivided interests of the related Trust
provided for in such Pass Through Trust Agreement, the
consent of the Certificateholders of which is required for any
such supplemental agreement provided for in such Pass Through
Trust Agreement, or to provide that certain other
provisions of such Pass Through Trust Agreement cannot be
modified or waived without the consent of the Certificateholder
of each Certificate of such class affected thereby; or
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cause any Trust to become an association taxable as a
corporation for U.S. federal income tax purposes. (Basic
Agreement, Section 9.02; Trust Supplements,
Section 8.03)
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Notwithstanding any other provision, no amendment or
modification of the buyout rights described in
Buyout Right of Certificateholders shall
be effective unless the Trustee of each class of Certificates
affected by such amendment or modifications shall have consented
thereto. (Trust Supplements, Section 8.04)
If a Trustee, as holder (or beneficial owner through the
Subordination Agent) of any Equipment Note in trust for the
benefit of the Certificateholders of the relevant Trust or as
Controlling Party under the Intercreditor Agreement, receives
(directly or indirectly through the Subordination Agent) a
request for a consent to any amendment, modification, waiver or
supplement under any Indenture, any Participation Agreement, any
Equipment Note, the Note Purchase Agreement or certain other
related documents, then subject to the provisions described
above in respect of modifications for which consent of such
Certificateholders is not required, such Trustee will forthwith
send a notice of such proposed amendment, modification, waiver
or supplement to each Certificateholder of the relevant Trust
registered on the register of such Trust as of the date of such
notice. Such Trustee will request from the Certificateholders of
such Trust a direction as to:
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whether or not to take or refrain from taking (or direct the
Subordination Agent to take or refrain from taking) any action
that a Noteholder of such Equipment Note or the Controlling
Party has the option to direct;
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whether or not to give or execute (or direct the Subordination
Agent to give or execute) any waivers, consents, amendments,
modifications or supplements as such a Noteholder or as
Controlling Party; and
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how to vote (or direct the Subordination Agent to vote) any such
Equipment Note if a vote has been called for with respect
thereto. (Basic Agreement, Section 10.01; Intercreditor
Agreement, Section 8.01(b))
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Provided such a request for a Certificateholder direction shall
have been made, in directing any action or casting any vote or
giving any consent as holder of any Equipment Note (or in
directing the Subordination Agent in any of the foregoing):
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other than as the Controlling Party, such Trustee will vote for
or give consent to any such action with respect to such
Equipment Note in the same proportion as that of (x) the
aggregate face amount of all Certificates actually voted in
favor of or for giving consent to such action by
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such direction of Certificateholders to (y) the aggregate
face amount of all outstanding Certificates of such
Trust; and
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as the Controlling Party, such Trustee will vote as directed in
such Certificateholder direction by the Certificateholders
evidencing fractional undivided interests aggregating not less
than a majority in interest in such Trust. (Basic Agreement,
Section 10.01)
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For purposes of the immediately preceding paragraph, a
Certificate is deemed actually voted if the
Certificateholder thereof has delivered to the applicable
Trustee an instrument evidencing such Certificateholders
consent to such direction prior to one Business Day before such
Trustee directs such action or casts such vote or gives such
consent. Notwithstanding the foregoing, but subject to certain
rights of the Certificateholders under the relevant Pass Through
Trust Agreement and subject to the Intercreditor Agreement,
such Trustee may, in its own discretion and at its own
direction, consent and notify the relevant Loan Trustee of such
consent (or direct the Subordination Agent to consent and notify
the relevant Loan Trustee of such consent) to any amendment,
modification, waiver or supplement under any related Indenture,
Participation Agreement, Equipment Note or the Note Purchase
Agreement or certain other related documents, if an Indenture
Event of Default under any Indenture has occurred and is
continuing, or if such amendment, modification, waiver or
supplement will not materially adversely affect the interests of
such Certificateholders. (Basic Agreement, Section 10.01)
Pursuant to the Intercreditor Agreement, with respect to any
Indenture at any given time, the Loan Trustee under such
Indenture will be directed by the Subordination Agent (as
directed by the respective Trustees or by the Controlling Party,
as applicable) in taking, or refraining from taking, any action
thereunder or with respect to the Equipment Notes issued under
such Indenture that are held by the Subordination Agent as the
property of the relevant Trust. Any Trustee acting as
Controlling Party will direct the Subordination Agent as such
Trustee is directed by Certificateholders evidencing fractional
undivided interests aggregating not less than a majority in
interest in the relevant Trust. (Intercreditor Agreement,
Section 2.06 and 8.01(b)) Notwithstanding the foregoing,
without the consent of each Liquidity Provider and each
Certificateholder holding Certificates representing a fractional
undivided interest in the Equipment Notes under the applicable
Indenture held by the Subordination Agent, among other things,
no amendment, supplement, modification, consent or waiver of or
relating to such Indenture, any related Equipment Note,
Participation Agreement or other related document will:
(i) reduce the principal amount of, Make-Whole Amount, if
any, or interest on, any Equipment Note under such Indenture;
(ii) change the date on which any principal amount of,
Make-Whole Amount, if any, or interest on any Equipment Note
under such Indenture, is due or payable; (iii) create any
lien with respect to the Collateral subject to such Indenture
prior to or pari passu with the lien thereon under such
Indenture except such as are permitted by such Indenture; or
(iv) reduce the percentage of the outstanding principal
amount of the Equipment Notes under such Indenture the consent
of whose holders is required for any supplemental agreement, or
the consent of whose holders is required for any waiver of
compliance with certain provisions of such Indenture or of
certain defaults thereunder or their consequences provided for
in such Indenture. In addition, without the consent of each
Certificateholder, no such amendment, modification, consent or
waiver will, among other things, deprive any Certificateholder
of the benefit of the lien of any Indenture on the related
Collateral, except as provided in connection with the exercise
of remedies under such Indenture. (Intercreditor Agreement,
Section 8.01(b)) See Indenture Events of
Default and Certain Rights Upon an Indenture Event of
Default for a description of the rights of the
Certificateholders of each Trust to direct the respective
Trustees.
Obligation to
Purchase Equipment Notes
The Trustees will be obligated to purchase the Equipment Notes
issued with respect to each Aircraft prior to the Delivery
Period Termination Date subject to the terms and conditions of a
note purchase agreement (the Note Purchase
Agreement) and the forms of financing agreements
attached to the Note Purchase Agreement. On and subject to the
terms and conditions of the Note
51
Purchase Agreement and such forms, Delta agrees to enter into a
secured debt financing with respect to each
2000-1
Aircraft on or prior to December 31, 2010 and with respect
to each 2009 Aircraft within 90 days after the Issuance
Date, in each case with the other relevant parties pursuant to a
Participation Agreement and an Indenture that are substantially
in the forms attached to the Note Purchase Agreement.
The description of such financing agreements in this prospectus
is based on the forms of such agreements attached to the Note
Purchase Agreement. However, the terms of the financing
agreements actually entered into may differ from the forms of
such agreements and, consequently, may differ from the
description of such agreements contained in this prospectus. See
Description of the Equipment Notes. Although such
changes are permitted, under the Note Purchase Agreement, Delta
must obtain written confirmation from each Rating Agency that
the use of financing agreements modified in any material respect
from the forms attached to the Note Purchase Agreement will not
result in a withdrawal, suspension or downgrading of the rating
of each class of Certificates then rated by such Rating Agency
and that remains outstanding. The terms of such financing
agreements also must comply with the Required Terms. In
addition, Delta, subject to certain exceptions, is obligated to
certify to the Trustees that any substantive modifications do
not materially and adversely affect the Certificateholders or
any Liquidity Provider.
Under the Note Purchase Agreement, the Trustees will not be
obligated to purchase the Equipment Notes to be issued with
respect to an Aircraft if such Aircraft has suffered an Event of
Loss or an Existing Financing Event of Loss (or an event that
would constitute such an Event of Loss or an Existing Financing
Event of Loss but for the requirement that notice be given or
time elapse or both), as the case may be. In addition, under the
Note Purchase Agreement, the Trustees will not be obligated to
purchase the Equipment Notes to be issued with respect to any
Aircraft not yet financed if a Triggering Event has occurred or
for other reasons. The Trustees will have no right or obligation
to purchase the Equipment Notes to be issued with respect to any
Aircraft after the Delivery Period Termination Date.
The Required Terms, as defined in the Note
Purchase Agreement, mandate that:
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the original principal amount and principal amortization
schedule for each series of Equipment Notes issued with respect
to each Aircraft will be as set forth in the table for that
Aircraft included in Appendix V (each such principal
amortization schedule to be expressed in percentages of original
principal amount).
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the interest rate applicable to each series of Equipment Notes
must be equal to the interest rate applicable to the
Certificates issued by the corresponding trust.
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the payment dates for the Equipment Notes must be June 17 and
December 17.
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(a) the past due rate in the Indentures, (b) the
Make-Whole Amount payable under the Indentures, (c) the
provisions relating to the redemption of the Equipment Notes in
the Indentures, and (d) the indemnification of the Loan
Trustees, the Subordination Agent, the Liquidity Providers, the
Trustees and the Escrow Agent with respect to certain claims,
expenses and liabilities, in each case will be provided as set
forth, as applicable, in the form of Indenture attached as an
exhibit to the Note Purchase Agreement (the Indenture
Form ) or the form of Participation Agreement
attached as an exhibit to the Note Purchase Agreement (the
Participation Agreement Form ).
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the amounts payable under the all-risk aircraft hull insurance
maintained with respect to each Aircraft must be not less than
110% of the unpaid principal amount of the related Equipment
Notes, subject to certain rights of self-insurance.
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modifications in any material adverse respect are prohibited
with respect to (i) the Granting Clause of the Indenture
Form so as to deprive holders of Equipments Notes under all the
Indentures of a first priority security interest in and mortgage
lien on the Aircraft or, to the
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extent assigned, certain of Deltas rights under its
purchase agreement with the Aircraft manufacturer or to
eliminate the obligations intended to be secured thereby,
(ii) certain provisions relating to the issuance,
redemption, payments, and ranking of the Equipment Notes
(including the obligation to pay the Make-Whole Amount in
certain circumstances), (iii) certain provisions regarding
Indenture Event of Defaults and remedies relating thereto,
(iv) certain provisions relating to the replacement of the
airframe or engines with respect to an Aircraft following an
Event of Loss with respect to such Aircraft, (v) certain
provisions relating to claims, actions, third party
beneficiaries, voting, Section 1110 and Aircraft
re-registration, (vi) the definition of Make-Whole Amount
and (vii) the provision that New York law will govern the
Indentures.
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modifications in any material adverse respect are prohibited
with respect to (i) certain conditions to the obligations
of the Trustees to purchase the Equipment Notes issued with
respect to an Aircraft involving good title to such Aircraft,
obtaining a certificate of airworthiness with respect to such
Aircraft, entitlement to the benefits of Section 1110 with
respect to such Aircraft and filings of certain documents with
the FAA, (ii) the provisions restricting transfers of
Equipment Notes, (iii) certain provisions relating to UCC
filings, representations and warranties, taxes, filings or third
party beneficiaries, (iv) certain provisions requiring the
delivery of legal opinions and (v) the provision that New
York law will govern the Participation Agreements.
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Notwithstanding the foregoing, the Indenture Form or the
Participation Agreement Form may be modified to the extent
required for the successive redemption of the Series B
Equipment Notes (or any Additional Equipment Notes) and issuance
of Refinancing Equipment Notes or the issuance of any Additional
Equipment Notes or the issuance of pass through certificates by
any pass through trust that acquires such Refinancing Equipment
Notes or Additional Equipment Notes, as applicable, or to
provide for any credit support for any pass through certificates
relating to any such Refinancing Equipment Notes or Additional
Equipment Notes, as applicable, in each case as provided in the
Note Purchase Agreement.
Termination of
the Trusts
With respect to each Trust, the obligations of Delta and the
Trustee of such Trust will terminate upon the distribution to
the Certificateholders of such Trust and to such Trustee of all
amounts required to be distributed to them pursuant to the
applicable Pass Through Trust Agreement and the disposition
of all property held in such Trust. The applicable Trustee will
mail to each Certificateholder of such Trust, not earlier than
60 days and not later than 15 days preceding such
final distribution, notice of the termination of such Trust, the
amount of the proposed final payment, the proposed date for the
distribution of such final payment for such Trust and certain
other information. The Final Distribution to any
Certificateholder of such Trust will be made only upon surrender
of such Certificateholders Certificates at the office or
agency of the applicable Trustee specified in such notice of
termination. (Basic Agreement, Section 11.01)
In the event that all of the Certificateholders of such Trust do
not surrender their Certificates issued by such Trust for
cancellation within six months after the date specified in such
written notice, the Trustee of such Trust will give a second
written notice to the remaining Certificateholders of such Trust
to surrender such Certificates for cancellation and receive the
final distribution. No additional interest will accrue with
respect to such Certificates after the Distribution Date
specified in the first written notice. In the event that any
money held by the Trustee of such Trust for the payment of
distributions on the Certificates issued by such Trust remains
unclaimed for two years (or such lesser time as such Trustee
shall be satisfied, after sixty days notice from Delta, is
one month prior to the escheat period provided under applicable
law) after the final distribution date with respect thereto,
such Trustee will pay to each Loan Trustee the appropriate
amount of money relating to such Loan Trustee and will give
written notice thereof to Delta. (Basic Agreement,
Section 11.01)
53
The
Trustees
The Trustee of each Trust initially will be U.S. Bank
Trust National Association. Each Trustees address is
U.S. Bank Trust National Association, 300 Delaware
Avenue, 9th Floor, Mail Code EX-DE-WDAW, Wilmington,
Delaware 19801, Attention: Corporate Trust Services
(Reference: Delta
2009-1 EETC).
With certain exceptions, the Trustees make no representations as
to the validity or sufficiency of the Basic Agreement, the
Trust Supplements, the Certificates, the Equipment Notes,
the Indentures, the Intercreditor Agreement, the Participation
Agreements, any Liquidity Facility, the Note Purchase Agreement,
the Deposit Agreements, the Escrow Agreements or other related
documents. (Basic Agreement, Sections 7.04 and 7.15;
Trust Supplements, Sections 7.03 and 7.04) The Trustee
of any Trust will not be liable to the Certificateholders of
such Trust for any action taken or omitted to be taken by it in
good faith in accordance with the direction of the holders of a
majority in face amount of outstanding Certificates of such
Trust. (Basic Agreement, Section 7.03(h)) Subject to
certain provisions, no Trustee will be under any obligation to
exercise any of its rights or powers under any Pass Through
Trust Agreement at the request of any holders of
Certificates issued thereunder unless there has been offered to
such Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by such Trustee
in exercising such rights or powers. (Basic Agreement,
Section 7.03(e)) Each Pass Through Trust Agreement
provides that the applicable Trustee and any related agent or
affiliate in their respective individual or any other capacity
may acquire and hold Certificates issued thereunder and, subject
to certain conditions, may otherwise deal with Delta with the
same rights it would have if it were not such Trustee, agent or
affiliate. (Basic Agreement, Section 7.05)
Book-Entry
Registration; Delivery and Form
General
On the Issuance Date, the Class A and Class B
Certificates will each be represented by one or more fully
registered global Certificates (each, a Global
Certificate ) of the applicable class and will be
deposited with the related Trustee as custodian for DTC and
registered in the name of Cede, as nominee of DTC. Except in the
limited circumstances described below, owners of beneficial
interests in Global Certificates will not be entitled to receive
physical delivery of Definitive Certificates. The Certificates
will not be issuable in bearer form.
DTC
DTC has informed Delta as follows: DTC is a limited purpose
trust company organized under the laws of the State of New York,
a banking organization within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a
clearing corporation within the meaning of the
Uniform Commercial Code and a Clearing Agency
registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its
participants (DTC Participants) and
facilitate the clearance and settlement of securities
transactions between DTC Participants through electronic
book-entry changes in accounts of DTC Participants, thereby
eliminating the need for physical movement of certificates. DTC
Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly (Indirect
Participants).
Delta expects that, pursuant to procedures established by DTC,
(i) upon the issuance of the Global Certificates, DTC or
its custodian will credit, on its internal system, the
respective principal amount of the individual beneficial
interests represented by such Global Certificates to the
accounts of persons who have accounts with such depositary and
(ii) ownership of beneficial interests in the Global
Certificates will be shown on, and the transfer of that
ownership will be effected only through,
54
records maintained by DTC or its nominee (with respect to
interests of DTC Participants) and the records of DTC
Participants (with respect to interests of persons other than
DTC Participants). Such accounts initially will be designated by
or on behalf of the Underwriters. Ownership of beneficial
interests in the Global Certificates will be limited to DTC
Participants or persons who hold interests through DTC
Participants. The laws of some states require that certain
purchasers of securities take physical delivery of such
securities. Such limits and such laws may limit the market for
beneficial interests in the Global Certificates. Qualified
Institutional Buyers (as defined under the Securities Act of
1933, as amended (the Securities Act)) may
hold their interests in the Global Certificates directly through
DTC if they are DTC Participants, or indirectly through
organizations that are DTC Participants.
So long as DTC or its nominee is the registered owner or holder
of the Global Certificates, DTC or such nominee, as the case may
be, will be considered the sole record owner or holder of the
Certificates represented by such Global Certificates for all
purposes under the Certificates and Pass Through
Trust Agreements. All references in this prospectus to
actions by the Certificateholders shall refer to actions taken
by DTC upon instructions from DTC Participants, and all
references to distributions, notices, reports and statements to
the Certificateholders will refer, as the case may be, to
distributions, notices, reports and statements to DTC or such
nominee, as the registered holder of the Certificates. No
beneficial owners of an interest in the Global Certificates will
be able to transfer that interest except in accordance with
DTCs applicable procedures, in addition to those provided
or under the applicable Pass Through Trust Agreement. Such
beneficial owners of an interest in the Global Certificates, and
registered owners of a Definitive Certificate, are referred to
herein individually as a Certificate Owner
and collectively as the Certificate Owners.
DTC has advised Delta that it will take any action permitted to
be taken by a Certificateholder under the applicable Pass
Through Trust Agreement only at the direction of one or
more DTC Participants to whose accounts with DTC the Global
Certificates are credited. Additionally, DTC has advised Delta
that in the event any action requires approval by a certain
percentage of the Certificateholders of a particular class, DTC
will take such action only at the direction of and on behalf of
DTC Participants whose holders include undivided interests that
satisfy any such percentage. DTC may take conflicting actions
with respect to other undivided interests to the extent that
such actions are taken on behalf of DTC Participants whose
holders include such undivided interests.
Under the rules, regulations and procedures creating and
affecting DTC and its operations (the DTC
Rules), DTC is required to make book-entry transfers
of Certificates among DTC Participants on whose behalf it acts
with respect to such Certificates. Certificate Owners of
Certificates that are not DTC Participants but that desire to
purchase, sell or otherwise transfer ownership of, or other
interests in, such Certificates may do so only through DTC
Participants. DTC Participants and Indirect Participants with
which Certificate Owners have accounts with respect to such
Certificates, however, are required to make book-entry transfers
on behalf of their respective customers. In addition, under the
DTC Rules, DTC is required to receive and transmit to the DTC
Participants distributions of principal of, Make-Whole Amount,
if any, and interest with respect to the Certificates. Such
Certificate Owners thus will receive all distributions of
principal, Make-Whole Amount, if any, and interest from the
relevant Trustee through DTC Participants or Indirect
Participants, as the case may be. Under this book entry system,
such Certificate Owners may experience some delay in their
receipt of payments because such payments will be forwarded by
the relevant Trustee to Cede, as nominee for DTC, and DTC in
turn will forward the payments to the appropriate DTC
Participants in amounts proportionate to the principal amount of
such DTC Participants respective holdings of beneficial
interests in the relevant Certificates, as shown on the records
of DTC or its nominee. Distributions by DTC Participants to
Indirect Participants or Certificate Owners, as the case may be,
will be the responsibility of such DTC Participants.
Unless and until Definitive Certificates are issued under the
limited circumstances described herein, the only
Certificateholder under each Pass Through
Trust Agreement will be Cede, as nominee of DTC.
Certificate Owners of Certificates therefore will not be
recognized by the Trustees as
55
Certificateholders, as such term is used in the Pass Through
Trust Agreements, and such Certificate Owners will be
permitted to exercise the rights of Certificateholders only
indirectly through DTC and DTC Participants. Conveyance of
notices and other communications by DTC to DTC Participants and
by DTC Participants to Indirect Participants and to such
Certificate Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in
effect from time to time.
Payments of the principal of, Make-Whole Amount (if any) and
interest on the Global Certificates will be made to DTC or its
nominee, as the case may be, as the registered owner thereof.
Payments, transfers, exchanges and other matters relating to
beneficial interests in a Global Certificate may be subject to
various policies and procedures adopted by DTC from time to
time. Because DTC can only act on behalf of DTC Participants,
who in turn act on behalf of Indirect Participants, the ability
of a Certificateholder to pledge its interest to persons or
entities that do not participate in the DTC system, or to
otherwise act with respect to such interest, may be limited due
to the lack of a physical certificate for such interest.
Neither Delta nor the Trustees, nor any paying agent or
registrar with respect to the Certificates, will have any
responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership
interests in the Global Certificates or for maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests or for the performance by DTC, any DTC
Participant or any Indirect Participant of their respective
obligations under the DTC Rules or any other statutory,
regulatory, contractual or customary procedures governing their
obligations. (Trust Supplements, Section 4.03(f))
Delta expects that DTC or its nominee, upon receipt of any
payment of principal, Make-Whole Amount (if any) or interest in
respect of the Global Certificates, will credit DTC
Participants accounts with payments in amounts
proportionate to their respective beneficial ownership interests
in the face amount of such Global Certificates, as shown on the
records of DTC or its nominee. Delta also expects that payments
by DTC Participants to owners of beneficial interests in such
Global Certificates held through such DTC Participants will be
governed by the standing instructions and customary practices of
such DTC Participants. Such payments will be the responsibility
of such DTC Participants.
Although DTC is expected to follow the foregoing procedures in
order to facilitate transfers in a Global Certificate among
participants of DTC, it is under no obligation to perform or
continue to perform such procedures and such procedures may be
discontinued at any time.
Same-Day
Settlement
As long as Certificates are registered in the name of DTC or its
nominee, all payments made by Delta to the Loan Trustee under
any Indenture will be in immediately available funds. Such
payments, including the final distribution of principal with
respect to the Certificates, will be passed through to DTC in
immediately available funds.
Any Certificates registered in the name of DTC or its nominee
will trade in DTCs Same Day Funds Settlement System until
maturity, and secondary market trading activity in the
Certificates will therefore be required by DTC to settle in
immediately available funds. No assurance can be given as the
effect, if any, of settlement in same day funds on trading
activity in the Certificates.
Definitive
Certificates
Interests in Global Certificates will be exchangeable or
transferable, as the case may be, for certificates in
definitive, physical registered form (Definitive
Certificates) only if (i) DTC advises the
applicable Trustee in writing that DTC is no longer willing or
able to discharge properly its responsibilities as depositary
with respect to such Certificates and a successor depositary is
not appointed by such Trustee within 90 days of such
notice, (ii) Delta, at its option, elects to terminate
56
the book-entry system through DTC or (iii) after the
occurrence of an Indenture Event of Default, Certificateholders
with fractional undivided interests aggregating not less than a
majority in interest in a Trust advise the applicable Trustee,
Delta and DTC through DTC Participants in writing that the
continuation of a book-entry system through DTC (or a successor
thereto) is no longer in such Certificateholders best
interest. Neither Delta nor any Trustee will be liable if Delta
or such Trustee is unable to locate a qualified successor
clearing system. (Trust Supplements, Section 4.03(b))
In connection with the occurrence of any event described in the
immediately preceding paragraph, the Global Certificates will be
deemed surrendered, and the Trustees will execute, authenticate
and deliver to each Certificate Owner of such Global
Certificates in exchange for such Certificate Owners
beneficial interest in such Global Certificates, an equal
aggregate principal amount of Definitive Certificates of
authorized denominations, in each case as such Certificate Owner
and related aggregate principal amount have been identified and
otherwise set forth (together with such other information as may
be required for the registration of such Definitive
Certificates) in registration instructions that shall have been
delivered by or on behalf of DTC to the Class A Trustee.
(Trust Supplements, Section 4.03(d)) Delta, the
Trustees and each registrar and paying agent with respect to the
Certificates (i) shall not be liable for any delay in
delivery of such registration instructions, and (ii) may
conclusively rely on, and shall be protected in relying on, such
registration instructions. (Trust Supplements,
Section 4.03(f))
Distribution of principal, Make-Whole Amount (if any) and
interest with respect to Definitive Certificates will thereafter
be made by the applicable Trustee in accordance with the
procedures set forth in the applicable Pass Through
Trust Agreement directly to holders in whose names the
Definitive Certificates were registered at the close of business
on the applicable record date. Such distributions will be made
by check mailed to the address of such holder as it appears on
the register maintained by the applicable Trustee. The final
payment on any such Definitive Certificate, however, will be
made only upon presentation and surrender of the applicable
Definitive Certificate at the office or agency specified in the
notice of final distribution to the applicable
Certificateholders.
Definitive Certificates issued in exchange for Global
Certificates will be transferable and exchangeable at the office
of the applicable Trustee upon compliance with the requirements
set forth in the applicable Pass Through Trust Agreement.
No service charge will be imposed for any registration of
transfer or exchange, but payment of a sum sufficient to cover
any tax or other governmental charge will be required. The
Certificates are registered instruments, title to which passes
upon registration of the transfer of the books of the applicable
Trustee in accordance with the terms of the applicable Pass
Through Trust Agreement. (Basic Agreement,
Section 3.04)
57
DESCRIPTION OF
THE DEPOSIT AGREEMENTS
The following summary describes certain material terms of the
Deposit Agreements, as well as certain related provisions of the
Escrow Agreements and the Note Purchase Agreement. The summary
does not purport to be complete and is qualified in its entirety
by reference to all of the provisions of the Deposit Agreements
and the related provisions of the Escrow Agreements and the Note
Purchase Agreement, copies of which will be filed as exhibits to
a Current Report on
Form 8-K
to be filed by Delta with the SEC.
General
Under the Escrow Agreements, the Escrow Agent with respect to
each Trust will enter into a separate Deposit Agreement with the
Depositary (each, a Deposit Agreement).
(Escrow Agreements, Section 1.02(a)) Pursuant to the
Deposit Agreements, the Depositary will establish separate
accounts into which the proceeds of the offering attributable to
Certificates of the applicable Trust will be deposited (each, a
Deposit) on behalf of the Escrow Agent for
the applicable Trust. (Deposit Agreements, Section 2.1) For
each Trust, there will be a separate Deposit for each Aircraft
that is to be financed in this offering. Pursuant to the Deposit
Agreements, except as described below under
Other Withdrawals and Return of
Deposits, on each Regular Distribution Date, the
Depositary under each Deposit Agreement will pay to the Paying
Agent on behalf of the Escrow Agent, for distribution to the
applicable Certificateholders, an amount equal to the interest
accrued on the Deposits during the relevant interest period at a
rate per annum equal to the interest rate applicable to
Certificates issued by the applicable Trust. (Deposit
Agreements, Section 2.2) The Deposits and interest paid
thereon will not be subject to the subordination provisions of
the Intercreditor Agreement and will not be available to pay any
other amount in respect of the Certificates.
Withdrawal of
Deposits to Purchase Equipment Notes
Upon the financing of an Aircraft under the related Indenture
prior to the Delivery Period Termination Date, the Trustee of
each Trust will request the Escrow Agent relating to such Trust
to withdraw from the Deposits relating to such Trust funds
sufficient to enable the Trustee of such Trust to purchase the
Equipment Notes of the series applicable to such Trust issued
with respect to such Aircraft. (Note Purchase Agreement,
Sections 1(b) and 1(d); Escrow Agreements,
Section 1.02(c)) Any portion of any Deposit so withdrawn
that is not used to purchase such Equipment Notes will be
re-deposited by the Escrow Agent or each Trustee on behalf of
the Escrow Agent into a new account with the Depositary (each
such deposit, also a Deposit). (Deposit
Agreements, Section 2.4; Escrow Agreements,
Section 1.06) Except as described below under
Other Withdrawals and Return of
Deposits, the Depositary will pay accrued but unpaid
interest on all Deposits withdrawn to purchase Equipment Notes
on the next Regular Distribution Date to the Paying Agent, on
behalf of the applicable Escrow Agent, for distribution to the
Certificateholders. (Deposit Agreements, Sections 2.2 and
4; Escrow Agreements, Section 2.03(a))
Other Withdrawals
and Return of Deposits
The Trustees obligations to purchase Equipment Notes to be
issued with respect to each Aircraft are subject to satisfaction
of certain conditions at the time of the financing of such
Aircraft under the related Indenture, as set forth in the Note
Purchase Agreement and the related Participation Agreement. See
Description of the Certificates Obligation to
Purchase Equipment Notes. Since such Aircraft are expected
to be subjected to the financing of this offering from time to
time prior to the Delivery Period Termination Date, no assurance
can be given that all such conditions will be satisfied with
respect to each such Aircraft prior to the Delivery Period
Termination Date. If any funds remain as Deposits with respect
to any Trust as of the Delivery Period Termination Date, such
remaining funds will be withdrawn by the Escrow Agent and
distributed by the Paying Agent, with accrued and unpaid
interest thereon, but without any premium, to the
Certificateholders of such Trust
58
on a date no earlier than 15 days after the Paying Agent
has received notice of the event requiring such distribution. If
the day scheduled for such withdrawal is within 10 days
before or after a Regular Distribution Date, the Escrow Agent
will request that such withdrawal be made on such Regular
Distribution Date. Moreover, in certain circumstances, any funds
held as Deposits will be returned by the Depositary to the
Paying Agent automatically on December 31, 2010 (the
Outside Termination Date), and the Paying
Agent will distribute such funds to the applicable
Certificateholders as promptly as practicable thereafter. The
obligation to purchase Equipment Notes to be issued with respect
to any Aircraft not yet financed pursuant to this offering will
terminate on the Delivery Period Termination Date. (Deposit
Agreements, Section 2.3(b)(i) and 4; Escrow Agreements,
Sections 1.02(f) and 2.03(b); Note Purchase Agreement,
Section 2)
If an Event of Loss or an Existing Financing Event of Loss (or
an event that would constitute such an Event of Loss or Existing
Financing Event of Loss but for the requirement that notice be
given or time elapse or both) occurs with respect to an Aircraft
before it is financed pursuant to this offering, Delta will give
notice of such event to each Trustee and such Trustee will
submit a withdrawal certificate to the applicable Escrow Agent,
and any funds in any Deposit with respect to such Aircraft will
be withdrawn by such Escrow Agent and distributed by the related
Paying Agent, with accrued and unpaid interest thereon, but
without any premium, to the Certificateholders of the related
Trust on a date not earlier than 15 days after such Paying
Agent has received notice of the event requiring such
distribution. (Note Purchase Agreement, Section 1(k);
Deposit Agreements, Section 2.3(b)(iii); Escrow Agreements,
Sections 2.03(b) and 2.07) Once Delta delivers a notice
described in the preceding sentence, the Trustees will have no
obligation to purchase Equipment Notes with respect to such
Aircraft. (Note Purchase Agreement, Section 2(c))
Existing Financing Event of Loss
means, with respect to an Aircraft that is subject to an
Existing Financing, one of several events of loss under the
applicable Existing Financing, which events of loss are
substantially similar to the Events of Loss.
If a Triggering Event occurs prior to the Delivery Period
Termination Date, any funds remaining in Deposits will be
withdrawn by the Escrow Agent for the applicable Trust and
distributed by the Paying Agent for such Trust, with accrued and
unpaid interest thereon, but without any premium, to the
Certificateholders of such Trust on a date no earlier than
15 days after the Paying Agent has received notice of such
Triggering Event, but, if the day scheduled for such withdrawal
is within 10 days before or after a Regular Distribution
Date, such Escrow Agent will request such withdrawal be made on
such Regular Distribution Date. (Escrow Agreements,
Section 1.02(f)) The obligation to purchase the Equipment
Notes to be issued with respect to any Aircraft not yet financed
pursuant to this offering will terminate on the date such
Triggering Event occurs. (Deposit Agreements,
Section 2.3(b)(i); Escrow Agreements, Sections 2.03(b)
and 2.06; Note Purchase Agreement, Section 2)
Replacement of
Depositary
If the Depositarys Short-Term Rating issued by either
Rating Agency is downgraded below the Depositary Threshold
Rating, then Delta must, within 30 days of the occurrence
of such event, replace the Depositary with a new depositary bank
meeting the requirements set forth below (the
Replacement Depositary). (Note Purchase
Agreement, Section 5(a))
Depositary Threshold Rating means, for
any entity, a Short-Term Rating for such entity of
P-1 from
Moodys and
A-1+ from
Standard & Poors.
Any Replacement Depositary may either be (a) one that meets
the Depositary Threshold Rating or (b) one that does not
meet the Depositary Threshold Rating, so long as, in the case of
either of the immediately preceding clauses (a) and (b),
Delta shall have received a written confirmation from each
Rating Agency that the replacement of the Depositary with the
Replacement Depositary will not result in a withdrawal,
suspension or reduction of the ratings for each class of
Certificates rated by such Rating Agency below the then current
rating for such Certificates (before the downgrading of such
59
rating as a result of the downgrading of the Depositary below
the applicable Depositary Threshold Rating). (Note Purchase
Agreement, Section 5(c)(i))
At any time during the period prior to the Delivery Period
Termination Date (including after the occurrence of a downgrade
event described above), Delta may replace the Depositary with a
Replacement Depositary. (Note Purchase Agreement,
Section 5(a)) There can be no assurance that at the time of
a downgrade event described above, there will be an institution
willing to replace the downgraded Depositary or that each Rating
Agency will provide the ratings confirmation described in the
immediately preceding paragraph.
Upon satisfaction of the conditions for replacement of the
Depositary with a Replacement Depositary set forth in the Note
Purchase Agreement, the Escrow Agent for each Trust will
request, upon at least 5 Business Days notice, the
following withdrawals:
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with respect to all Deposits of such Trust then held by the
Depositary being replaced, withdrawal of (1) the entire
amount of such Deposits together with (2) all accrued and
unpaid interest on such Deposits to but excluding the date of
such withdrawal, which funds will be paid by the Depositary
being replaced over to such Replacement Depositary; and
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with respect to all Deposits of such Trust, if any, previously
withdrawn in connection with the purchase of the related
Equipment Notes, as described in Withdrawal of
Deposits to Purchase Equipment Notes, withdrawal of all
accrued and unpaid interest on such Deposits to but excluding
the date of the applicable withdrawal in connection with the
purchase of such Equipment Notes, which funds will be paid by
the Depositary being replaced to the Paying Agent Account of
such Trust and, upon the confirmation by the Paying Agent of
receipt in such Paying Agent Account of such amounts, the Paying
Agent will distribute such amounts to the Certificateholders of
such Trust on the immediately succeeding Regular Distribution
Date and, until such Regular Distribution Date, the amounts will
be held in such Paying Agent Account. (Note Purchase Agreement,
Section 5(d); Escrow Agreements, Sections 1.02(d) and
2.03(c))
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Limitation on
Damages
The Deposit Agreements provide that in no event shall the
Depositary be responsible or liable for special, indirect,
punitive, or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss of profit, whether or not
foreseeable) suffered by the Escrow Agent of each Trust or any
of the Receiptholders in connection with the Deposit Agreements
or the transactions contemplated or any relationships
established by the Deposit Agreements irrespective of whether
the Depositary has been advised of the likelihood of such loss
or damage and regardless of the form of action. (Deposit
Agreements, Section 16)
Depositary
The Bank of New York Mellon (the Bank) will
act as depositary (the Depositary). The Bank
is a New York state chartered bank that formerly was named
The Bank of New York. The Bank has total assets of
approximately $166.5 billion and total equity capital of
approximately $11.4 billion, in each case at
September 30, 2009. The Bank is a wholly-owned subsidiary
of The Bank of New York Mellon Corporation (the
BNMC).
The Bank has Long-Term Ratings of Aaa from Moodys and AA
from Standard & Poors and a long-term senior
debt rating of AA- from Fitch Ratings
(Fitch), and Short-Term Ratings of
P-1 from
Moodys and
A-1+ from
Standard & Poors and a short-term deposit rating
of F1+ from Fitch.
The Banks principal office is located at One Wall Street,
New York, New York 10286, and its telephone number is
212-495-1784.
A copy of the most recent BNMC filings with the SEC, including
its Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q
and Current Reports on
Form 8-K,
may be obtained from BNMCs Public Relations Department,
One Wall Street, 31st Floor,
(212) 635-1569
or from the SEC at
http://www.sec.gov.
The information that BNMC and affiliates, including the Bank,
filed with the SEC is not part of, and is not incorporated by
reference in, this prospectus.
60
DESCRIPTION OF
THE ESCROW AGREEMENTS
The following summary describes certain material terms of the
escrow and paying agent agreements (the Escrow
Agreements), as well as certain related provisions of
the Deposit Agreements and the Note Purchase Agreement. The
summary does not purport to be complete and is qualified in its
entirety by reference to all of the provisions of the Escrow
Agreements and the related provisions of the Deposit Agreements,
copies of which will be filed as exhibits to a Current Report on
Form 8-K
to be filed by Delta with the SEC.
General
U.S. Bank National Association, as escrow agent in respect
of each Trust (the Escrow Agent),
U.S. Bank Trust National Association, as paying agent
on behalf of the Escrow Agent in respect of each Trust (the
Paying Agent), each Trustee and the
Underwriters will enter into a separate Escrow Agreement for the
benefit of the Certificateholders of each Trust as holders of
the Escrow Receipts affixed thereto (in such capacity, a
Receiptholder). The cash proceeds of the
offering of the Certificates of each Trust will be deposited on
behalf of the Escrow Agent (for the benefit of the
Receiptholders) with the Depositary as Deposits relating to such
Trust. (Escrow Agreements, Section 1.03; Deposit
Agreements, Section 2.1) The Escrow Agent will permit the
Trustee of the related Trust to cause funds to be withdrawn from
such Deposits to allow such Trustee to purchase the related
Equipment Notes pursuant to the Note Purchase Agreement and the
related Participation Agreement or in connection with special
distributions under certain circumstances as described under
Description of the Deposit Agreements Other
Withdrawals and Return of Deposits. (Escrow Agreements,
Section 1.02(c) (f)) In addition, pursuant to
the terms of the Deposit Agreements, the Depositary agrees to
pay accrued interest on the Deposits in accordance with the
Deposit Agreements to the Paying Agent for distribution to the
Receiptholders. (Deposit Agreements, Section 4)
Each Escrow Agreement requires that the Paying Agent establish
and maintain, for the benefit of the Receiptholders of each
Trust, the Paying Agent Account for such Trust, which will be
non-interest-bearing, and the Paying Agent is under no
obligation to invest any amounts held in such Paying Agent
Account. (Escrow Agreements, Section 2.02). Pursuant to the
Deposit Agreements, the Depositary agrees to pay funds released
from the related Deposits and accrued interest on the related
Deposits directly into such Paying Agent Account, except for
amounts withdrawn to purchase any related Equipment Notes as
described under Description of the Deposit
Agreements Withdrawal of Deposits to Purchase
Equipment Notes and amounts paid to a Replacement
Depositary as described under Description of the Deposit
Agreements Replacement of Depositary. (Deposit
Agreements, Section 4) The Paying Agent will
distribute amounts deposited into the Paying Agent Account for
the related Trust to the Certificateholders of such Trust as
further described herein. See Description of the
Certificates Payments and Distributions and
Description of the Deposit Agreements.
Upon receipt by the Depositary of cash proceeds from this
offering, the Escrow Agent will issue one or more escrow
receipts (Escrow Receipts) which will be
affixed by the related Trustee to each Certificate. Each Escrow
Receipt evidences the related Receiptholders interest in
amounts from time to time deposited into the Paying Agent
Account and is limited in recourse to amounts deposited into
such account. An Escrow Receipt may not be assigned or
transferred except in connection with the assignment or transfer
of the Certificate to which it is affixed. Each Escrow Receipt
will be registered by the Escrow Agent in the same name and
manner as the Certificate to which it is affixed. (Escrow
Agreements, Sections 1.03 and 1.04) Because the Escrow
Receipts will be affixed to the Certificates, distributions to
the Receiptholders on the Escrow Receipts are sometimes referred
to in this prospectus, for convenience, as distributions to the
Certificateholders.
Each Escrow Agreement provides that each Receiptholder will have
the right (individually and without the need for any other
action of any person, including the Escrow Agent or any other
Receiptholder), upon any default in the payment of interest on
the Deposits when due by the
61
Depositary in accordance with the applicable Deposit Agreement,
or upon any default in the payment of any final withdrawal,
replacement withdrawal or event of loss withdrawal when due by
the Depositary in accordance with the terms of the applicable
Deposit Agreement and Escrow Agreement, to proceed directly
against the Depositary by making a demand to the Depositary for
the portion of such payment that would have been distributed to
such Receiptholder pursuant to such Escrow Agreement or by
bringing suit to enforce payment of such portion. The Escrow
Agent will notify Receiptholders in the event of a default in
any such payment and will promptly forward to Receiptholders
upon receipt copies of all written communications relating to
any payments due to the Receiptholders in respect of the
Deposits. (Escrow Agreements, Sections 9 and 16)
Certain
Modifications of the Escrow Agreements and Note Purchase
Agreement
The Note Purchase Agreement contains provisions requiring the
Trustees, the Escrow Agent and the Paying Agent, at Deltas
request, to enter into amendments to, among other agreements,
the Escrow Agreements and the Note Purchase Agreement as may be
necessary or desirable:
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if any Additional Equipment Notes are to be issued or
Series B Equipment Notes or any Additional Equipment Notes
are to be redeemed and new equipment notes with the same series
designation as that of the redeemed Equipment Notes are to be
issued, to give effect to such issuance of Additional Equipment
Notes or redemption and issuance of Series B Equipment
Notes or any Additional Equipment Notes and the issuance of pass
through certificates by any pass through trust that acquires any
such new equipment notes or Additional Equipment Notes, as
applicable, and to make related changes (including to provide
for any prefunding mechanism) and to provide for credit support
(including a liquidity facility) for any such pass through
certificates; and
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if the Depositary is to be replaced, to give effect to the
replacement of the Depositary with the Replacement Depositary
and the replacement of the Deposit Agreements with replacement
deposit agreements. (Note Purchase Agreement,
Sections 4(a)(v) and 5(e))
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In each case described immediately above, no requests (other
than Deltas request) or consents (including no consent of
the Certificateholders) will be required for such amendments.
Each Escrow Agreement contains provisions requiring the Escrow
Agent and the Paying Agent, upon request of the related Trustee
and without any consent of the Certificateholders, to enter into
an amendment to the Escrow Agreements or the Note Purchase
Agreement, among other things, for the following purposes:
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to correct or supplement any provision in the Escrow Agreements
or the Note Purchase Agreement which may be defective or
inconsistent with any other provision in the Escrow Agreements
or the Note Purchase Agreement or to cure any ambiguity or
correct any mistake;
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to modify any other provision with respect to matters or
questions arising under the Escrow Agreements or the Note
Purchase Agreement; provided that any such action will
not materially adversely affect the Certificateholders;
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to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body;
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to evidence and provide for the acceptance of appointment under
the Escrow Agreements or the Note Purchase Agreement of a
successor Escrow Agent, successor Paying Agent or successor
Trustee; or
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for any purposes described in the first thirteen bullet points
of the first paragraph under Description of the
Certificates Modification of the Pass Through Trust
Agreements and Certain Other Agreements. (Escrow
Agreements, Section 8)
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62
The Escrow
Agent
U.S. Bank National Association will be the Escrow Agent
under each Escrow Agreement. The Escrow Agents address is
U.S. Bank National Association, One Federal Street,
3rd
Floor, Mail Code EX-MA-FED, Boston, Massachusetts 02110,
Attention: Corporate Trust Services.
The Paying
Agent
U.S. Bank Trust National Association will be the
Paying Agent under each Escrow Agreement. The Paying
Agents address is U.S. Bank Trust National
Association, One Federal Street,
3rd
Floor, Mail Code EX-MA-FED, Boston, Massachusetts 02110,
Attention: Corporate Trust Services.
63
DESCRIPTION OF
THE LIQUIDITY FACILITIES
The following summary describes certain material terms of the
Liquidity Facilities and certain provisions of the Intercreditor
Agreement relating to the Liquidity Facilities. The summary does
not purport to be complete and is qualified in its entirety by
reference to all of the provisions of the Liquidity Facilities
and the Intercreditor Agreement, copies of which will be filed
as exhibits to a Current Report on
Form 8-K
to be filed by Delta with the SEC.
General
The liquidity provider for each of the Class A and
Class B Trusts (each, a Liquidity
Provider) will enter into a separate revolving credit
agreement (each, a Liquidity Facility) with
the Subordination Agent with respect to each of the Class A
and Class B Trusts. Under each Liquidity Facility, the
related Liquidity Provider will be required, if necessary, to
make one or more advances (Interest Drawings)
to the Subordination Agent in an aggregate amount (the
Required Amount) sufficient to pay interest
on the Pool Balance of the related class of Certificates on up
to three successive semiannual Regular Distribution Dates
(without regard to any expected future payments of principal on
such Certificates) at the Stated Interest Rate for such
Certificates. If interest payment defaults occur which exceed
the amount covered by and available under the Liquidity Facility
for the Class A or Class B Trust, the
Certificateholders of such Trust will bear their allocable share
of the deficiencies to the extent that there are no other
sources of funds. The initial Liquidity Provider with respect to
each of the Class A and Class B Trusts may be replaced
by one or more other entities with respect to any of such Trusts
under certain circumstances. Therefore, the Liquidity Provider
for each Trust may differ.
Drawings
The aggregate amount available under the Liquidity Facility for
each applicable Trust at June 17, 2011 (the first Regular
Distribution Date that occurs after the Outside Termination
Date), assuming that all Aircraft have been financed and that
all interest and principal due on or prior to such Regular
Distribution Date is paid, will be:
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Available
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Trust
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Amount
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Class A
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$
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61,813,229.91
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Class B
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$
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12,204,666.89
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Except as otherwise provided below, the Liquidity Facility for
each Trust will enable the Subordination Agent to make Interest
Drawings thereunder on any Regular Distribution Date in order to
make interest distributions then scheduled for the Certificates
of such Trust at the Stated Interest Rate for such Trust to the
extent that the amount, if any, available to the Subordination
Agent on such Regular Distribution Date is not sufficient to pay
such interest. The maximum amount available to be drawn under
the Liquidity Facility with respect to any Trust on any Regular
Distribution Date to fund any shortfall of interest on
Certificates of such Trust will not exceed the then Maximum
Available Commitment under such Liquidity Facility. The
Maximum Available Commitment at any time
under each Liquidity Facility is an amount equal to the then
Maximum Commitment of such Liquidity Facility less the aggregate
amount of each Interest Drawing outstanding under such Liquidity
Facility at such time; provided that, following a
Downgrade Drawing, a Special Termination Drawing, a Final
Drawing or a Non-Extension Drawing under Liquidity Facility, the
Maximum Available Commitment under such Liquidity Facility shall
be zero.
Maximum Commitment means for the
Liquidity Facility for the Class A Trust and the
Class B Trust initially $68,938,865.19 and $18,288,961.17,
respectively, as the same may be reduced from time to time as
described below.
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The Liquidity Facility for any applicable class of Certificates
does not provide for drawings thereunder to pay for principal
of, or Make-Whole Amount on, the Certificates of such class or
any interest with respect to the Certificates of such class in
excess of the Stated Interest Rate for such Certificates or for
more than three semiannual installments of interest or to pay
principal of, or interest on, or Make-Whole Amount with respect
to, the Certificates of any other class. (Liquidity Facilities,
Section 2.02; Intercreditor Agreement, Section 3.05)
In addition, the Liquidity Facility with respect to each Trust
does not provide for drawings thereunder to pay any amounts
payable with respect to the Deposits relating to such Trust.
Each payment by a Liquidity Provider for a Trust will reduce by
the same amount the Maximum Available Commitment under the
related Liquidity Facility, subject to reinstatement as
hereinafter described. With respect to any Interest Drawings,
upon reimbursement of the applicable Liquidity Provider in full
or in part for the amount of such Interest Drawings plus accrued
interest thereon, the Maximum Available Commitment under the
applicable Liquidity Facility will be reinstated by the amount
reimbursed but not to exceed the then Required Amount of the
applicable Liquidity Facility; provided, however,
that the Maximum Available Commitment of such Liquidity Facility
will not be so reinstated at any time if (i) a Liquidity
Event of Default has occurred and is continuing and less than
65% of the then aggregate outstanding principal amount of all
Equipment Notes (other than Additional Equipment Notes, if any)
are Performing Equipment Notes or (ii) a Final Drawing,
Downgrade Drawing, Special Termination Drawing or Non-Extension
Drawing shall have occurred with respect to such Liquidity
Facility. With respect to any other drawings under such
Liquidity Facility, amounts available to be drawn thereunder are
not subject to reinstatement. (Liquidity Facilities,
Section 2.02(a); Intercreditor Agreement,
Section 3.05(g)) On each date on which the Pool Balance for
a Trust shall have been reduced, the Maximum Commitment of the
Liquidity Facility for such Trust will be automatically reduced
to an amount equal to the then Required Amount. (Liquidity
Facilities, Section 2.04; Intercreditor Agreement,
Section 3.05(j))
Performing Equipment Note means an
Equipment Note issued pursuant to an Indenture with respect to
which no payment default has occurred and is continuing (without
giving effect to any acceleration); provided that, in the
event of a bankruptcy proceeding in which Delta is a debtor
under the Bankruptcy Code, (i) any payment default
occurring before the date of the order for relief in such
proceedings shall not be taken into consideration during the
60-day
period under Section 1110(a)(2)(A) of the Bankruptcy Code
(or such longer period as may apply under Section 1110(b)
of the Bankruptcy Code) (the Section 1110
Period), (ii) any payment default occurring after
the date of the order for relief in such proceeding will not be
taken into consideration if such payment default is cured under
Section 1110(a)(2)(B) of the Bankruptcy Code before the
later of 30 days after the date of such default or the
expiration of the Section 1110 Period and (iii) any
payment default occurring after the Section 1110 Period
will not be taken into consideration if such payment default is
cured before the end of the grace period, if any, set forth in
the related Indenture. (Intercreditor Agreement,
Section 1.01)
Replacement of
Liquidity Facilities
If at any time the Short-Term Rating of a Liquidity Provider
issued by either Rating Agency (or, if such Liquidity Provider
does not have a Short-Term Rating issued by a given Rating
Agency, the Long-Term Rating of such Liquidity Provider issued
by such Rating Agency) is lower than the Liquidity Threshold
Rating, then the related Liquidity Facility may be replaced with
a Replacement Facility. If such Liquidity Facility is not so
replaced with a Replacement Facility within 10 days after
the downgrading, the Subordination Agent will draw the then
Maximum Available Commitment under such Liquidity Facility (the
Downgrade Drawing). The Subordination Agent
will deposit the proceeds of any Downgrade Drawing into a cash
collateral account (the Cash Collateral
Account) for the applicable class of Certificates and
will use these proceeds for the same purposes and under the same
circumstances, and subject to the same conditions, as cash
payments of Interest Drawings under
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such Liquidity Facility would be used. (Liquidity Facilities,
Section 2.02(b)(ii); Intercreditor Agreement,
Sections 3.05(c) and (f))
Long-Term Rating means, for any
entity: (a) in the case of Moodys, the long-term
senior unsecured debt rating of such entity and (b) in the
case of Standard & Poors, the long-term issuer
credit rating of such entity.
Short-Term Rating means, for any
entity: (a) in the case of Moodys, the short-term
senior unsecured debt rating of such entity and (b) in the
case of Standard & Poors, the short-term issuer
credit rating of such entity.
Liquidity Threshold Rating means:
(i) a Short-Term Rating of
P-1 in the
case of Moodys and
A-1 in the
case of Standard & Poors and (ii) in the
case of any entity that does not have a Short-Term Rating from
either or both of such Rating Agencies, then in lieu of such
Short-Term Rating from such Rating Agency or Rating Agencies, a
Long-Term Rating of A2 in the case of Moodys and A in the
case of Standard & Poors.
A Replacement Facility for any
Liquidity Facility will mean an irrevocable revolving credit
agreement (or agreements) in substantially the form of the
replaced Liquidity Facility, including reinstatement provisions,
or in such other form (which may include a letter of credit,
surety bond, financial insurance policy or guaranty) as will
permit the Rating Agencies to confirm in writing their
respective ratings then in effect for the Certificates with
respect to which such Liquidity Facility was issued (before
downgrading of such ratings, if any, as a result of the
downgrading of the related Liquidity Provider), in a face amount
(or in an aggregate face amount) equal to the amount sufficient
to pay interest on the Pool Balance of the Certificates of the
applicable Trust (at the Stated Interest Rate for such
Certificates, and without regard to expected future principal
distributions) on the three successive semiannual Regular
Distribution Dates following the date of replacement of such
Liquidity Facility and issued by an entity (or entities) having
Short-Term Ratings issued by the Rating Agencies (or if such
entity does not have a Short-Term Rating issued by a given
Rating Agency, the Long-Term Rating of such entity issued by
such Rating Agency) which are equal to or higher than the
applicable Liquidity Threshold Rating. (Intercreditor Agreement,
Section 1.01) The provider of any Replacement Facility will
have the same rights (including, without limitation, priority
distribution rights and rights as Controlling Party)
under the Intercreditor Agreement as the replaced Liquidity
Provider. (Intercreditor Agreement, Section 3.05)
The Liquidity Facility for each of the Class A and
Class B Trusts provides that the applicable Liquidity
Providers obligations thereunder will expire on the
earliest of:
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364 days after the Issuance Date (counting from, and
including, the Issuance Date);
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the date on which the Subordination Agent delivers to such
Liquidity Provider a certification that all of the Certificates
of such Trust have been paid in full or provision has been made
for such payment;
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the date on which the Subordination Agent delivers to such
Liquidity Provider a certification that a Replacement Facility
has been substituted for such Liquidity Facility;
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the fifth Business Day following receipt by the Subordination
Agent of a Termination Notice from such Liquidity Provider (see
Liquidity Events of Default); and
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the date on which no amount is or may (including by reason of
reinstatement) become available for drawing under such Liquidity
Facility. (Liquidity Facilities, Section 1.01)
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Each Liquidity Facility provides that it may be extended for
additional
364-day
periods by mutual agreement of the related Liquidity Provider
and the Subordination Agent. The Intercreditor Agreement will
provide for the replacement of the Liquidity Facility for any
Trust if such Liquidity Facility is scheduled to expire earlier
than 15 days after the Final Legal Distribution Date for
the Certificates of such Trust and such Liquidity Facility is
not extended or replaced by the 25th day prior to its then
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scheduled expiration date. (Liquidity Facilities,
Section 2.10) If such Liquidity Facility is not so extended
or replaced by the 25th day prior to its then scheduled
expiration date, the Subordination Agent shall request a drawing
in full up to the then Maximum Available Commitment under such
Liquidity Facility (the Non-Extension
Drawing). (Liquidity Facilities,
Section 2.02(b)(i)) The Subordination Agent will deposit
the proceeds of the Non-Extension Drawing into the Cash
Collateral Account for the related Certificates and will use
these proceeds for the same purposes and under the same
circumstances, and subject to the same conditions, as cash
payments of Interest Drawings under such Liquidity Facility
would be used. (Intercreditor Agreement, Section 3.05(d))
Subject to certain limitations, Delta may, at its option,
arrange for a Replacement Facility at any time to replace the
Liquidity Facility for any Trust (including without limitation
any Replacement Facility described in the following sentence);
provided that, if the initial Liquidity Provider is
replaced, it shall be replaced with respect to all Liquidity
Facilities under which is the Liquidity Provider. (Liquidity
Facilities, Section 2.10) In addition, if a Liquidity
Provider shall determine not to extend a Liquidity Facility,
then such Liquidity Provider may, at its option, arrange for a
Replacement Facility to replace such Liquidity Facility
(i) during the period no earlier than 40 days and no
later than 25 days prior to the then scheduled expiration
date of such Liquidity Facility and (ii) at any time after
a Non-Extension Drawing has been made under such Liquidity
Facility. (Liquidity Facilities, Section 2.02(b)(ii)) A
Liquidity Provider may also arrange for a Replacement Facility
to replace the related Liquidity Facility at any time after a
Downgrade Drawing under such Liquidity Facility. If any
Replacement Facility is provided at any time after a Downgrade
Drawing or a Non-Extension Drawing under any Liquidity Facility,
the funds with respect to such Liquidity Facility on deposit in
the Cash Collateral Account for such Trust will be returned to
the Liquidity Provider being replaced. (Intercreditor Agreement,
Section 3.05(e))
Upon receipt by the Subordination Agent of a Termination Notice
with respect to any Liquidity Facility from the relevant
Liquidity Provider as described below under
Liquidity Events of Default, the
Subordination Agent shall request a final drawing (a
Final Drawing) or a special termination
drawing (the Special Termination Drawing), as
applicable, under such Liquidity Facility in an amount equal to
the then Maximum Available Commitment thereunder. The
Subordination Agent will deposit the proceeds of the Final
Drawing or the Special Termination Drawing into the Cash
Collateral Account for the related Certificates and will use
these proceeds for the same purposes and under the same
circumstances, and subject to the same conditions, as cash
payments of Interest Drawings under such Liquidity Facility
would be used. (Liquidity Facilities, Sections 2.02(c) and
2.02(d); Intercreditor Agreement, Sections 3.05(i) and
3.05(k))
Drawings under any Liquidity Facility will be made by delivery
by the Subordination Agent of a certificate in the form required
by such Liquidity Facility. Upon receipt of such a certificate,
the relevant Liquidity Provider is obligated to make payment of
the drawing requested thereby in immediately available funds.
Upon payment by the relevant Liquidity Provider of the amount
specified in any drawing under any Liquidity Facility, such
Liquidity Provider will be fully discharged of its obligations
under such Liquidity Facility with respect to such drawing and
will not thereafter be obligated to make any further payments
under such Liquidity Facility in respect of such drawing to the
Subordination Agent or any other person. (Liquidity Facilities,
Section 2.02(a))
Reimbursement of
Drawings
The Subordination Agent must reimburse amounts drawn under any
Liquidity Facility by reason of an Interest Drawing, Special
Termination Drawing, Final Drawing, Downgrade Drawing or
Non-Extension Drawing and pay interest thereon, but only to the
extent that the Subordination Agent has funds available
therefor. (Liquidity Facilities, Section 2.09)
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Interest
Drawings and Final Drawings
Amounts drawn by reason of an Interest Drawing or Final Drawing
(each, a Drawing) will be immediately due and
payable, together with interest on the amount of such drawing.
From the date of such drawing to (but excluding) the third
business day following the applicable Liquidity Providers
receipt of the notice of such Interest Drawing, interest will
accrue at the Base Rate plus 4.00% per annum. Thereafter,
interest will accrue at LIBOR for the applicable interest period
plus 4.00% per annum. (Liquidity Facilities, Section 3.07)
Base Rate means a fluctuating interest
rate per annum in effect from time to time, which rate per annum
shall at all times be equal to the weighted average of the rates
on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for each day of the period for which the Base Rate is
to be determined (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New
York, or if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for
such transactions received by the applicable Liquidity Provider
from three Federal funds brokers of recognized standing selected
by it (and reasonably satisfactory to Delta) plus one quarter of
one percent (0.25%).
LIBOR means, with respect to any
interest period, the rate per annum at which U.S. dollars
are offered in the London interbank market as shown on Reuters
Screen LIBOR01 (or any successor thereto) at approximately
11:00 A.M. (London time) two Business Days before the first
day of such interest period, for a period comparable to such
interest period, or if such rate is not available, a rate per
annum determined by certain alternative methods.
If at any time, a Liquidity Provider shall have determined
(which determination shall be conclusive and binding upon the
Subordination Agent, absent manifest error) that, by reason of
circumstances affecting the relevant interbank lending market
generally, the LIBOR rate determined or to be determined for
such interest period will not adequately and fairly reflect the
cost to such Liquidity Provider (as conclusively certified by
such Liquidity Provider, absent manifest error) of making or
maintaining advances, such Liquidity Provider shall give
facsimile or telephonic notice thereof (a Rate
Determination Notice) to the Subordination Agent. If
such notice is given, then the outstanding principal amount of
the LIBOR advances under the related Liquidity Facility shall be
converted to Base Rate advances thereunder effective from the
date of the Rate Determination Notice; provided that the
rate then applicable in respect of such Base Rate advances shall
be increased by one percent (1.00%). Each Liquidity Provider
shall withdraw a Rate Determination Notice given under the
applicable Liquidity Facility when such Liquidity Provider
determines that the circumstances giving rise to such Rate
Determination Notice no longer apply to such Liquidity Provider,
and the Base Rate advances shall be converted to LIBOR advances
effective as the first day of the next succeeding interest
period after the date of such withdrawal. Each change in the
Base Rate shall become effective immediately. (Liquidity
Facilities, Section 3.07(g))
Downgrade
Drawings, Special Termination Drawings, Non-Extension Drawings
and Final Drawings
The amount drawn under any Liquidity Facility by reason of a
Downgrade Drawing, a Special Termination Drawing, a
Non-Extension Drawing or Final Drawing and deposited in a Cash
Collateral Account will be treated as follows:
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such amount will be released on any Distribution Date to the
extent that such amount exceeds the Required Amount, first, to
the applicable Liquidity Provider up to the amount of its
Liquidity Obligations, and second, for distribution pursuant to
the Intercreditor Agreement;
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any portion of such amount withdrawn from the Cash Collateral
Account for the applicable Certificates to pay interest
distributions on such Certificates will be treated in the same
way as Interest Drawings; and
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the balance of such amount will be invested in certain specified
eligible investments.
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Any Downgrade Drawing, Special Termination Drawing or
Non-Extension Drawing under any Liquidity Facility, other than
any portion thereof applied to the payment of interest
distributions on the Certificates, will bear interest,
(a) subject to clause (b) below, at a rate equal to
(i) in the case of a Downgrade Drawing, LIBOR for the
applicable interest period (or, as described in the first
paragraph under Reimbursement
Drawings Interest Drawings and Final Drawings,
the Base Rate) plus a specified margin, (ii) in the case of
a Special Termination Drawing, LIBOR for the applicable interest
period (or, as described in the first paragraph under
Reimbursement Drawings Interest
Drawings and Final Drawings, the Base Rate) plus a
specified margin and (iii) in the case of a Non-Extension
Drawing, the investment earnings on the amounts deposited in the
Cash Collateral Account on the outstanding amount from time to
time of such Non-Extension Drawing plus a specified margin, and
(b) from and after the date, if any, on which such
Downgrade Drawing, Special Termination Drawing or Non-Extension
Drawing is converted into a Final Drawing as described below
under Liquidity Events of Default, at a
rate equal to LIBOR for the applicable interest period (or, as
described in the first paragraph under
Reimbursement of Drawings Interest
Drawings and Final Drawings, the Base Rate) plus 4.00% per
annum.
Liquidity Events
of Default
Events of default under each Liquidity Facility (each, a
Liquidity Event of Default) will consist of:
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the acceleration of all of the Equipment Notes (provided
that, if such acceleration occurs during the period prior to
the Delivery Period Termination Date, the aggregate principal
amount thereof exceeds $330 million); or
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certain bankruptcy or similar events involving Delta. (Liquidity
Facilities, Section 1.01)
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If (i) any Liquidity Event of Default under any Liquidity
Facility has occurred and is continuing and (ii) less than
65% of the aggregate outstanding principal amount of all
Equipment Notes (other than Additional Equipment Notes, if any)
are Performing Equipment Notes, the applicable Liquidity
Provider may, in its discretion, give a notice of termination of
such Liquidity Facility (a Final Termination
Notice). With respect to any Liquidity Facility, if
the Pool Balance of the related class of Certificates is greater
than the aggregate outstanding principal amount of the related
series of Equipment Notes (other than any such series of
Equipment Notes previously sold or with respect to which the
Aircraft related to such series of Equipment Notes has been
disposed of) at any time during the
18-month
period prior to the final expected Regular Distribution Date
with respect to such class of Certificates, the Liquidity
Provider of such Trust may, in its discretion, give a notice of
special termination of such Liquidity Facility (a
Special Termination Notice and, together with
the Final Termination Notice, a Termination
Notice). The Termination Notice will have the
following consequences:
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the related Liquidity Facility will expire on the fifth Business
Day after the date on which such Termination Notice is received
by the Subordination Agent;
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the Subordination Agent will promptly request, and the
applicable Liquidity Provider will honor, a Final Drawing or
Special Termination Drawing, as applicable, thereunder in an
amount equal to the then Maximum Available Commitment thereunder;
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in the event that a Final Drawing is made, any Drawing remaining
unreimbursed as of the date of termination will be automatically
converted into a Final Drawing under such Liquidity Facility;
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in the event a Special Termination Notice is given, all amounts
owing to the applicable Liquidity Provider will be treated as a
Special Termination Drawing for the purposes set forth under
Description of the Intercreditor Agreement
Priority of Distributions; and
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all amounts owing to the applicable Liquidity Provider will be
automatically accelerated. (Liquidity Facilities,
Section 6.01)
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Notwithstanding the foregoing, the Subordination Agent will be
obligated to pay amounts owing to the applicable Liquidity
Provider only to the extent of funds available therefor after
giving effect to the payments in accordance with the provisions
set forth under Description of the Intercreditor
Agreement Priority of Distributions.
(Liquidity Facilities, Section 2.09) Upon the circumstances
described below under Description of the Intercreditor
Agreement Intercreditor Rights, a Liquidity
Provider may become the Controlling Party with respect to the
exercise of remedies under the Indentures. (Intercreditor
Agreement, Section 2.06(c))
Liquidity
Provider
The initial Liquidity Provider for each Trust will be Natixis
S.A., acting via its New York Branch. The Liquidity Provider has
Short-Term Ratings of
P-1 from
Moodys and
A-1 from
Standard & Poors.
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DESCRIPTION OF
THE INTERCREDITOR AGREEMENT
The following summary describes certain material provisions of
the Intercreditor Agreement (the Intercreditor
Agreement) among the Trustees, the Liquidity Providers
and U.S. Bank Trust National Association, as
subordination agent (the Subordination
Agent). The summary does not purport to be complete
and is qualified in its entirety by reference to all of the
provisions of the Intercreditor Agreement, a copy of which will
be filed as an exhibit to a Current Report on
Form 8-K
to be filed by Delta with the SEC.
Intercreditor
Rights
General
The Equipment Notes relating to each Trust will be issued to and
registered in the name of the Subordination Agent as agent and
trustee for the Trustee of such Trust. (Intercreditor Agreement,
Section 2.01(a))
Controlling
Party
Each Loan Trustee will be directed, so long as no Indenture
Event of Default shall have occurred and be continuing
thereunder and subject to certain limitations described below,
in taking, or refraining from taking, any action under an
Indenture or with respect to the Equipment Notes issued under
such Indenture, by the holders of at least a majority of the
outstanding principal amount of the Equipment Notes issued under
such Indenture. See Voting of Equipment
Notes below. For so long as the Subordination Agent is the
registered holder of the Equipment Notes, the Subordination
Agent will act with respect to the preceding sentence in
accordance with the directions of the Trustees for whom the
Equipment Notes issued under such Indenture are held as
Trust Property, to the extent constituting, in the
aggregate, directions with respect to the required principal
amount of Equipment Notes.
After the occurrence and during the continuance of an Indenture
Event of Default under an Indenture, each Loan Trustee will be
directed in taking, or refraining from taking, any action
thereunder or with respect to the Equipment Notes issued under
such Indenture, including acceleration of such Equipment Notes
or foreclosing the lien on the related Aircraft with respect to
which such Equipment Note was issued, by the Controlling Party,
subject to the limitations described below. See
Description of the Certificates Indenture
Events of Default and Certain Rights Upon an Indenture Event of
Default for a description of the rights of the
Certificateholders of each Trust to direct the respective
Trustees. (Intercreditor Agreement, Section 2.06(a))
The Controlling Party will be:
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if Final Distributions have not been paid in full to the holders
of Class A Certificates, the Class A Trustee;
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if Final Distributions have been paid in full to the holders of
the Class A Certificates, but not to the holders of the
Class B Certificates, the Class B Trustee; and
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under certain circumstances, and notwithstanding the foregoing,
the Liquidity Provider with the largest amount owed to it, as
discussed in the next paragraph. (Intercreditor Agreement,
Sections 2.06(b) and (c))
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At any time after 18 months from the earliest to occur of
(x) the date on which the entire available amount under any
Liquidity Facility shall have been drawn (excluding a Downgrade
Drawing or Non-Extension Drawing (but including a Final Drawing,
a Special Termination Drawing or a Downgrade Drawing or
Non-Extension Drawing that has been converted to a Final Drawing
under such Liquidity Facility)) and remains unreimbursed,
(y) the date on which the entire amount of any Downgrade
Drawing or Non-Extension Drawing shall have been withdrawn from
the relevant Cash Collateral Account to pay interest on the
relevant class of Certificates and remains unreimbursed and
(z) the date on which all Equipment Notes under all
Indentures shall have been accelerated (provided
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that, if such acceleration occurs prior to the Delivery Period
Termination Date, the aggregate principal amount thereof exceeds
$330 million), the Liquidity Provider with the highest
amount of unreimbursed Liquidity Obligations due to it (so long
as such Liquidity Provider has not defaulted in its obligations
to make any drawing under any Liquidity Facility) will have the
right to elect to become the Controlling Party with respect to
any Indenture. (Intercreditor Agreement, Section 2.06(c))
For purposes of giving effect to the rights of the Controlling
Party, the Trustees (other than the Controlling Party) will
irrevocably agree, and the Certificateholders (other than the
Certificateholders represented by the Controlling Party) will be
deemed to agree by virtue of their purchase of Certificates,
that the Subordination Agent, as record holder of the Equipment
Notes, shall exercise its voting rights in respect of the
Equipment Notes held by the Subordination Agent as directed by
the Controlling Party and any vote so exercised shall be binding
upon the Trustees and Certificateholders, subject to certain
limitations. (Intercreditor Agreement, Section 2.06) For a
description of certain limitations on the Controlling
Partys rights to exercise remedies, see
Limitation on Exercise of Remedies
and Description of the Equipment Notes
Remedies. (Intercreditor Agreement, Section 2.06(b))
Final Distributions means, with
respect to the Certificates of any Trust on any Distribution
Date, the sum of (x) the aggregate amount of all accrued
and unpaid interest on such Certificates (excluding interest
payable on the Deposits relating to such Trust) and (y) the
Pool Balance of such Certificates as of the immediately
preceding Distribution Date (less the amount of the Deposits for
such class of Certificates as of such preceding Distribution
Date other than any portion of such Deposits thereafter used to
acquire Equipment Notes pursuant to the Note Purchase
Agreement). For purposes of calculating Final Distributions with
respect to the Certificates of any Trust, any Make-Whole Amount
paid on the Equipment Notes held in such Trust which has not
been distributed to the Certificateholders of such Trust (other
than such Make-Whole Amount or a portion thereof applied to the
payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to
the amount of such Final Distributions. (Intercreditor
Agreement, Section 1.01)
Limitation on
Exercise of Remedies
So long as any Certificates are outstanding, during the period
ending on the date which is nine months after the earlier of
(x) the acceleration of the Equipment Notes under any
Indenture and (y) the bankruptcy or insolvency of Delta,
without the consent of each Trustee (other than the Trustee of
any Trust all of the Certificates of which are held or
beneficially owned by Delta or its affiliates), no Aircraft
subject to the lien of such Indenture or such Equipment Notes
may be sold in the exercise of remedies under such Indenture, if
the net proceeds from such sale would be less than the Minimum
Sale Price for such Aircraft or such Equipment Notes.
(Intercreditor Agreement, Section 4.01(a)(iii))
Minimum Sale Price means, with respect
to any Aircraft or the Equipment Notes issued in respect of such
Aircraft, at any time, the lesser of (1) in the case of the
sale of an Aircraft, 80%, or, in the case of the sale of such
related Equipment Notes, 90%, of the Appraised Current Market
Value of such Aircraft and (2) the sum of the aggregate
Note Target Price of such Equipment Notes and an amount equal to
the Excess Liquidity Obligations in respect of the Indenture
under which such Equipment Notes were issued. (Intercreditor
Agreement, Section 1.01)
Excess Liquidity Obligations means,
with respect to an Indenture, an amount equal to the sum of
(i) the amount of fees payable to the Liquidity Provider
with respect to each Liquidity Facility, multiplied by a
fraction, the numerator of which is the then outstanding
aggregate principal amount of the Series A Equipment Notes
and Series B Equipment Notes issued under such Indenture
and the denominator of which is the then outstanding aggregate
principal amount of all Series A Equipment Notes and
Series B Equipment Notes, (ii) interest on any Special
Termination Drawing, Downgrade Drawing or Non-Extension Drawing
payable under each Liquidity Facility in excess of investment
earnings on such drawing multiplied by the fraction specified in
clause (i) above, (iii) if any payment
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default by Delta exists with respect to interest on any
Series A Equipment Notes or Series B Equipment Notes,
the excess of the interest on any Interest Drawing (or portion
of any Downgrade Drawing, Non-Extension Drawing or Special
Termination Drawing that is used to pay interest on the
Certificates) or Final Drawing payable under each Liquidity
Facility plus certain other amounts payable under each Liquidity
Facility with respect thereto, over the sum of
(a) investment earnings from any Final Drawing plus
(b) any interest at the past due rate actually payable
(whether or not in fact paid) by Delta on the overdue scheduled
interest on the Series A Equipment Notes and Series B
Equipment Notes in respect of which such Drawing was made (or
portion of Downgrade Drawing, Non-Extension Drawing or Special
Termination Drawing was used), multiplied by a fraction the
numerator of which is the aggregate overdue amounts of interest
on the Series A Equipment Notes and Series B Equipment
Notes issued under such Indenture (other than interest becoming
due and payable solely as a result of acceleration of any such
Equipment Notes) and the denominator of which is the then
aggregate overdue amounts of interest on all Series A
Equipment Notes and Series B Equipment Notes (other than
interest becoming due and payable solely as a result of
acceleration of any such Equipment Notes), and (iv) any
other amounts owed to a Liquidity Provider by the Subordination
Agent as borrower under each Liquidity Facility other than
amounts due as repayment of advances thereunder or as interest
on such advances, except to the extent payable pursuant to
clauses (ii) and (iii) above, multiplied by the
fraction specified in clause (i) above. The foregoing
definition shall be revised accordingly to reflect, if
applicable, any Replacement Facility or if Additional
Certificates with credit support similar to the Liquidity
Facilities are issued. See Possible Issuance of Additional
Certificates and Refinancing of Certificates. (Indentures,
Section 2.14)
Note Target Price means, for any
Equipment Note issued under any Indenture: (i) the
aggregate outstanding principal amount of such Equipment Note,
plus (ii) the accrued and unpaid interest thereon, together
with all other sums owing on or in respect of such Equipment
Note (including, without limitation, enforcement costs incurred
by the Subordination Agent in respect of such Equipment Note).
(Intercreditor Agreement, Section 1.01)
Following the occurrence and during the continuation of an
Indenture Event of Default under any Indenture, in the exercise
of remedies pursuant to such Indenture, the Loan Trustee under
such Indenture may be directed to lease the related Aircraft to
any person (including Delta) so long as the Loan Trustee in
doing so acts in a commercially reasonable manner
within the meaning of Article 9 of the Uniform Commercial
Code as in effect in any applicable jurisdiction (including
Sections 9-610
and 9-627 thereof). (Intercreditor Agreement,
Section 4.01(a)(ii))
If following certain events of bankruptcy, reorganization or
insolvency with respect to Delta described in the Intercreditor
Agreement (a Delta Bankruptcy Event) and
during the pendency thereof, the Controlling Party receives a
proposal from or on behalf of Delta to restructure the financing
of any one or more of the Aircraft, the Controlling Party will
promptly thereafter give the Subordination Agent, each Trustee
and each Liquidity Provider that has not made a Final Drawing
notice of the material economic terms and conditions of such
restructuring proposal whereupon the Subordination Agent acting
on behalf of each Trustee will post such terms and conditions of
such restructuring proposal on DTCs Internet bulletin
board or make such other commercially reasonable efforts as the
Subordination Agent may deem appropriate to make such terms and
conditions available to all Certificateholders. Thereafter,
neither the Subordination Agent nor any Trustee, whether acting
on instructions of the Controlling Party or otherwise, may,
without the consent of each Trustee and each Liquidity Provider
that has not made a Final Drawing, enter into any term sheet,
stipulation or other agreement (a Restructuring
Arrangement) (whether in the form of an adequate
protection stipulation, an extension under Section 1110(b)
of the Bankruptcy Code or otherwise) to effect any such
restructuring proposal with or on behalf of Delta unless and
until the material economic terms and conditions of such
restructuring proposal shall have been made available to all
Certificateholders and each Liquidity Provider that has not made
a Final Drawing, for a period of not less than 15 calendar days
(except that such requirement shall not apply to any such
Restructuring Arrangement that is effective (whether
prospectively or retrospectively) as of a date on or before the
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expiration of the
60-day
period under Section 1110 and to be effective, initially,
for a period not longer than three months from the expiry of
such 60-day
period (an Interim Restructuring
Arrangement)). The requirements described in the
immediately preceding sentence (i) will not apply to any
extension of a Restructuring Arrangement with respect to which
such requirements have been complied with in connection with the
original entry of such Restructuring Arrangement if the
possibility of such extension has been disclosed in satisfaction
of the notification requirements and such extension shall not
amend or modify any of the other terms and conditions of such
Restructuring Arrangement and (ii) will apply to the
initial extension of an Interim Restructuring Arrangement beyond
the three months following the expiry of the
60-day
period but not to any subsequent extension of such Interim
Restructuring Arrangement, if the possibility of such subsequent
extension has been disclosed in satisfaction of the notification
requirements and such subsequent extension shall not amend or
modify any of the other terms and conditions of such Interim
Restructuring Arrangement. (Intercreditor Agreement,
Section 4.01(c))
In the event that any Certificateholder gives irrevocable notice
of the exercise of its right to purchase all (but not less than
all) of the Certificates represented by the then Controlling
Party (as described in Description of the
Certificates Certificate Buyout Right of
Certificateholders) prior to the expiry of the applicable
notice period specified above, such Controlling Party may not
direct the Subordination Agent or any Trustee to enter into any
such restructuring proposal with respect to any of the Aircraft,
unless and until such Certificateholder fails to purchase such
class of Certificates on the date that it is required to make
such purchase. (Intercreditor Agreement, Section 4.01(c))
Post Default
Appraisals
Upon the occurrence and continuation of an Indenture Event of
Default under any Indenture, the Subordination Agent will be
required to obtain three desktop appraisals from the appraisers
selected by the Controlling Party setting forth the current
market value, current lease rate and distressed value (in each
case, as defined by the International Society of Transport
Aircraft Trading or any successor organization) of the Aircraft
subject to such Indenture (each such appraisal, an
Appraisal and the current market value
appraisals being referred to herein as the Post Default
Appraisals). For so long as any Indenture Event of
Default shall be continuing under any Indenture, and without
limiting the right of the Controlling Party to request more
frequent Appraisals, the Subordination Agent will be required to
obtain additional Appraisals on the date that is 364 days
from the date of the most recent Appraisal or if a Delta
Bankruptcy Event shall have occurred and is continuing, on the
date that is 180 days from the date of the most recent
Appraisal and shall (acting on behalf of each Trustee) post such
Appraisals on DTCs Internet bulletin board or make such
other commercially reasonable efforts as the Subordination Agent
may deem appropriate to make such Appraisals available to all
Certificateholders. (Intercreditor Agreement,
Section 4.01(a)(iv))
Appraised Current Market Value of any
Aircraft means the lower of the average and the median of the
three most recent Post Default Appraisals of such Aircraft.
(Intercreditor Agreement, Section 1.01)
Priority of
Distributions
All payments in respect of the Equipment Notes and certain other
payments received on each Regular Distribution Date or Special
Distribution Date will be promptly distributed by the
Subordination Agent on such Regular Distribution Date or Special
Distribution Date in the following order of priority:
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to the Subordination Agent, any Trustee, any Certificateholder
and any Liquidity Provider to the extent required to pay certain
out-of-pocket
costs and expenses actually incurred by the Subordination Agent
(or reasonably expected to be incurred by the Subordination
Agent for the period ending on the next succeeding Regular
Distribution Date, which shall not exceed $150,000 unless
approved in writing by the Controlling Party and accompanied by
evidence that such costs are actually expected to be incurred)
or any Trustee or to reimburse any
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Certificateholder or any Liquidity Provider in respect of
payments made to the Subordination Agent or any Trustee in
connection with the protection or realization of the value of
the Equipment Notes held by the Subordination Agent or any
Collateral under (and as defined in) any Indenture
(collectively, the Administration Expenses).
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to each Liquidity Provider (a) to the extent required to
pay the accrued and unpaid Liquidity Expenses or (b) in the
case of a Special Payment on account of the redemption, purchase
or prepayment of the Equipment Notes issued pursuant to an
Indenture (an Equipment Note Special
Payment), so long as no Indenture Event of Default has
occurred and is continuing under any Indenture, the amount of
accrued and unpaid Liquidity Expenses that are not yet overdue,
multiplied by the Applicable Fraction or, if an Indenture Event
of Default has occurred and is continuing, clause (a) will
apply.
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to each Liquidity Provider (i)(a) to the extent required to pay
interest accrued and unpaid on the Liquidity Obligations or
(b) in the case of an Equipment Note Special Payment, so
long as no Indenture Event of Default has occurred and is
continuing under any Indenture, to the extent required to pay
accrued and unpaid interest then overdue on the Liquidity
Obligations, plus an amount equal to the amount of accrued and
unpaid interest on the Liquidity Obligations not yet overdue,
multiplied by the Applicable Fraction or, if an Indenture Event
of Default has occurred and is continuing, clause (a) will
apply and (ii) if a Special Termination Drawing has been
made under a Liquidity Facility, the outstanding amount of such
Special Termination Drawing under such Liquidity Facility.
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to (i) if applicable, unless (in the case of this
clause (i) only) (x) less than 65% of the aggregate
outstanding principal amount of all Equipment Notes (other than
Additional Equipment Notes, if any) are Performing Equipment
Notes and a Liquidity Event of Default shall have occurred and
be continuing under such Liquidity Facility or (y) a Final
Drawing shall have occurred under such Liquidity Facility, the
funding of the Cash Collateral Account with respect to such
Liquidity Facility up to the Required Amount for the related
class of Certificates and (ii) each Liquidity Provider to
the extent required to pay the outstanding amount of all
Liquidity Obligations.
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to the Subordination Agent, any Trustee or any Certificateholder
to the extent required to pay certain fees, taxes, charges and
other amounts payable.
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to the Class A Trustee (a) to the extent required to
pay accrued and unpaid interest at the Stated Interest Rate on
the Pool Balance of the Class A Certificates (excluding
interest, if any, payable with respect to the Deposits relating
to such class of Certificates) or (b) in the case of an
Equipment Note Special Payment, so long as no Indenture Event of
Default has occurred and is continuing under any Indenture, to
the extent required to pay any such interest that is then
accrued, due and unpaid together with (without duplication)
accrued and unpaid interest at the Stated Interest Rate on the
outstanding principal amount of the Series A Equipment
Notes held in the Class A Trust being redeemed, purchased
or prepaid or, if an Indenture Event of Default has occurred and
is continuing, clause (a) will apply.
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to the Class B Trustee (a) to the extent required to
pay unpaid Class B Adjusted Interest on the Class B
Certificates (excluding interest, if any, payable with respect
to the Deposits relating to such class of Certificates) or
(b) in the case of an Equipment Note Special Payment, so
long as no Indenture Event of Default has occurred and is
continuing under any Indenture, to the extent required to pay
any accrued, due and unpaid Class B Adjusted Interest
(excluding interest, if any, payable with respect to the
Deposits relating to such class of Certificates) or, if an
Indenture Event of Default has occurred and is continuing,
clause (a) will apply.
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to the Class A Trustee to the extent required to pay
Expected Distributions on the Class A Certificates.
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to the Class B Trustee (a) to the extent required to
pay accrued and unpaid interest at the Stated Interest Rate on
the Pool Balance of the Class B Certificates (other than
Class B
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Adjusted Interest paid above) (excluding interest, if any,
payable with respect to the Deposits relating to such class of
Certificates) or (b) in the case of an Equipment Note
Special Payment, so long as no Indenture Event of Default has
occurred and is continuing under any Indenture, to the extent
required to pay any such interest that is then accrued, due and
unpaid (other than Class B Adjusted Interest paid above)
together with (without duplication) accrued and unpaid interest
at the Stated Interest Rate on the outstanding principal amount
of the Series B Equipment Notes held in the Class B
Trust and being redeemed, purchased or prepaid or, if an
Indenture Event of Default has occurred and is continuing,
clause (a) will apply.
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to the Class B Trustee to the extent required to pay
Expected Distributions on the Class B Certificates.
(Intercreditor Agreement, Sections 2.04 and 3.02)
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If Additional Certificates are issued, the priority of
distributions in the Intercreditor Agreement may be revised such
that certain obligations relating to interest on the Additional
Certificates may rank ahead of certain obligations with respect
to the Certificates. See Possible Issuance of Additional
Certificates and Refinancing of Certificates.
Applicable Fraction means, with
respect to any Special Distribution Date, a fraction, the
numerator of which shall be the amount of principal of the
applicable Series A Equipment Notes and Series B
Equipment Notes being redeemed, purchased or prepaid on such
Special Distribution Date, and the denominator of which shall be
the aggregate unpaid principal amount of all Series A
Equipment Notes and Series B Equipment Notes outstanding as
of such Special Distribution Date. The definition of
Applicable Fraction will be revised if Additional
Certificates are issued. See Possible Issuance of
Additional Certificates and Refinancing of Certificates.
Liquidity Obligations means, with
respect to each Liquidity Provider, the obligations to reimburse
or to pay such Liquidity Provider all principal, interest, fees
and other amounts owing to it under the applicable Liquidity
Facility or certain other agreements.
Liquidity Expenses means, with respect
to each Liquidity Provider, all Liquidity Obligations other than
any interest accrued thereon or the principal amount of any
drawing under the applicable Liquidity Facility.
Expected Distributions means, with
respect to the Certificates of any Trust on any Distribution
Date (the Current Distribution Date), the
difference between:
(A) the Pool Balance of such Certificates as of the
immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date after the
Issuance Date, the original aggregate face amount of the
Certificates of such Trust), and
(B) the Pool Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i) the
principal of any Equipment Notes other than Performing Equipment
Notes held in such Trust has been paid in full and such payments
have been distributed to the holders of such Certificates,
(ii) the principal of any Performing Equipment Notes held
in such Trust has been paid when due (whether at stated maturity
or upon prepayment or purchase or otherwise, but without giving
effect to any acceleration of Performing Equipment Notes) and
such payments have been distributed to the holders of such
Certificates and (iii) the principal of any Equipment Notes
formerly held in such Trust that have been sold pursuant to the
Intercreditor Agreement has been paid in full and such payments
have been distributed to the holders of such Certificates,
without giving effect to any reduction in the Pool Balance as a
result of any distribution attributable to Deposits occurring
after the immediately preceding Distribution Date (or, if the
Current Distribution Date is the first Distribution Date,
occurring after the initial issuance of the Certificates of such
Trust).
For purposes of calculating Expected Distributions with respect
to the Certificates of any Trust, any Make-Whole Amount paid on
the Equipment Notes held in such Trust that has not been
76
distributed to the Certificateholders of such Trust (other than
such Make-Whole Amount or a portion thereof applied to the
payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to
the amount of Expected Distributions. (Intercreditor Agreement,
Section 1.01)
Class B Adjusted Interest means,
as of any Current Distribution Date, (I) any interest
described in clause (II) of this definition accrued prior
to the immediately preceding Distribution Date which remains
unpaid and (II) the sum of (x) interest determined at
the Stated Interest Rate for the Class B Certificates for
the period commencing on, and including, the immediately
preceding Distribution Date (or, if the Current Distribution
Date is the first Distribution Date, the Issuance Date) and
ending on, but excluding, the Current Distribution Date, on the
Eligible B Pool Balance on such Distribution Date and
(y) the sum of interest for each Series B Equipment
Note with respect to which, or with respect to the Aircraft with
respect to which such Equipment Note was issued, a disposition,
distribution, sale or Deemed Disposition Event has occurred,
since the immediately preceding Distribution Date (but only if
no such event has previously occurred with respect to such
Series B Equipment Note), determined at the Stated Interest
Rate for the Class B Certificates for each day during the
period commencing on, and including, the immediately preceding
Distribution Date (or, if the current Distribution Date is the
first Distribution Date, the Issuance Date) and ending on, but
excluding, the date of the earliest of such disposition,
distribution, sale or Deemed Disposition Event with respect to
such Series B Equipment Note or Aircraft, as the case may
be, on the principal amount of such Series B Equipment Note
calculated pursuant to clause (B)(i), (ii), (iii) or (iv),
as applicable, of the definition of Eligible B Pool Balance.
(Intercreditor Agreement, Section 1.01)
Eligible B Pool Balance means, as of
any date of determination, the excess of (A) the Pool
Balance of the Class B Certificates as of the immediately
preceding Distribution Date (or, if such date of determination
is on or before the first Distribution Date, the original
aggregate face amount of the Class B Certificates) (after
giving effect to payments made on such date of determination)
over (B) the sum of, with respect to each Series B
Equipment Note, one of the following amounts, if applicable:
(i) if there has previously been a sale or disposition by
the applicable Loan Trustee of the Aircraft for cash under (and
as defined in) the related Indenture, the outstanding principal
amount of such Series B Equipment Note that remains unpaid
as of such date of determination subsequent to such sale or
disposition and after giving effect to any distributions of the
proceeds of such sale or disposition applied under such
Indenture to the payment of such Series B Equipment Note,
(ii) if there has previously been an Event of Loss with
respect to the applicable Aircraft to which such Series B
Equipment Note relates, the outstanding principal amount of such
Series B Equipment Note that remains unpaid as of such date
of determination subsequent to the scheduled date of mandatory
redemption of such Series B Equipment Note following Event
of Loss and after giving effect to the distributions of any
proceeds in respect of such Event of Loss applied under such
Indenture to the payment of such Series B Equipment Note,
(iii) if such Series B Equipment Note has previously
been sold for cash by the Subordination Agent, the excess, if
any, of (x) the outstanding amount of principal and
interest as of the date of such sale by the Subordination Agent
of such Series B Equipment Note over (y) the purchase
price received with respect to such sale of such Series B
Equipment Note for cash (net of any applicable costs and
expenses of such sale) or (iv) if a Deemed Disposition
Event has occurred with respect to such Series B Equipment
Note, the outstanding principal amount of such Series B
Equipment Note; provided, however, that if more
than one of the clauses (i), (ii), (iii) and (iv) is
applicable to any one Series B Equipment Note, only the
amount determined pursuant to the clause that first became
applicable shall be counted with respect to such Series B
Equipment Note.
Deemed Disposition Event means, in
respect of any Equipment Note, the continuation of an Indenture
Event of Default in respect of such Equipment Note without an
Actual Disposition Event occurring in respect of such Equipment
Note for a period of four years from the date of the occurrence
of such Indenture Event of Default.
Actual Disposition Event means, in
respect of any Equipment Note, (i) the sale or disposition
by the applicable Loan Trustee for cash of the Aircraft securing
such Equipment Note,
77
(ii) the occurrence of the mandatory redemption date for
such Equipment Note following an Event of Loss with respect to
such Aircraft or (iii) the sale by the Subordination Agent
of such Equipment Note for cash. (Intercreditor Agreement,
Section 1.01)
Interest Drawings under the applicable Liquidity Facility and
withdrawals from the applicable Cash Collateral Account, in
respect of interest on the Certificates of the Class A or
Class B Trust, as applicable, will be distributed to the
Trustee for such class of Certificates, notwithstanding the
priority of distributions set forth in the Intercreditor
Agreement and otherwise described herein. All amounts on deposit
in the Cash Collateral Account for any such Trust that are in
excess of the Required Amount will be paid to the applicable
Liquidity Provider. (Intercreditor Agreement,
Section 3.05(f))
Voting of
Equipment Notes
In the event that the Subordination Agent, as the registered
holder of any Equipment Note, receives a request for its consent
to any amendment, supplement, modification, approval, consent or
waiver under such Equipment Note or the related Indenture or the
related Participation Agreement or other related document,
(i) if no Indenture Event of Default shall have occurred
and be continuing with respect to such Indenture, the
Subordination Agent shall request directions from the Trustee(s)
and shall vote or consent in accordance with such directions and
(ii) if any Indenture Event of Default shall have occurred
and be continuing with respect to such Indenture, the
Subordination Agent will exercise its voting rights as directed
by the Controlling Party, subject to certain limitations;
provided that no such amendment, supplement,
modification, approval, consent or waiver shall, without the
consent of each Liquidity Provider, reduce the amount of
principal or interest payable by Delta under any Equipment Note.
In addition, see the last paragraph under Description of
the Certificates Modification of the Pass Through
Trust Agreements and Certain Other Agreements for a
description of the additional Certificateholder consent
requirements with respect to amendments, supplements,
modifications, approvals, consents or waivers of the Indentures,
Equipment Notes, Participation Agreements, Note Purchase
Agreement or other related documents. (Intercreditor Agreement,
Section 8.01(b))
List of
Certificateholders
Upon the occurrence of an Indenture Event of Default, the
Subordination Agent shall instruct the Trustees to, and the
Trustees shall, request that DTC post on its Internet bulletin
board a securities position listing setting forth the names of
all the parties reflected on DTCs books as holding
interests in the Certificates. (Intercreditor Agreement,
Section 5.01(c))
Reports
Promptly after the occurrence of a Triggering Event or an
Indenture Event of Default resulting from the failure of Delta
to make payments on any Equipment Note and on every Regular
Distribution Date while the Triggering Event or such Indenture
Event of Default shall be continuing, the Subordination Agent
will provide to the Trustees, the Liquidity Providers, the
Rating Agencies and Delta a statement setting forth the
following information:
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after a Delta Bankruptcy Event, with respect to each Aircraft,
whether such Aircraft is (i) subject to the
60-day
period of Section 1110, (ii) subject to an election by
Delta under Section 1110(a) of the Bankruptcy Code,
(iii) covered by an agreement contemplated by
Section 1110(b) of the Bankruptcy Code or (iv) not
subject to any of (i), (ii) or (iii).
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to the best of the Subordination Agents knowledge, after
requesting such information from Delta, (i) whether the
Aircraft are currently in service or parked in storage,
(ii) the maintenance status of the Aircraft and
(iii) location of the Engines. Delta has agreed to provide
such information upon request of the Subordination Agent, but no
more frequently than every three months with respect to each
Aircraft so long as it is subject to the lien of an Indenture.
(Note Purchase Agreement, Section 4(a)(vi))
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the current Pool Balance of each class of Certificates, the
Eligible B Pool Balance and outstanding principal amount of all
Equipment Notes for all Aircraft.
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the expected amount of interest which will have accrued on the
Equipment Notes and on the Certificates as of the next Regular
Distribution Date.
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the amounts paid to each person on such Distribution Date
pursuant to the Intercreditor Agreement.
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details of the amounts paid on such Distribution Date identified
by reference to the relevant provision of the Intercreditor
Agreement and the source of payment (by Aircraft and party).
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if the Subordination Agent has made a Final Drawing or a Special
Termination Drawing under any Liquidity Facility.
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the amounts currently owed to each Liquidity Provider.
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the amounts drawn under each Liquidity Facility.
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after a Delta Bankruptcy Event, any operational reports filed by
Delta with the bankruptcy court which are available to the
Subordination Agent on a non-confidential basis. (Intercreditor
Agreement, Section 5.01(d))
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The Subordination
Agent
U.S. Bank Trust National Association will be the
Subordination Agent under the Intercreditor Agreement. Delta and
its affiliates may from time to time enter into banking and
trustee relationships with the Subordination Agent and its
affiliates. The Subordination Agents address is
U.S. Bank Trust National Association, One Federal
Street,
3rd
Floor, Mail Code EX-MA-FED, Boston, Massachusetts 02110,
Attention: Corporate Trust Services.
The Subordination Agent may resign at any time, in which event a
successor Subordination Agent will be appointed as provided in
the Intercreditor Agreement. Delta (unless an Indenture Event of
Default has occurred and is continuing) or the Controlling Party
may remove the Subordination Agent for cause as provided in the
Intercreditor Agreement. In such circumstances, a successor
Subordination Agent will be appointed as provided in the
Intercreditor Agreement. Any resignation or removal of the
Subordination Agent and appointment of a successor Subordination
Agent does not become effective until acceptance of the
appointment by the successor Subordination Agent. (Intercreditor
Agreement, Section 7.01(a))
79
DESCRIPTION OF
THE AIRCRAFT AND THE APPRAISALS
The
Aircraft
The Trusts are expected to hold Equipment Notes for, and secured
by, (i) the
2000-1
Aircraft, consisting of ten Boeing
737-832
aircraft, nine Boeing
757-232
aircraft and three
767-332ER
aircraft, in each case delivered new to Delta from 1999 to 2000,
and (ii) the 2009 Aircraft, consisting of two Boeing
737-732
aircraft and three Boeing
777-232LR
aircraft, in each case delivered new to Delta in 2009. The
airframe constituting part of an Aircraft is referred to herein
as an Airframe, and each engine constituting
part of an Aircraft is referred to herein as an
Engine. Each Aircraft is owned and is being
operated by Delta. The Aircraft have been designed to comply
with Stage 3 noise level standards, which are the most
restrictive regulatory standards currently in effect in the
United States with respect to the Aircraft for aircraft noise
abatement. The ER and LR designation is
provided by the manufacturer and is not recognized by the FAA.
The Boeing
737-732 is a
single-aisle commercial jet aircraft. Seating capacity is
124 seats in Deltas standard configuration. The
737-732 is
currently deployed primarily on Deltas North American
routes, as well as, to cities in Central America and northern
South America. The
737-732
Aircraft are powered by two CFM56-7B24 jet engines manufactured
by CFM International, Inc.
The Boeing
737-832 is a
single-aisle commercial jet aircraft. Seating capacity is
160 seats in Deltas standard configuration. The
737-832 is
currently deployed primarily on Deltas North American
routes, as well as, to cities in the Caribbean and Central
America. The
737-832
Aircraft are powered by two CFM56-7B24 jet engines manufactured
by CFM International, Inc.
The Boeing
757-232 is a
single-aisle commercial jet aircraft. Seating capacity is
184 seats in Deltas standard configuration. The
757-232 is
currently deployed primarily on Deltas North American
routes, as well as, to cities in the Caribbean, Central America
and northern South America. The
757-232
Aircraft are powered by two PW2037 jet engines manufactured by
Pratt & Whitney.
The Boeing
767-332ER is
a twin-aisle commercial jet aircraft. Seating capacities are
216 seats for Deltas international configuration. The
767-332ER is
currently deployed primarily on Deltas transoceanic
routes. The
767-332ER
Aircraft are powered by two CF6-80C2B6F jet engines manufactured
by General Electric Company.
The Boeing
777-232LR is
a twin-aisle commercial jet aircraft. Seating capacities are
278 seats for Deltas standard configuration. The
777-232LR is
currently deployed primarily on Deltas long-haul routes to
Australia, South Africa, the Middle East and Asia. The
777-232LR
Aircraft are powered by two GE90-110B1L2 jet engines
manufactured by General Electric Company.
The
Appraisals
The table below sets forth the appraised values of the Aircraft,
as determined by Aircraft Information Systems, Inc.
(AISI), BK Associates, Inc.
(BK) and Morten Beyer & Agnew, Inc.
(MBA, and together with AISI and BK, the
Appraisers), independent aircraft appraisal
and consulting firms, and certain additional information
regarding such Aircraft.
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Registration
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Manufacturers
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Month of
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Appraisers Valuations
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Appraised
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Aircraft Type
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Number
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Serial Number
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Delivery
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AISI
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BK
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MBA
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Value(1)
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Boeing
737-732
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N306DQ
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29633
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January 2009
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$
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40,250,000
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$
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37,234,000
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$
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39,080,000
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$
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38,854,667
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Boeing
737-732
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N307DQ
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29679
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January 2009
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40,290,000
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37,222,000
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39,080,000
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38,864,000
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Boeing
737-832
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N376DA
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29624
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January 1999
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21,370,000
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25,675,000
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24,270,000
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23,771,667
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Boeing
737-832
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N378DA
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30265
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August 1999
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21,500,000
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26,708,000
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25,340,000
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24,516,000
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Boeing
737-832
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N380DA
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30266
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September 1999
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21,460,000
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26,707,000
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25,460,000
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24,542,333
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Boeing
737-832
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N382DA
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30345
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October 1999
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22,580,000
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27,850,000
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26,540,000
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25,656,667
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Boeing
737-832
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N384DA
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30347
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November 1999
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22,630,000
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27,873,000
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26,740,000
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25,747,667
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Boeing
737-832
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N386DA
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30373
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December 1999
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22,550,000
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27,882,000
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26,910,000
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25,780,667
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80
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Registration
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Manufacturers
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Month of
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Appraisers Valuations
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Appraised
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Aircraft Type
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Number
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Serial Number
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Delivery
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AISI
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BK
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MBA
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Value(1)
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Boeing
737-832
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N388DA
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30375
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February 2000
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23,130,000
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27,585,000
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26,170,000
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25,628,333
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Boeing
737-832
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N390DA
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30536
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April 2000
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24,010,000
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28,737,000
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27,260,000
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26,669,000
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Boeing
737-832
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N392DA
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30561
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May 2000
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23,310,000
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28,159,000
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26,680,000
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26,049,667
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Boeing
737-832
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N394DA
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30562
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June 2000
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24,230,000
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29,270,000
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27,680,000
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27,060,000
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Boeing
757-232
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N696DL
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29728
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January 1999
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19,140,000
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20,098,000
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21,500,000
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20,098,000
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Boeing
757-232
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N698DL
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29911
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August 1999
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19,200,000
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20,622,000
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22,710,000
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20,622,000
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Boeing
757-232
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N6700
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30337
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September 1999
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19,610,000
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20,934,000
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23,150,000
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20,934,000
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Boeing
757-232
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N6702
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30188
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November 1999
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19,260,000
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20,824,000
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23,150,000
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20,824,000
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Boeing
757-232
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N6704Z
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30396
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April 2000
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20,690,000
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21,279,000
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24,040,000
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21,279,000
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Boeing
757-232
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N6706Q
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30422
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May 2000
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20,820,000
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21,293,000
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24,210,000
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21,293,000
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Boeing
757-232
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N6708D
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30480
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July 2000
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20,740,000
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21,561,000
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24,620,000
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21,561,000
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Boeing
757-232
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N6710E
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30482
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August 2000
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21,130,000
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21,843,000
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25,040,000
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21,843,000
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Boeing
757-232
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N6712B
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30484
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October 2000
|
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21,020,000
|
|
|
|
22,050,000
|
|
|
|
25,390,000
|
|
|
|
22,050,000
|
|
Boeing
767-332ER
|
|
|
N1602
|
|
|
|
29694
|
|
|
January 1999
|
|
|
35,900,000
|
|
|
|
48,899,000
|
|
|
|
36,330,000
|
|
|
|
36,330,000
|
|
Boeing
767-332ER
|
|
|
N1604R
|
|
|
|
30180
|
|
|
April 1999
|
|
|
36,130,000
|
|
|
|
49,647,000
|
|
|
|
37,060,000
|
|
|
|
37,060,000
|
|
Boeing
767-332ER
|
|
|
N16065
|
|
|
|
30199
|
|
|
June 1999
|
|
|
36,230,000
|
|
|
|
49,914,000
|
|
|
|
37,600,000
|
|
|
|
37,600,000
|
|
Boeing
777-232LR
|
|
|
N705DN
|
|
|
|
29742
|
|
|
March 2009
|
|
|
153,790,000
|
|
|
|
144,408,000
|
|
|
|
140,470,000
|
|
|
|
144,408,000
|
|
Boeing
777-232LR
|
|
|
N706DN
|
|
|
|
30440
|
|
|
April 2009
|
|
|
153,800,000
|
|
|
|
144,405,000
|
|
|
|
140,700,000
|
|
|
|
144,405,000
|
|
Boeing
777-232LR
|
|
|
N707DN
|
|
|
|
39091
|
|
|
April 2009
|
|
|
153,870,000
|
|
|
|
144,343,000
|
|
|
|
140,700,000
|
|
|
|
144,343,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,058,640,000
|
|
|
$
|
1,123,022,000
|
|
|
$
|
1,087,880,000
|
|
|
$
|
1,067,790,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
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The appraised value of each
Aircraft set forth above is the lesser of the average and median
appraised value of each such Aircraft. Such appraisals indicate
appraised base value, adjusted for the maintenance of such
Aircraft at or around the time of such appraisals (but assuming
the engines are in a half-time condition).
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According to the International Society of Transport Aircraft
Trading, appraised base value is defined as each
Appraisers opinion of the underlying economic value of an
aircraft in an open, unrestricted, stable market environment
with a reasonable balance of supply and demand, and assumes full
consideration of its highest and best use. An
aircrafts appraised base value is founded in the
historical trend of values and in the projection of value trends
and presumes an arms-length, cash transaction between
willing, able and knowledgeable parties, acting prudently, with
an absence of duress and with a reasonable period of time
available for marketing.
Each Appraiser was asked to provide, and each Appraiser
furnished, its opinion as to the appraised value of each
Aircraft based on appraised base value adjusted for the
maintenance status of such Aircraft at or about the time of the
appraisals (but assuming the engines are in a half-time
condition). As part of this process, all three Appraisers
performed desk-top appraisals without any physical
inspection of the Aircraft. The appraisals are based on various
significant assumptions and methodologies which vary among the
Appraisers. The appraisals may not reflect the current market
value of the Aircraft. Appraisals that are based on different
assumptions and methodologies (or a physical inspection of the
Aircraft) may result in valuations that are materially different
from those contained in the appraisals.
The Appraisers have delivered letters setting forth their
respective appraisals, copies of which are annexed to this
prospectus as Appendix II. For a discussion of the
assumptions and methodologies used in each of the appraisals,
please refer to such letters. In addition, we have set forth on
Appendix III to this prospectus a summary of the base
value, maintenance adjustment and maintenance adjusted base
value determined by each Appraiser with respect to each Aircraft.
An appraisal is only an estimate of value. It does not
necessarily indicate the price at which an aircraft may be
purchased or sold in the market. In particular, the appraisals
of the Aircraft are estimates of the values of the Aircraft
assuming the Aircraft are in a certain condition, which may not
be the case. An appraisal should not be relied upon as a measure
of realizable value. The proceeds realized upon the exercise of
remedies with respect to any Aircraft, including a sale of such
Aircraft, may be less than its appraised value. The value of an
Aircraft if remedies are exercised under the applicable
Indenture will depend on various factors, including market,
economic and airline industry
81
conditions; the supply of similar aircraft; the availability of
buyers; the condition of the Aircraft; the time period in which
the Aircraft is sought to be sold; and whether the Aircraft is
sold separately or as part of a block.
As discussed under Risk Factors Relating to
the Airline Industry Terrorist attacks or
international hostilities may adversely affect our business,
financial condition and operating results, since
September 11, 2001, the airline industry has suffered
substantial losses. In response to adverse market conditions,
many U.S. air carriers and lessors have reduced the number
of aircraft in operation, and there may be further reductions,
particularly by air carriers in bankruptcy or liquidation. Any
such reduction of aircraft of the same models as the Aircraft
could adversely affect the value of the Aircraft.
Accordingly, we cannot assure you that the proceeds realized
upon any exercise of remedies with respect to any Aircraft would
be sufficient to satisfy in full payments due on the Equipment
Notes relating to such Aircraft or the full amount of
distributions expected on the Certificates. See Risk
Factors Risk Factors Relating to the Certificates
and the Offering Appraisals should not be relied
upon as a measure of realizable value of the Aircraft.
Deliveries of
Aircraft
On and subject to the terms and conditions of the Note Purchase
Agreement and the applicable Participation Agreement and
Indenture, Delta agrees to enter into a secured debt financing
agreement with respect to each Aircraft prior to the delivery
deadline (the Delivery Period Termination
Date), which shall be the earlier of
(a) December 31, 2010; and (b) the date on which
Equipment Notes issued with respect to all of the Aircraft have
been purchased by the Trustees in accordance with the Note
Purchase Agreement. On and subject to the terms and conditions
of the Note Purchase Agreement, Delta agrees to finance the
2000-1
Aircraft pursuant to this offering prior to December 31,
2010 and to finance the 2009 Aircraft pursuant to this offering
within 90 days after the Issuance Date.
82
DESCRIPTION OF
THE EQUIPMENT NOTES
The following summary describes certain material terms of the
Equipment Notes. The summary does not purport to be complete and
is qualified in its entirety by reference to all of the
provisions of the Equipment Notes, the form of Indenture, the
form of Participation Agreement and the Note Purchase Agreement,
copies of which will be filed as an exhibit to a Current Report
on
Form 8-K
to be filed by Delta with the SEC. Except as otherwise
indicated, the following summaries relate to the Equipment
Notes, the Indenture and the Participation Agreement applicable
to each Aircraft.
On and subject to the terms and conditions of the Note Purchase
Agreement and the applicable Participation Agreement and
Indenture, Delta agrees to enter into a secured debt financing
with respect to each
2000-1
Aircraft prior to December 31, 2010 and with respect to
each 2009 Aircraft within 90 days after the Issuance Date.
The Note Purchase Agreement provides for the relevant parties to
enter into a Participation Agreement and an Indenture relating
to the financing of each Aircraft that are substantially in the
forms attached to the Note Purchase Agreement. See
Description of the Certificates Obligation to
Purchase Equipment Notes. The description of the terms of
the Equipment Notes in this prospectus is based on the forms of
such agreements annexed to the Note Purchase Agreement. However,
the terms of the financing agreements actually entered into may
differ from the forms of such agreements and, consequently, may
differ from the description of such agreements contained in this
prospectus. Although such changes are permitted, under the Note
Purchase Agreement, Delta must obtain written confirmation from
each Rating Agency that the use of financing agreements modified
in any material respect from the forms attached to the Note
Purchase Agreement will not result in a withdrawal, suspension
or downgrading of the ratings of each class of Certificates then
rated by such Rating Agency and that remains outstanding. The
terms of such agreements also must in any event comply with the
Required Terms. In addition, Delta, subject to certain
exceptions, is obligated to certify to the Trustees that any
substantive modifications do not materially and adversely affect
the Certificateholders or the Liquidity Providers. See
Description of the Certificates Obligation to
Purchase Equipment Notes.
General
Pursuant to the terms of a participation agreement among Delta,
the Trustees, the Subordination Agent and the Loan Trustee with
respect to each Aircraft (each, a Participation
Agreement), the Trusts will purchase from Delta the
Equipment Notes to be issued under the related Indenture.
Equipment Notes will be issued in two series with respect to
each Aircraft, the Series A Equipment
Notes and the Series B Equipment
Notes (the Series B Equipment Notes, together
with the Series A Equipment Notes, the Equipment
Notes). Delta may elect to issue one series of
Additional Equipment Notes with respect to an Aircraft at any
time, which will be funded from sources other than this
offering. See Possible Issuance of Additional Certificates
and Refinancing of Certificates. The Equipment Notes with
respect to each Aircraft will be issued under a separate
indenture and security agreement (each, an
Indenture) between Delta and U.S. Bank
Trust National Association, as loan trustee thereunder
(each, a Loan Trustee). The Equipment Notes
will be direct, full recourse obligations of Delta.
Subordination
The following subordination provisions will be applicable to the
Equipment Notes issued under the Indentures:
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the indebtedness evidenced by the Series B Equipment Notes
issued under such Indenture will be, to the extent and in the
manner provided in such Indenture, subordinate and subject in
right of payment to the Series A Equipment Notes issued
under such Indenture.
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if Delta issues any Additional Equipment Notes under such
Indenture, the indebtedness evidenced by such Additional
Equipment Notes will be, to the extent and in the manner
provided in such Indenture (as may be amended in connection with
any issuance of such
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83
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Additional Equipment Notes), subordinate and subject in right of
payment to the Series A Equipment Notes and the
Series B Equipment Notes issued under such Indenture. See
Possible Issuance of Additional Certificates and
Refinancing of Certificates.
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the indebtedness evidenced by the Series A Equipment Notes,
the Series B Equipment Notes and any Additional Equipment
Notes issued under any Indenture will be, to the extent and in
the manner provided in the other Indentures, subordinate and
subject in right of payment to Equipment Notes issued under such
other Indentures. (Indentures, Section 2.13(a))
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By the acceptance of its Equipment Notes of any series issued
under any Indenture, each holder of such series of Equipment
Notes (each, a Noteholder) will agree that:
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if such Noteholder, in its capacity as a Noteholder under such
Indenture, receives any payment or distribution under such
Indenture that it is not entitled to receive under the
provisions of such Indenture, it will hold any amount so
received in trust for the Loan Trustee under such Indenture and
forthwith turn over such amount to such Loan Trustee in the form
received to be applied as provided in such Indenture; and
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if such Noteholder, in its capacity as a Noteholder under any
other Indenture, receives any payment or distribution in respect
of Equipment Notes of any series issued under such other
Indenture that it is not entitled to receive under the
provisions of such other Indenture, it will hold any amount so
received in trust for the Loan Trustee under such other
Indenture and forthwith turn over such amount to such Loan
Trustee under such other Indenture in the form received to be
applied as provided in such other Indenture. (Indentures,
Section 2.13(c))
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By acceptance of its Equipment Notes of any series under any
Indenture, each Noteholder of such series will also:
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agree to and shall be bound by the subordination provisions in
such Indenture;
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authorize and direct Loan Trustees under all Indentures on such
Noteholders behalf to take any action necessary or
appropriate to effectuate the subordination as provided in such
Indenture; and
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appoint Loan Trustees under all Indentures as such
Noteholders attorney-in-fact for such purpose.
(Indentures, Section 2.13(a))
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By virtue of the Intercreditor Agreement, all of the Equipment
Notes held by the Subordination Agent will be effectively
cross-subordinated. This means that payments received on a
junior series of Equipment Notes issued in respect of one
Aircraft may be applied in accordance with the priority of
payment provisions set forth in the Intercreditor Agreement to
make distributions on a more senior class of Certificates.
(Intercreditor Agreement, Section 3.02)
During the existence of an Indenture Event of Default, if the
Equipment Notes under the relevant Indenture have become due and
payable in full as described in
Remedies, then after payment in full of
first, the persons indemnified under
Indemnification and certain other
expenses with respect to such Indenture; second, the
Series A Equipment Notes under such Indenture; third, the
Series B Equipment Notes under such Indenture; and, if
applicable, fourth, any Additional Equipment Notes under such
Indenture; any excess proceeds will be available to pay certain
indemnity and expense obligations with respect to Equipment
Notes issued under other Indentures and held by the
Subordination Agent (Related Equipment Notes)
and, after payment in full of such indemnity and expense
obligations, to pay any shortfalls then due in respect of
Related Equipment Notes under which either (i) a default of
the type described in the first clause under
Indenture Events of Default, Notice and
Waiver has occurred and is continuing, whether or not the
applicable grace period has expired, or (ii) an Indenture
Event of Default not described in the preceding clause (i)
has occurred and is continuing and either (x) the Equipment
Notes under the relevant Indenture have become due
84
and payable and the acceleration has not been rescinded or
(y) the relevant Loan Trustee has notified Delta that it
intends to exercise remedies under such Indenture (see
Remedies) (each such Indenture, a
Defaulted Operative Indenture) in the
following order of priority Series A Equipment
Notes, Series B Equipment Notes and, if applicable,
Additional Equipment Notes ratably as to each such
series; and in the absence of any such shortfall, such excess
proceeds, if any, will be held by the relevant Loan Trustee as
additional collateral for such Related Equipment Notes (See
Security). (Indentures,
Section 3.03)
Principal and
Interest Payments
Subject to the provisions of the Intercreditor Agreement,
interest paid on the Equipment Notes held in each Trust will be
passed through to the Certificateholders of such Trust on the
dates and at the rate per annum applicable to the Certificates
issued by such Trust until the final expected Regular
Distribution Date for such Trust. Subject to the provisions of
the Intercreditor Agreement, principal paid on the Equipment
Notes held in each Trust will be passed through to the
Certificateholders of such Trust in scheduled amounts on the
dates set forth herein until the final expected Regular
Distribution Date for such Trust.
Interest will be payable on the unpaid principal amount of each
Equipment Note at the rate applicable to such Equipment Note on
June 17 and December 17 of each year, commencing on
June 17, 2010. Interest on the Equipment Notes will be
computed on the basis of a
360-day year
of twelve
30-day
months. Overdue amounts of principal and (to the extent
permitted by applicable law) Make-Whole Amount, if any, interest
and any other amounts payable under each series of Equipment
Notes will bear interest, payable on demand, at the interest
rate that is the lesser of (i) the interest applicable to
such series of Equipment Notes plus 1% and (ii) the maximum
rate permitted by applicable law. (Indentures, Section 2.01)
Scheduled principal payments on the outstanding Series A
and Series B Equipment Notes will be made on June 17 and
December 17 in certain years, commencing on June 17, 2010
and ending on December 17, 2019 in the case of the
Series A Equipment Notes and December 17, 2016 in the
case of the Series B Equipment Notes. See Description
of the Certificates Pool Factors for a
discussion of the Scheduled Payments of principal of the
Equipment Notes and possible revisions thereto.
If any date scheduled for a payment of principal, Make-Whole
Amount (if any) or interest with respect to the Equipment Notes
is not a Business Day, such payment will be made on the next
succeeding Business Day and interest will not be added for such
additional period.
Redemption
If an Event of Loss occurs with respect to an Aircraft under any
Indenture and such Aircraft is not replaced by Delta under such
Indenture, the Equipment Notes issued with respect to such
Aircraft will be redeemed, in whole, in each case at a price
equal to 100% of the unpaid principal thereof, together with all
accrued and unpaid interest thereon to (but excluding) the date
of redemption, but without any premium, and all other
obligations owed or then due and payable to holders of the
Equipment Notes issued under such Indenture. (Indentures,
Section 2.10)
All of the Equipment Notes issued with respect to an Aircraft
may be redeemed prior to maturity at any time, at the option of
Delta; provided that all outstanding Equipment Notes
issued with respect to all other Aircraft are simultaneously
redeemed. In addition, Delta may elect to redeem the
Series B Equipment Notes with respect to all Aircraft
either in connection with a refinancing of such series or
without any such refinancing. See Possible Issuance of
Additional Certificates and Refinancing of Certificates.
The redemption price in the case of any optional redemption of
Equipment Notes under any Indenture will be equal to 100% of the
unpaid principal thereof, together with all accrued and unpaid
interest thereon to (but excluding) the date of redemption and
all other obligations owed or
85
then due and payable to holders of the Equipment Notes issued
under such Indenture, plus a Make-Whole Amount (if any).
(Indentures, Section 2.11)
Notice of any such redemption will be given by the Loan Trustee
to each holder of the Equipment Notes to be redeemed not less
than 30 nor more than 60 days prior to the applicable
redemption date.
A notice of redemption may be revoked by written notice from
Delta to the Loan Trustee given no later than three days prior
to the redemption date. (Indentures, Section 2.12)
Make-Whole Amount means with respect
to any Equipment Note, the amount (as determined by an
independent investment banker selected by Delta (and, following
the occurrence and during the continuance of an Indenture Event
of Default, reasonably acceptable to the Loan Trustee)), if any,
by which (i) the present value of the remaining scheduled
payments of principal and interest from the redemption date to
maturity of such Equipment Note computed by discounting each
such payment on a semiannual basis from its respective payment
date (assuming a 360 day year of twelve 30 day months)
using a discount rate equal to the Treasury Yield plus 0.75%
(such percentage, the Make-Whole Spread),
exceeds (ii) the outstanding principal amount of such
Equipment Note plus accrued but unpaid interest thereon to the
date of redemption. (Indentures, Annex A)
For purposes of determining the Make-Whole Amount,
Treasury Yield means, at the date of
determination, the interest rate (expressed as a semiannual
equivalent and as a decimal rounded to the number of decimal
places as appears in the interest rate applicable to the
relevant Equipment Note and, in the case of United States
Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to
maturity for United States Treasury securities maturing on the
Average Life Date and trading in the public securities market
either as determined by interpolation between the most recent
weekly average constant maturity, non-inflation-indexed series
yield to maturity for two series of United States Treasury
securities, trading in the public securities markets,
(A) one maturing as close as possible to, but earlier than,
the Average Life Date and (B) the other maturing as close
as possible to, but later than, the Average Life Date, in each
case as reported in the most recent H.15(519) or, if a weekly
average constant maturity, non-inflation-indexed series yield to
maturity for United States Treasury securities maturing on the
Average Life Date is reported in the most recent H.15(519), such
weekly average yield to maturity as reported in such H.15(519).
H.15(519) means the weekly statistical
release designated as such, or any successor publication,
published by the Board of Governors of the Federal Reserve
System. The date of determination of a Make-Whole Amount shall
be the third Business Day prior to the applicable redemption
date and the most recent H.15(519) means the
latest H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
(Indentures, Annex A)
Average Life Date for each Equipment
Note to be redeemed shall be the date which follows the
redemption date by a period equal to the Remaining Weighted
Average Life at the redemption date of such Equipment Note.
Remaining Weighted Average Life of an
Equipment Note, at the redemption date of such Equipment Note,
shall be the number of days equal to the quotient obtained by
dividing: (i) the sum of the products obtained by
multiplying (A) the amount of each then remaining
installment of principal, including the payment due on the
maturity date of such Equipment Note, by (B) the number of
days from and including the redemption date to but excluding the
scheduled payment date of such principal installment by
(ii) the then unpaid principal amount of such Equipment
Note. (Indentures, Annex A)
Security
Aircraft
The Equipment Notes issued under any Indenture will be secured
by a security interest in, among other things, the Aircraft
subject to the lien of such Indenture and each Aircraft subject
to the
86
liens of the other Indentures, as well as an assignment for
security purposes to the Loan Trustee of certain of Deltas
warranty rights under its purchase agreements with the Aircraft
manufacturer. (Indentures, Granting Clause)
Since the Equipment Notes are so cross-collateralized, any
proceeds from the sale of any Aircraft by the Loan Trustee or
other exercise of remedies under the related Indenture following
an Indenture Event of Default under such Indenture will (after
all of the Equipment Notes issued under such Indenture have been
paid off, and subject to the provisions of the Bankruptcy Code)
be available for application to shortfalls with respect to the
Equipment Notes issued under the other Indentures and the other
obligations secured by the other Indentures that are due at the
time of such application, as described under
Subordination above. In the absence of
any such shortfall at the time of such application, excess
proceeds will be held by the Loan Trustee under such Indenture
as additional collateral for the Equipment Notes issued under
each of the other Indentures and will be applied to the payments
in respect of the Equipment Notes issued under such other
Indentures as they come due. However, if any Equipment Note
ceases to be held by the Subordination Agent (as a result of
sale during the exercise of remedies by the Controlling Party or
otherwise), such Equipment Note will cease to be entitled to the
benefits of cross-collateralization. (Indentures,
Section 3.03) Any cash Collateral held as a result of the
cross-collateralization of the Equipment Notes would not be
entitled to the benefits of Section 1110.
If the Equipment Notes issued under an Indenture are repaid in
full in the case of an Event of Loss with respect to the
applicable Aircraft, the lien on such Aircraft under such
Indenture will be released. (Indentures, Section 7.05) At
any time on or after the Final Maturity Date, if all obligations
secured under all of the Indentures that are then due have been
paid, the liens on all Aircraft under all Indentures will be
released. (Indentures, Section 10.01) Once the lien on any
Aircraft is released, such Aircraft will no longer secure the
amounts that may be owing under the Indentures.
Cash
Cash, if any, held from time to time by the Loan Trustee with
respect to any Aircraft, including funds held as the result of
an Event of Loss to such Aircraft, will be invested and
reinvested by such Loan Trustee, at the direction of Delta, in
investments described in the related Indenture. (Indentures,
Section 5.06) Such investments would not be entitled to the
benefits of Section 1110.
Loan to Value
Ratios of Equipment Notes
The tables in Appendix IV to this prospectus set forth the
loan to Aircraft value ratios (LTVs) for the
Series A and Series B Equipment Notes issued in
respect of (i) each 2009 Aircraft as of June 17, 2010
(the first Regular Distribution Date that occurs after the
Issuance Date), (ii) each
2000-1
Aircraft as of June 17, 2011 (the first Regular
Distribution Date that occurs after the Outside Termination
Date) and (iii) in each of the foregoing cases, each
Regular Distribution Date thereafter. With respect to each
2000-1
Aircraft, the LTVs for any Regular Distribution Date after the
Issuance Date but prior to June 17, 2011 are not included
because June 17, 2011 is the first Regular Distribution
Date to occur after the Outside Termination Date, which is the
last date that the
2000-1
Aircraft may be subjected to the financing of this offering.
The LTVs for each Regular Distribution Date listed in the tables
in Appendix IV were obtained by dividing (i) the
outstanding principal amount (assuming no payment default,
purchase or early redemption) of such Equipment Notes, plus in
the case of the Series B Equipment Notes, the outstanding
balance of the Series A Equipment Notes issued under the
relevant Indenture, determined immediately after giving effect
to the payments scheduled to be made on each such Regular
Distribution Date by (ii) the assumed aircraft value (the
Assumed Aircraft Value) on such Regular
Distribution Date, calculated based on the Depreciation
Assumption, of the Aircraft with respect to which such Equipment
Notes were assumed to be issued.
87
The tables in Appendix IV are based on the assumption (the
Depreciation Assumption) that the Assumed
Aircraft Value of each Aircraft depreciates annually by
approximately 3% of the appraised value at delivery per year for
the first 15 years after delivery of such Aircraft by the
manufacturer, by approximately 4% per year thereafter for the
next five years and by approximately 5% each year after that.
With respect to each Aircraft, the appraised value of such
Aircraft is the theoretical value that, when depreciated from
the initial delivery of such Aircraft by the manufacturer in
accordance with the Depreciation Assumption, results in the
appraised value of such Aircraft specified under
Summary Equipment Notes and the Aircraft
and Description of the Aircraft and the
Appraisals The Appraisals.
Other rates or methods of depreciation could result in
materially different LTVs, and no assurance can be given
(i) that the depreciation rate and method assumed for the
purposes of the tables are the ones most likely to occur or
(ii) as to the actual future value of any Aircraft. Thus,
the tables should not be considered a forecast or prediction of
expected or likely LTVs, but simply a mathematical calculation
based on one set of assumptions. See Risk
Factors Risk Factors Relating to the Certificates
and the Offering Appraisals should not be relied
upon as a measure of realizable value of the Aircraft.
Limitation of
Liability
Except as otherwise provided in the Indentures, no Loan Trustee,
in its individual capacity, will be answerable or accountable
under the Indentures or the Equipment Notes under any
circumstances except, among other things, for its own willful
misconduct or negligence. (Indentures, Section 6.01)
Indenture Events
of Default, Notice and Waiver
Indenture Events of Default under each
Indenture will include:
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the failure by Delta to pay any interest, principal or
Make-Whole Amount (if any) within 15 days after the same
has become due on any Equipment Note;
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the failure by Delta to pay any amount (other than interest,
principal or Make-Whole Amount (if any)) when due under the
Indenture, any Equipment Note or any other operative documents
for more than 30 days after Delta receives written notice
from the Loan Trustee or any Noteholder under such Indenture;
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the failure by Delta to carry and maintain (or cause to be
maintained) insurance or indemnity on or with respect to the
Aircraft in accordance with the provisions of such Indenture;
provided that no such failure to carry and maintain
insurance will constitute an Indenture Event of Default until
the earlier of (i) the date such failure has continued
unremedied for a period of 30 days after the Loan Trustee
receives notice of the cancellation of such insurance or
(ii) the date such insurance is not in effect as to the
Loan Trustee;
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the failure by Delta to perform or observe any other covenant,
condition or agreement to be performed or observed by it under
any operative document that continues for a period of
60 days after Delta receives written notice from the Loan
Trustee or any Noteholder under such Indenture; provided
that, if such failure is capable of being remedied, no such
failure will constitute an Indenture Event of Default for a
period of one year after such notice is received by Delta so
long as Delta is diligently proceeding to remedy such failure;
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any representation or warranty made by Delta in the related
operative documents proves to have been incorrect in any
material respect when made, and such incorrectness continues to
be material to the transactions contemplated by the Indenture
and remains unremedied for a period of 60 days after Delta
receives written notice from the Loan Trustee under such
Indenture; provided that, if such incorrectness is
capable of being remedied, no such incorrectness will constitute
an Indenture Event of Default for a period of one year after
such
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notice is received by Delta so long as Delta is diligently
proceeding to remedy such incorrectness;
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the occurrence of certain events of bankruptcy, reorganization
or insolvency of Delta; or
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the occurrence and continuance of an Indenture Event of
Default under any other Indenture, but only if, as of any
date of determination, all Equipment Notes issued and
outstanding under such other Indenture are held by the
Subordination Agent under the Intercreditor Agreement.
(Indenture, Section 4.01)
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Each Indenture provides that the holders of a majority in
aggregate unpaid principal amount of the Equipment Notes
outstanding under such Indenture, by written instruction to the
Loan Trustee, may on behalf of all the Noteholders waive any
past default and its consequences under such Indenture, except a
default in the payment of the principal of, Make-Whole Amount
(if any) or interest due under any such Equipment Notes
outstanding (other than with the consent of the holder thereof)
or a default in respect of any covenant or provision of such
Indenture that cannot be modified or amended without the consent
of each such affected Noteholder. (Indentures,
Section 4.05) This provision, among others, is subject to
the terms of the Intercreditor Agreement.
Remedies
The exercise of remedies under the Indentures will be subject to
the terms of the Intercreditor Agreement, and the following
description should be read in conjunction with the description
of the Intercreditor Agreement.
If an Indenture Event of Default occurs and is continuing under
an Indenture, the related Loan Trustee may, and upon receipt of
written instructions of the holders of a majority in principal
amount of the Equipment Notes then outstanding under such
Indenture will, declare the principal of all such Equipment
Notes issued thereunder immediately due and payable, together
with all accrued but unpaid interest thereon (but without any
Make-Whole Amount). If certain events of bankruptcy or
insolvency occur with respect to Delta, such amounts shall,
subject to applicable law, become due and payable without any
declaration or other act on the part of the related Loan Trustee
or holders of Equipment Notes. The holders of a majority in
principal amount of Equipment Notes outstanding under an
Indenture may rescind any declaration of acceleration of such
Equipment Notes if (i) there has been paid to or deposited
with the related Loan Trustee an amount sufficient to pay all
overdue installments of principal and interest on any such
Equipment Notes, and all other amounts owing under the operative
documents, that have become due otherwise than by such
declaration of acceleration and (ii) all other Indenture
Events of Default, other than nonpayment of principal amount or
interest on the Equipment Notes that have become due solely
because of such acceleration, have been cured or waived;
provided that no such rescission or annulment will extend to
or affect any subsequent default or Indenture Event of Default
or impair any right consequent thereon. (Indentures,
Section 4.02(d))
Each Indenture provides that, if an Indenture Event of Default
under such Indenture has occurred and is continuing, the related
Loan Trustee may exercise certain rights or remedies available
to it under such Indenture or under applicable law. Such
remedies include the right to take possession of the Aircraft
and to sell all or any part of the Airframe or any Engine
comprising the Aircraft subject to such Indenture. (Indentures,
Section 4.02(a)) See Description of the Intercreditor
Agreement Intercreditor Rights
Limitation on Exercise of Remedies.
In the case of Chapter 11 bankruptcy proceedings in which
an air carrier is a debtor, Section 1110 provides special
rights to holders of security interests with respect to
equipment (as defined in Section 1110).
Section 1110 provides that, subject to the limitations
specified therein, the right of a secured party with a security
interest in equipment to take possession of such
equipment in compliance with the provisions of a security
agreement and to enforce any of its rights or remedies
thereunder is not affected after 60 days after the date of
the order for relief in a case under
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Chapter 11 of the Bankruptcy Code by any provision of the
Bankruptcy Code. Section 1110, however, provides that the
right to take possession of an aircraft and enforce other
remedies may not be exercised for 60 days following the
date of the order for relief (or such longer period consented to
by the holder of a security interest and approved by the court)
and may not be exercised at all after such period if the trustee
in reorganization agrees, subject to the approval of the court,
to perform the debtors obligations under the security
agreement and cures all defaults (other than a default of a kind
specified in Section 365(b)(2) of the Bankruptcy Code, such
as a default that is a breach of a provision relating to the
financial condition, bankruptcy or insolvency of the debtor).
Equipment is defined in Section 1110, in part,
as an aircraft, aircraft engine, propeller, appliance, or
spare part (as defined in section 40102 of title 49 of
the United States Code) that is subject to a security interest
granted by, leased to, or conditionally sold to a debtor that,
at the time such transaction is entered into, holds an air
carrier operating certificate issued pursuant to
chapter 447 of title 49 of the United States Code
for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo.
It is a condition to each Trustees obligations to purchase
Equipment Notes with respect to each Aircraft that Deltas
internal counsel provide an opinion to the Trustees that, if
Delta were to become a debtor under Chapter 11 of the
Bankruptcy Code, the Loan Trustee would be entitled to the
benefits of Section 1110 with respect to the Airframe and
Engines comprising the Aircraft originally subjected to the lien
of the relevant Indenture. This opinion will be subject to
certain qualifications and assumptions.
The opinion of Deltas internal counsel will not address
the possible replacement of an Aircraft after an Event of Loss
in the future, the consummation of which is conditioned upon the
contemporaneous delivery of an opinion of counsel to the effect
that the related Loan Trustee will be entitled to
Section 1110 benefits with respect to the replacement
Airframe unless there is a change in law or court interpretation
that results in Section 1110 not being available. See
Certain Provisions of the
Indentures Events of Loss. The opinion of
Deltas internal counsel also will not address the
availability of Section 1110 with respect to the bankruptcy
proceedings of any possible lessee of an Aircraft if it is
leased by Delta.
In certain circumstances following the bankruptcy or insolvency
of Delta where the obligations of Delta under any Indenture
exceed the value of the Aircraft Collateral under such
Indenture, post-petition interest will not accrue on the related
Equipment Notes. In addition, to the extent that distributions
are made to any Certificateholders, whether under the
Intercreditor Agreement or from drawings on the Liquidity
Facilities, in respect of amounts that would have been funded by
post-petition interest payments on such Equipment Notes had such
payments been made, there would be a shortfall between the claim
allowable against Delta on such Equipment Notes after the
disposition of the Aircraft Collateral securing such Equipment
Notes and the remaining balance of the Certificates. Such
shortfall would first reduce some or all of the remaining claim
against Delta available to the Trustees for the most junior
classes.
If an Indenture Event of Default under any Indenture occurs and
is continuing, any sums held or received by the related Loan
Trustee may be applied to reimburse such Loan Trustee for any
tax, expense or other loss incurred by it and to pay any other
amounts due to such Loan Trustee prior to any payments to
holders of the Equipment Notes issued under such Indenture.
(Indentures, Section 3.03)
Modification of
Indentures
Without the consent of holders of a majority in principal amount
of the Equipment Notes outstanding under any Indenture, the
provisions of such Indenture and the related Equipment Notes and
Participation Agreement may not be amended or modified, except
to the extent indicated below.
In addition, any Indenture and any Equipment Notes may be
amended without the consent of any Noteholder or any other
beneficiaries of the security under such Indenture to, among
other things,
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(i) evidence the succession of another person to Delta and
the assumption by any such successor of the covenants of Delta
contained in such Indenture and any of the operative documents;
(ii) cure any defect or inconsistency in such Indenture or
the Equipment Notes issued thereunder, or make any change not
inconsistent with the provisions of such Indenture (provided
that such change does not adversely affect the interests of
any Noteholder or any other beneficiary of the security under
such Indenture in its capacity solely as Noteholder or other
beneficiary of the security under such Indenture, as the case
may be); (iii) cure any ambiguity or correct any mistake;
(iv) evidence the succession of a new trustee or the
removal of a trustee, or facilitate the appointment of an
additional or separate trustee pursuant to such Indenture;
(v) convey, transfer, assign, mortgage or pledge any
property to or with the Loan Trustee of such Indenture;
(vi) make any other provisions or amendments with respect
to matters or questions arising under such Indenture or such
Equipment Notes or to amend, modify or supplement any provision
thereof, provided that such action does not adversely
affect the interests of any Noteholder or any other beneficiary
of the security under such Indenture in its capacity solely as
Noteholder or other beneficiary of the security under such
Indenture, as the case may be; (vii) correct, supplement or
amplify the description of any property at any time subject to
the lien of such Indenture or assure, convey and confirm unto
the Loan Trustee any property subject or required to be subject
to the lien of such Indenture, or subject to the lien of such
Indenture, the applicable Airframe or Engines or any replacement
Airframe or replacement Engine; (viii) add to the covenants
of Delta for the benefit of the Noteholders or any other
beneficiary of the security under such Indenture or surrender
any rights or powers conferred upon Delta under such Indenture;
(ix) add to rights of the Noteholders or any other
beneficiary of the security under such Indenture;
(x) include on the Equipment Notes under such Indenture any
legend as may be required by law or as may otherwise be
necessary or advisable; (xi) comply with any applicable
requirements of the Trust Indenture Act or any other
requirements of applicable law or of any regulatory body;
(xii) give effect to the replacement of any Liquidity
Provider with a replacement liquidity provider and the
replacement of any Liquidity Facility with a Replacement
Facility and, if a Replacement Facility is to be comprised of
more than one instrument, incorporate appropriate mechanics for
multiple liquidity facilities for the applicable Trust;
(xiii) give effect to the replacement of the Depositary
with a Replacement Depositary and the agreements related
thereto; (xiv) evidence the succession of a new escrow
agent or a new paying agent under the Escrow Agreements pursuant
thereto or the removal of the Escrow Agent or the Paying Agent
thereunder; and (xv) provide for the issuance, in
connection with a refinancing, of Series B Equipment Notes,
or the issuance or successive redemption and issuance from time
to time of one series of Additional Equipment Notes, and for the
issuance of pass through certificates by any pass through trust
that acquires any such Series B Equipment Notes or
Additional Equipment Notes, and make changes relating to any of
the foregoing (including, without limitation, provide for any
prefunding mechanism in connection therewith), and provide for
any credit support for any pass through certificates relating to
any such Series B Equipment Notes or Additional Equipment
Notes (including, without limitation, secure claims for fees,
interest, expenses, reimbursement of advances and other
obligations arising from such credit support (including, without
limitation, specify such credit support as a Liquidity
Facility and the provider of any such credit support as a
Liquidity Provider, and if such Liquidity Facility
is to be comprised of more than one instrument, to incorporate
appropriate mechanics for multiple liquidity facilities for a
single pass through trust), in each case, provided that,
such Series B Equipment Notes or Additional Equipment
Notes, as the case may be, are issued in accordance with the
Note Purchase Agreement, the applicable Participation Agreement
and the Intercreditor Agreement. See Possible Issuance of
Additional Certificates and Refinancing of Certificates.
(Indentures, Section 9.01)
Each Indenture provides that without the consent of the holder
of each Equipment Note outstanding under such Indenture affected
thereby, no amendment or modification of such Indenture may,
among other things, (i) reduce the principal amount of,
Make-Whole Amount (if any) or interest payable on any Equipment
Notes issued under such Indenture; (ii) change the date on
which any principal amount of, Make-Whole Amount (if any) or
interest payable on any Equipment Note is due or payable;
(iii) create any lien with respect to the Collateral
subject to the lien of such Indenture prior to
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or pari passu with the lien of such Indenture, except as
permitted by such Indenture, or deprive any holder of an
Equipment Note issued under such Indenture of the benefit of the
lien of such Indenture upon the related Collateral, except as
provided in connection with the exercise of remedies under such
Indenture, provided that, without the consent of each
holder of an affected Related Equipment Note then outstanding,
no such amendment, waiver or modification of terms of, or
consent under, any thereof shall modify the provisions described
in the last paragraph under
Subordination or this clause (iii)
or deprive any holder of a Related Equipment Note of the benefit
of the lien of such Indenture upon the related Collateral,
except as provided in connection with the exercise of remedies
under such Indenture; or (iv) reduce the percentage in
principal amount of outstanding Equipment Notes issued under
such Indenture required to take or approve any action under such
Indenture. (Indentures, Section 9.02(a))
Indemnification
Delta will indemnify each Loan Trustee, the Liquidity Providers,
the Subordination Agent, the Escrow Agent, the Paying Agent, the
escrow agent (if any) and paying agent (if any) with respect to
the Additional Certificates, if issued, and each Trustee, but
not, in any case, the holders of Certificates, for certain
losses, claims and other matters. (Participation Agreements,
Section 4.02) No Loan Trustee will be indemnified, however,
for actions arising from its negligence or willful misconduct,
or for the inaccuracy of any representation or warranty made in
its individual capacity under an Indenture.
No Loan Trustee will be required to take any action or refrain
from taking any action (other than notifying the Noteholders if
it knows of an Indenture Event of Default or of a default
arising from Deltas failure to pay when due principal,
interest or Make-Whole Amount (if any) under any Equipment Note)
unless it has received indemnification satisfactory to it
against any risks incurred in connection therewith. (Indentures,
Section 5.03)
Certain
Provisions of the Indentures
Maintenance
and Operation
Under the terms of each Indenture, Delta will be obligated,
among other things and at its expense, to keep each Aircraft
duly registered, and to maintain, service, repair, and overhaul
the Aircraft (or cause the same to be done) so as to keep it in
such condition as necessary to maintain the airworthiness
certificate for the Aircraft in good standing at all times
(other than during temporary periods of storage, maintenance,
testing or modification or during periods of grounding by
applicable governmental authorities). (Indentures,
Section 7.02(c) and (e))
Delta will agree not to maintain, use, or operate any Aircraft
in violation of any law, rule or regulation of any government
having jurisdiction over such Aircraft, or in violation of any
airworthiness certificate, license or registration relating to
such Aircraft issued by such government, except, among other
things, to the extent Delta (or any lessee) is contesting in
good faith the validity or application of any such law, rule or
regulation in any manner that does not involve any material risk
of sale, forfeiture or loss of the Aircraft or impair the lien
of the related Indenture. (Indentures, Section 7.02(b))
Delta must make (or cause to be made) all alterations,
modifications, and additions to each Airframe and Engine
necessary to meet the applicable requirements of the FAA or any
other applicable governmental authority of another jurisdiction
in which the Aircraft may then be registered; provided
that Delta (or any lessee) may in good faith contest the
validity or application of any such requirement in any manner
that does not involve, among other things, a material risk of
sale, loss or forfeiture of the Aircraft and does not materially
adversely affect the Loan Trustees interest in the
Aircraft under (and as defined in) the related Indenture. Delta
(or any lessee) may add further parts and make other
alterations, modifications, and additions to any Airframe or any
Engine as Delta (or any such lessee) deems desirable in the
proper conduct of its business, including without limitation
removal (without replacement) of parts, so long as such
alterations, modifications, additions, or
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removals do not materially diminish the value or utility of such
Airframe or Engine below its value or utility immediately prior
to such alteration, modification, addition, or removal (assuming
such Airframe or Engine was maintained in accordance with the
related Indenture), except that the value (but not the utility)
of any Airframe or Engine may be reduced from time to time by
the value of any such parts which have been removed that Delta
deems obsolete or no longer suitable or appropriate for use on
such Airframe or Engine. All parts (with certain exceptions)
incorporated or installed in or added to such Airframe or Engine
as a result of such alterations, modifications or additions will
be subject to the lien of the related Indenture. Delta (or any
lessee) is permitted to remove (without replacement) any part
that (i) is in addition to, and not in replacement of or
substitution for, any part originally incorporated or installed
in or attached to an Airframe or Engine at the time of delivery
thereof to Delta or any part in replacement of or substitution
for such part, (ii) is not required to be incorporated or
installed in or attached to any Airframe or Engine pursuant to
applicable requirements of the FAA or other jurisdiction in
which the Aircraft may then be registered, and (iii) can be
removed without materially diminishing the value or utility
required to be maintained by the terms of the related Indenture
that the Aircraft would have had if such part had never been
installed. (Indentures, Section 7.04(c))
Except as set forth above, or in certain cases of Event of Loss,
Delta will be obligated to replace or cause to be replaced all
parts that are incorporated or installed in or attached to any
Airframe or any Engine and become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use. Any such replacement parts
will become subject to the lien of the related Indenture in lieu
of the part replaced. (Indentures, Section 7.04(a))
Registration,
Leasing and Possession
Although Delta has certain re-registration rights, as described
below, Delta generally is required to keep each Aircraft duly
registered under the Transportation Code with the FAA and to
record each Indenture under the Federal Aviation Act.
(Indentures, Section 7.02(e)) In addition, Delta will
register the international interests created
pursuant to the Indentures under the Cape Town Convention on
International Interests in Mobile Equipment and the related
Aircraft Equipment Protocol (the Cape Town
Treaty). (Indentures, Section 7.02(e)). Although
Delta has no current intention to do so, Delta will be permitted
to register an Aircraft in certain jurisdictions outside the
United States, subject to certain conditions specified in the
related Indenture. These conditions include a requirement that
the laws of the new jurisdiction of registration will give
effect to the lien of and the security interest created by the
related Indenture in the applicable Aircraft. (Indentures,
Section 7.02(e)) Delta also will be permitted, subject to
certain limitations, to lease any Aircraft or any Engine to any
United States certificated air carrier, to certain foreign air
carriers or to certain manufacturers of airframes or engines
(either directly or through an affiliate). In addition, subject
to certain limitations, Delta will be permitted to transfer
possession of any Airframe or any Engine other than by lease,
including transfers of possession by Delta or any lessee in
connection with certain interchange and pooling arrangements,
wet leases, and transfers in connection with
maintenance or modifications and transfers to the government of
the United States, Canada, France, Germany, Japan, The
Netherlands, Sweden, Switzerland and the United Kingdom or any
instrumentality or agency thereof. (Indentures,
Section 7.02(a)) There will be no general geographical
restrictions on Deltas (or any lessees) ability to
operate the Aircraft. The extent to which the relevant Loan
Trustees lien would be recognized in an Aircraft if such
Aircraft were located in certain countries is uncertain.
Permitted foreign air carrier lessees are not limited to those
based in a country that is a party to the Convention on the
International Recognition of Rights in Aircraft (Geneva 1948)
(the Mortgage Convention) or a party to the
Cape Town Treaty. It is uncertain to what extent the relevant
Loan Trustees security interest would be recognized if an
Aircraft is registered or located in a jurisdiction not a party
to the Mortgage Convention or the Cape Town Treaty. The Cape
Town Treaty provides, that, subject to certain exceptions, a
registered international interest has priority over
a subsequently registered interest and over an unregistered
interest for purposes of the law of those jurisdictions that
have ratified the Cape Town Treaty. There are many jurisdictions
in the world that have not ratified the Cape Town Treaty,
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and the Aircraft may be located in any such jurisdiction from
time to time. There is no legal precedent with respect to the
application of the Cape Town Treaty in any jurisdiction and
therefore it is unclear how the Cape Town Treaty will be applied.
In addition, any exercise of the right to repossess an Aircraft
may be difficult, expensive and time-consuming, particularly
when such Aircraft is located outside the United States or has
been registered in a foreign jurisdiction or leased to or in
possession of a foreign or domestic operator. Any such exercise
would be subject to the limitations and requirements of
applicable law, including the need to obtain consents or
approvals for deregistration or re-export of the Aircraft, which
may be subject to delays and political risk. When a defaulting
lessee or other permitted transferee is the subject of a
bankruptcy, insolvency, or similar event such as protective
administration, additional limitations may apply. See Risk
Factors Risk Factors Relating to the Certificates
and the Offering Repossession of Aircraft may be
difficult, time-consuming and expensive.
In addition, some jurisdictions may allow for other liens or
other third party rights to have priority over a Loan
Trustees security interest in an Aircraft. As a result,
the benefits of the related Loan Trustees security
interest in an Aircraft may be less than they would be if the
Aircraft were located or registered in the United States.
Upon repossession of an Aircraft, the Aircraft may need to be
stored and insured. The costs of storage and insurance can be
significant, and the incurrence of such costs could reduce the
proceeds available to repay the Certificateholders. In addition,
at the time of foreclosing on the lien on the Aircraft under the
related Indenture, an Airframe subject to such Indenture might
not be equipped with Engines subject to the same Indenture. If
Delta fails to transfer title to engines not owned by Delta that
are attached to repossessed Aircraft, it could be difficult,
expensive and time-consuming to assemble an Aircraft consisting
of an Airframe and Engines subject to the Indenture.
Liens
Delta is required to maintain each Aircraft free of any liens,
other than the lien of the Indenture, any other rights existing
pursuant to or permitted by the other operative documents and
pass through documents related thereto, the rights of others in
possession of the Aircraft in accordance with the terms of the
related Indenture and liens attributable to other parties to the
operative documents and pass through documents related thereto
and other than certain other specified liens, including but not
limited to (i) liens for taxes either not yet overdue or
being contested in good faith by appropriate proceedings so long
as such proceedings do not involve any material risk of the
sale, forfeiture or loss of the Airframe or any Engine or the
Loan Trustees interest therein or impair the lien of the
related Indenture; (ii) materialmens,
mechanics, workers, landlords,
repairmens, employees or other similar liens arising
in the ordinary course of business and securing obligations that
either are not yet overdue for more than 60 days or are
being contested in good faith by appropriate proceedings so long
as such proceedings do not involve any material risk of the
sale, forfeiture or loss of the Airframe or any Engine or the
Loan Trustees interest therein or materially impair the
lien of the related Indenture; (iii) judgment liens so long
as such judgment is discharged, vacated or reversed within
60 days or the execution of such judgment is stayed pending
appeal or such judgment is discharged, vacated or reversed
within 60 days after expiration of such stay;
(iv) salvage or similar rights of insurers under insurance
policies maintained by Delta; (v) any other lien as to
which Delta has provided a bond, cash collateral or other
security adequate in the reasonable opinion of the relevant Loan
Trustee; and (vi) liens approved in writing by the Loan
Trustee with the consent of holders of a majority in principal
amount of the Equipment Notes outstanding under the Indenture.
(Indentures, Section 7.01)
Insurance
Subject to certain exceptions, Delta is required to maintain or
cause to be maintained, at its or any lessees expense, all
risk aircraft hull insurance covering each Aircraft (including,
without limitation, war risk hull insurance if and to the extent
the same is maintained by Delta (or any permitted lessee) with
respect to other similar aircraft operated by Delta (or such
permitted lessee) on
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the same routes), at all times in an amount not less than 110%
of the aggregate outstanding principal amount of the Equipment
Notes relating to such Aircraft. However, after giving effect to
self-insurance permitted as described below, the amount payable
under such insurance may be less than such amounts payable with
respect to such Equipment Notes. If an Aircraft suffers an Event
of Loss, insurance proceeds up to an amount equal to the
outstanding principal amount of the Equipment Notes, together
with accrued but unpaid interest thereon, plus an amount equal
to the interest that will accrue on the outstanding principal
amount of the Equipment Notes during the period commencing on
the day following the date of payment of such insurance proceeds
to the Loan Trustee and ending on the loss payment date (the sum
of those amounts being, the Loan Amount) will
be paid to the applicable Loan Trustee. If an Aircraft or Engine
suffers loss or damage not constituting an Event of Loss but
involving insurance proceeds in excess of $8,000,000 (in the
case of a Boeing
737-732 or
Boeing
737-832),
$12,000,000 (in the case of a Boeing
757-232),
$15,000,000 (in the case of a Boeing
767-332ER)
or $28,000,000 (in the case of a Boeing
777-232LR),
proceeds in excess of such specified amounts up to the Loan
Amount will be payable to the applicable Loan Trustee, and the
proceeds up to such specified amounts and proceeds in excess of
the Loan Amount will be payable directly to Delta unless an
Indenture Event of Default exists, in which event all insurance
proceeds for any loss or damage to an Aircraft (or Engine) up to
an amount equal to the Loan Amount will be payable to the Loan
Trustee. So long as the loss does not constitute an Event of
Loss, insurance proceeds will be applied to repair or replace
the equipment. (Indentures, Section 7.06(c) and (f))
In addition, subject to certain exceptions, Delta is obligated
to maintain or cause to be maintained aircraft liability
insurance at its or any lessees expense, including,
without limitation, passenger, contractual, bodily injury,
personal injury and property damage liability insurance
(exclusive of manufacturers product liability insurance
and war risk, hijacking and related perils insurance) with
respect to each Aircraft. Such liability insurance must be
underwritten by insurers of recognized responsibility. The
amount of such liability insurance coverage may not be less than
the amount of aircraft liability insurance from time to time
applicable to similar aircraft in Deltas fleet on which
Delta carries insurance and operated by Delta on the same or
similar routes on which the Aircraft is operated. (Indentures,
Section 7.06(a))
Delta is also required to maintain or cause to be maintained war
risk, hijacking and related perils liability insurance with
respect to each Aircraft if such Aircraft, the related Airframe
or any related Engine is being operated in any war zone or area
of recognized or, in Deltas judgment, threatened
hostilities, (i) in an amount that is not less than the
aircraft liability insurance applicable to similar aircraft and
engines in Deltas fleet on which Delta carries insurance
and operated by Delta (or if a lease is in effect, in such
permitted lessees fleet on which such permitted lessee
carries insurance and operated by such permitted lessee) on the
same or similar routes as such Aircraft; provided that
such liability insurance shall not be less than the minimum
insurance amount specified in the applicable Indenture,
(ii) that is maintained in effect with insurers of
recognized responsibility, and (iii) which shall cover the
perils set forth in the insurance policies maintained in
connection with the CRAF Program (as such insurance policies
maintained in connection with the CRAF Program may be amended
from time to time). Except with respect to any war-risk,
hijacking or related perils liability insurance maintained on
any aircraft owned or operated by Delta in connection with the
CRAF Program, if war-risk, hijacking or related perils liability
insurance is maintained by Delta (or if a lease is in effect, by
such permitted lessee) with respect to any aircraft owned or
operated by Delta (or such permitted lessee) of the same or
similar type operated by Delta (or such permitted lessee) on the
same or similar routes as operated by such Aircraft, then Delta
shall maintain or cause to be maintained with respect to such
Aircraft war-risk, hijacking and related perils liability
insurance in scope and coverage no less comprehensive, in an
amount not less than the insurance maintained by Delta (or such
permitted lessee) with respect to such other aircraft, and with
insurers of recognized responsibility. (Indentures,
Section 7.06(b))
Delta may self-insure, but the amount of such self-insurance
with respect to all of the aircraft and engines in the combined
fleet of Delta and its affiliates may not exceed for any
12-month
policy year
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1% of the average aggregate insurable value (during the
preceding policy year) of all aircraft in the combined fleets of
Delta and its affiliates on which Delta and its affiliates carry
insurance, unless an insurance broker of national standing
certifies that the standard among all other major
U.S. airlines is a higher level of self-insurance, in which
case Delta may self-insure the Aircraft to such higher level. In
addition, Delta may self-insure to the extent of (i) any
applicable deductible per occurrence for an aircraft that is not
in excess of the amount customarily allowed as a deductible in
the industry or is required to facilitate claims handling, or
(ii) any applicable mandatory minimum per aircraft (or, if
applicable, per annum or other period) liability insurance or
hull insurance deductibles imposed by the aircraft liability or
hull insurers. (Indentures, Section 7.06(d))
In respect of each Aircraft, Delta is required to name the
relevant Loan Trustee, each Trustee, the Subordination Agent and
the Liquidity Providers as additional insured parties as their
respective interests may appear under all liability insurance
policies required by the terms of the Indenture with respect to
such Aircraft. In addition, the hull and liability insurance
policies will be required to provide that, in respect of the
interests of such additional insured party, the insurance shall
not be invalidated or impaired by any action or inaction of
Delta (or any permitted lessee). (Indentures,
Section 7.06(a), (b) and (c))
Subject to certain customary exceptions, Delta may not operate
(or permit any lessee to operate) any Aircraft in any area that
is excluded from coverage by any insurance policy in effect with
respect to such Aircraft and required by the Indenture or in any
war zone or recognized (or, in Deltas judgment,
threatened) areas of hostility. (Indentures,
Section 7.02(b))
Events of
Loss
If an Event of Loss occurs with respect to the Airframe or the
Airframe and one or more Engines of an Aircraft, Delta must
elect within 90 days after such occurrence (i) to
replace such Airframe and any such Engines or (ii) to pay
the applicable Loan Trustee the outstanding principal amount of
the Equipment Notes relating to such Aircraft together with
interest accrued but unpaid thereon, but without any premium.
Depending upon Deltas election, not later than the first
Business Day after the 120th day following the date of
occurrence of such Event of Loss, Delta will (i) redeem the
Equipment Notes under the applicable Indenture by paying to the
Loan Trustee the outstanding unpaid principal amount of such
Equipment Notes, together with accrued but unpaid interest
thereon, but without any premium or (ii) substitute an
airframe (or airframe and one or more engines, as the case may
be) for the Airframe, or Airframe and Engine(s), that suffered
such Event of Loss. If Delta elects to replace an Airframe (or
Airframe and one or more Engines, as the case may be) that
suffered such Event of Loss, it will do so with an airframe or
airframe and engine(s) of the same model as the Airframe or
Airframe and Engine(s) to be replaced or a comparable or
improved model, and with a value and utility (without regard to
hours or cycles) at least equal to the Airframe or Airframe and
Engine(s) to be replaced, assuming that such Airframe and such
Engine(s) were in the condition and repair required by the
related Indenture. Delta is also required to provide to the
relevant Loan Trustee opinions of counsel (i) to the effect
that such Loan Trustee will be entitled to the benefits of
Section 1110 with respect to the replacement airframe
(unless, as a result of a change in law or governmental or
judicial interpretation, such benefits were not available with
respect to the Aircraft immediately prior to such replacement),
and (ii) as to the due registration of the replacement
aircraft, the due recordation of a supplement to the Indenture
relating to such replacement aircraft, and the validity and
perfection of the security interest granted to the Loan Trustee
in the replacement aircraft. If Delta elects not to replace such
Airframe, or Airframe and Engine(s), then upon payment of the
outstanding principal amount of the Equipment Notes issued with
respect to such Aircraft, together with accrued but unpaid
interest thereon (but without any premium), the lien of the
Indenture will terminate with respect to such Aircraft, and the
obligation of Delta thereafter to make the scheduled interest
and principal payments with respect to such Equipment Notes will
cease. The payments made under the Indenture by Delta will be
deposited with the applicable Loan Trustee. Amounts in excess of
the amounts due and owing under the Equipment Notes issued with
respect to such Aircraft will be distributed by such Loan
Trustee to Delta. (Indentures, Sections 2.10, 3.02, 7.05(a)
and 7.05(c))
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If an Event of Loss occurs with respect to an Engine alone,
Delta will be required to replace such Engine within
120 days after the occurrence of such Event of Loss with
another engine, free and clear of all liens (other than certain
permitted liens). Such replacement engine will be the same model
as the Engine to be replaced, or a comparable or improved model
of the same or another manufacturer, suitable for installation
and use on the Airframe, and will have a value and utility
(without regard to hours or cycles) at least equal to the Engine
to be replaced, assuming that such Engine was in the condition
and repair required by the terms of the relevant Indenture.
(Indentures, Section 7.05(b))
An Event of Loss with respect to an Aircraft,
Airframe or any Engine means any of the following events with
respect to such property:
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the loss of such property or of the use thereof due to
destruction, damage to such property beyond repair or rendition
of such property permanently unfit for normal use for any reason
whatsoever;
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any damage to such property that results in an insurance
settlement with respect to such property on the basis of a total
loss or a compromised or constructive total loss;
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the theft, hijacking or disappearance of such property for a
period exceeding 180 consecutive days;
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the requisition for use or hire of such property by any
government (other than a requisition for use or hire by the
government of Canada, France, Germany, Japan, The Netherlands,
Sweden, Switzerland, the United Kingdom or the United States or
the government of the country of registry of the Aircraft) that
results in the loss of possession of such property by Delta (or
any lessee) for a period exceeding 12 consecutive months;
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the operation or location of the Aircraft, while under
requisition for use by any government, in an area excluded from
coverage by any insurance policy required by the terms of the
Indenture, unless Delta has obtained indemnity or insurance in
lieu thereof from such government;
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any requisition of title or other compulsory acquisition,
capture, seizure, deprivation, confiscation or detention
(excluding requisition for use or hire not involving a
requisition of title) for any reason of the Aircraft by any
government that results in the loss of title or use of the
Aircraft by Delta (or a permitted lessee) for a period in excess
of 180 consecutive days;
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as a result of any law, rule, regulation, order or other action
by the FAA or other government of the country of registry, the
use of the Aircraft or Airframe in the normal business of air
transportation is prohibited by virtue of a condition affecting
all aircraft of the same type for a period of 18 consecutive
months, unless Delta is diligently carrying forward all steps
that are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use is prohibited
for a period of three consecutive years; and
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with respect to an Engine only, any divestiture of title to or
interest in such Engine or, in certain circumstances, the
installation of such Engine on an airframe that is subject to a
conditional sale or other security agreement.
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An Event of Loss with respect to an Aircraft is deemed to have
occurred if an Event of Loss occurs with respect to the Airframe
that is a part of such Aircraft unless Delta elects to
substitute a replacement Airframe pursuant to the related
Indenture. (Indentures, Annex A)
If, at any time before the Final Maturity Date, the Equipment
Notes issued under an Indenture are repaid in full in the case
of an Event of Loss with respect to the applicable Aircraft, the
lien on such Aircraft under such Indenture will be released, and
such Aircraft will not thereafter secure any other Equipment
Notes.
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POSSIBLE ISSUANCE
OF ADDITIONAL CERTIFICATES AND REFINANCING OF
CERTIFICATES
Issuance of
Additional Certificates
Delta may elect to issue one additional series of equipment
notes (the Additional Equipment Notes) with
respect to any Aircraft at any time, which Additional Equipment
Notes will be funded from sources other than this offering but
will be issued under the same Indenture as the Equipment Notes
for such Aircraft. Any Additional Equipment Notes issued under
an Indenture will be subordinated in right of payment to
Series A Equipment Notes and Series B Equipment Notes
issued under such Indenture. Delta will fund the sale of any
Additional Equipment Notes through the sale of pass through
certificates (the Additional Certificates)
issued by a single pass through trust (an Additional
Trust). (Intercreditor Agreement, Section 8.01(d))
The Trustee of any Additional Trust will become a party to the
Intercreditor Agreement, and the Intercreditor Agreement will be
amended by written agreement of Delta and the Subordination
Agent to provide for the subordination of the Additional
Certificates to the Administration Expenses, the Liquidity
Obligations, the Class A Certificates and the Class B
Certificates. The priority of distributions under the
Intercreditor Agreement may be revised, however, with respect to
Additional Certificates to provide for distribution of
Adjusted Interest with respect to such
Additional Certificates (calculated in a manner substantially
similar to the calculation of Class B Adjusted Interest)
after Class B Adjusted Interest, but before Expected
Distributions on the Class A Certificates. (Intercreditor
Agreement, Section 8.01(d))
Any such issuance of Additional Equipment Notes and Additional
Certificates, and any such amendment of the Intercreditor
Agreement (and any amendment of an Indenture in connection with
such issuance), is contingent upon each Rating Agency providing
written confirmation that such actions will not result in a
withdrawal, suspension, or downgrading of the rating of any
class of Certificates then rated by such Rating Agency and that
remains outstanding. The issuance of Additional Equipment Notes
and Additional Certificates in compliance with the foregoing
conditions will not require the consent of any Trustee or any
holders of any class of Certificates. (Intercreditor Agreement,
Section 8.01(d))
Refinancing of
Certificates
Delta may elect to redeem Series B Equipment Notes (or any
series of Additional Equipment Notes) then outstanding and to
issue new Equipment Notes with the same series designation as,
but with terms that may differ from, those of the redeemed
Equipment Notes (any such new Equipment Notes, the
Refinancing Equipment Notes) in respect of
all (but not less than all) of the Aircraft. In such case, Delta
will fund the sale of such Refinancing Equipment Notes through
the sale of pass through certificates (the Refinancing
Certificates) issued by a single pass through trust
(each, a Refinancing Trust).
The Trustee of any Refinancing Trust will become a party to the
Intercreditor Agreement, and the Intercreditor Agreement will be
amended by written agreement of Delta and the Subordination
Agent to provide for the subordination of the Refinancing
Certificates to the Administration Expenses, the Liquidity
Obligations, the Class A Certificates and, if applicable,
the Class B Certificates in the same manner that the
corresponding class of refinanced Certificates was subordinated.
Such issuance of Refinancing Equipment Notes and Refinancing
Certificates, and any such amendment of the Intercreditor
Agreement (and any amendment of an Indenture in connection with
such refinancing), is contingent upon each Rating Agency
providing written confirmation that such actions will not result
in a withdrawal, suspension, or downgrading of the rating of any
class of Certificates then rated by such Rating Agency and that
remains outstanding. The issuance of Refinancing Certificates in
compliance with the foregoing conditions will not require the
consent of any Trustee or any holders of any class of
Certificates. (Intercreditor Agreement, Section 8.01(c))
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Additional
Liquidity Facilities
Refinancing Certificates in respect of refinanced Class B
Certificates may have the benefit of credit support similar to
the Liquidity Facilities and claims for fees, interest,
expenses, reimbursement of advances and other obligations
arising from such credit support may rank equally with similar
claims in respect of the Liquidity Facilities, so long as the
prior written consent of the Liquidity Providers shall have been
obtained and each Rating Agency shall have provided written
confirmation that such actions will not result in a withdrawal,
suspension, or downgrading of the rating of any class of
Certificates then rated by such Rating Agency and that remains
outstanding. (Intercreditor Agreement, Section 8.01(c)(iii))
Additional Certificates and Refinancing Certificates in respect
of refinanced Additional Certificates may have the benefit of
credit support similar to the Liquidity Facilities
(provided that claims for fees, interest, expenses,
reimbursement of advances and other obligations arising from
such credit support shall be subordinate to the Administrative
Expenses, Liquidity Obligations, the Class A Certificates
and the Class B Certificates), so long as the prior written
consent of the Liquidity Providers shall have been obtained and
each Rating Agency shall have provided written confirmation that
such actions will not result in a withdrawal, suspension, or
downgrading of the rating of any class of Certificates then
rated by such Rating Agency and that remains outstanding.
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CERTAIN U.S.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain
U.S. federal income tax consequences of the purchase,
ownership and disposition of Certificates and the associated
Escrow Receipts by a Certificate Owner that purchases such
Certificates in the initial offering thereof at the offering
price set forth in this prospectus and holds such Certificates
as capital assets. This discussion does not address all of the
U.S. federal income tax consequences that may be relevant
to Certificate Owners in light of their particular circumstances
or to Certificate Owners that may be subject to special rules
(such as tax-exempt organizations, banks, dealers and traders in
securities that use
mark-to-market
accounting, insurance companies, regulated investment companies,
real estate investment trusts, certain former citizens or
residents of the United States, Certificate Owners that hold
Certificates as part of a hedging, integrated or conversion
transaction or a straddle or Certificate Owners that have a
functional currency other than the
U.S. dollar). This discussion does not address any other
U.S. federal tax consequences or any U.S. state or
local, or
non-U.S.,
tax consequences. This discussion generally is addressed only to
beneficial owners of Certificates that are U.S. Persons and
that are not treated as partnerships for U.S. federal
income tax purposes, except that the discussion below under
Certain U.S. Federal Income Tax
Consequences to
Non-U.S. Certificateholders
and Information Reporting and Backup
Withholding addresses certain U.S. federal income tax
consequences to Certificate Owners that are not
U.S. Persons. For purposes of this discussion, a
U.S. Person means a person that, for
U.S. federal income tax purposes, is (i) an individual
citizen or resident of the United States, (ii) a
corporation (including non-corporate entities taxable as
corporations) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia,
(iii) an estate the income of which is subject to
U.S. federal income tax regardless of its source,
(iv) a trust (x) with respect to which a court within
the United States is able to exercise primary supervision over
its administration and one or more U.S. persons have the
authority to control all of its substantial decisions or
(y) that has in effect a valid election under
U.S. Treasury regulations to be treated as a
U.S. person and (v) except as otherwise provided in
U.S. Treasury regulations, a partnership created or
organized in or under the laws of the United States, any state
thereof or the District of Columbia. If an entity treated for
U.S. federal income tax purposes as a partnership holds
Certificates, the tax consequences may depend upon the status
and activities of such entity and its partners. Prospective
investors that are treated as partnerships for U.S. federal
income tax purposes should consult their own advisors regarding
the U.S. federal income tax consequences to them and their
partners of an investment in Certificates.
This discussion is based upon the tax laws of the United States,
as well as judicial and administrative interpretations thereof
(in final or proposed form), all as in effect on the date of
this prospectus and all of which are subject to change or
differing interpretations, which could apply retroactively. No
rulings have been or will be sought from the Internal Revenue
Service (the IRS) with respect to any of the
U.S. federal income tax consequences discussed below, and
no assurance can be given that the IRS will not take positions
contrary to the discussion below. The Trusts, the Subordination
Agent and the Loan Trustees are not indemnified for any
U.S. federal income taxes or, with certain exceptions,
other taxes that may be imposed upon them, and the imposition of
any such taxes could result in a reduction in the amounts
available for distribution to Certificate Owners.
PERSONS CONSIDERING AN INVESTMENT IN CERTIFICATES SHOULD
CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL,
STATE AND LOCAL, AND ANY
NON-U.S.,
INCOME AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF CERTIFICATES AND THE ASSOCIATED
ESCROW RECEIPTS IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
Tax Status of the
Trusts
Although there is no authority addressing the classification of
entities that are similar to the Trusts in all respects, based
upon an interpretation of analogous authorities and the terms of
the Pass Through Trust Agreements, the Note Purchase
Agreement, the Liquidity Facilities, the Intercreditor
100
Agreement, the Deposit Agreements and the Escrow Agreements, all
as in effect on the date hereof, each Trust should be classified
as a grantor trust under Subpart E, Part I of
Subchapter J of Chapter 1 of Subtitle A of the
Internal Revenue Code of 1986, as amended (the
Code), for U.S. federal income tax
purposes. Each person holding or having a beneficial interest in
a Certificate, by its acceptance of such Certificate or
interest, agrees to treat the Trust that issued such Certificate
as a grantor trust for U.S. federal, state and local income
tax purposes. Each Trust intends to file income tax returns and
report to investors on the basis that it is a grantor trust.
Except as set forth below under Taxation of Certificate
Owners Trusts Classified as Partnerships, the
discussion below assumes that each Trust will be so classified
as a grantor trust.
If a Trust were not classified as a grantor trust for
U.S. federal income tax purposes, such Trust would be
classified as a partnership for such purposes, and would not be
classified as an association (or publicly traded partnership)
taxable as a corporation and, accordingly, would not itself be
subject to U.S. federal income tax, provided that at
least 90% of such Trusts gross income for each of its
taxable years is qualifying income (which generally
includes, among other things, interest income, gain from the
sale or other disposition of capital assets held for the
production of interest income and income derived with respect to
a business of investing in securities). Assuming each Trust
operates in accordance with the terms of the related Pass
Through Trust Agreement and the other agreements to which
it is a party, income derived by such Trust from the Equipment
Notes of such Trust and the Note Purchase Agreement will
constitute qualifying income for these purposes.
Taxation of
Certificate Owners
General
Each Certificate Owner will be treated as the owner of a pro
rata undivided interest in each Equipment Note, the contractual
rights and obligations under the Note Purchase Agreement and any
other property held in the applicable Trust and will be required
to report on its U.S. federal income tax return its pro
rata share of the entire income from such Equipment Notes and
other property in accordance with such Certificate Owners
method of accounting. A Certificate Owner using the cash method
of accounting generally must take into account its pro rata
share of income as and when received by the applicable Trustee.
A Certificate Owner using the accrual method of accounting
generally must take into account its pro rata share of income as
it accrues or is received by the applicable Trustee, whichever
is earlier.
It is anticipated that the Equipment Notes will not be issued
with original issue discount (OID) for
U.S. federal income tax purposes. If, however, any
Equipment Note is issued with more than a de minimis
amount of OID, a Certificate Owner of the related class of
Certificates would be required to include such OID in income for
U.S. federal income tax purposes as it accrues under a
constant yield method based on a compounding of interest,
regardless of such Certificate Owners method of accounting
and prior to such Certificate Owners receipt of cash
attributable to such income.
Under aggregation rules set forth in the U.S. Treasury
regulations, if a Certificate Owner purchases Certificates of
more than one class, certain of that Certificate Owners
interests in the Equipment Notes in the related Trusts must, in
certain circumstances, be treated together as a single debt
instrument which, for OID purposes, has a single issue price,
maturity date, stated redemption price at maturity and yield to
maturity. If the aggregation rules apply to a Certificate Owner,
such Equipment Notes could be treated with respect to such
Certificate Owner as having been issued with OID, even if the
related Equipment Notes would not otherwise be so treated.
Certificate Owners that purchase Certificates of more than one
class should consult their own tax advisors regarding the
aggregation rules.
Each Certificate Owner will also be treated as the owner of a
pro rata undivided interest in the associated Deposits. Such
Deposits likely will be subject to the U.S. Treasury
regulations regarding OID and contingent payments. Under such
regulations, a Certificate Owner would be required to include
interest income (and any OID) on the associated Deposits in
income as it accrues under a
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constant yield method based on a compounding of interest,
regardless of such Certificate Owners regular method of
accounting and prior to such Certificate Owners receipt of
cash attributable to such income.
Each Certificate Owner will be entitled to deduct, consistent
with its method of accounting, its pro rata share of fees and
expenses paid or incurred by the applicable Trust as provided in
Section 162 or 212 of the Code. Certain fees and expenses,
including fees paid to the Trustees and the Liquidity Providers,
will be borne by parties other than the Certificate Owners. It
is possible that such fees and expenses will be treated as
constructively received by the applicable Trust, in which event
a Certificate Owner of such Trust will be required to include in
income and will be entitled to deduct its pro rata share of such
fees and expenses. If such Certificate Owner is an individual,
estate or trust, the deduction for such Certificate Owners
share of such fees and expenses will be allowed only to the
extent that all of such Certificate Owners miscellaneous
itemized deductions, including such Certificate Owners
share of such fees and expenses, exceed 2% of such Certificate
Owners adjusted gross income. In addition, in the case of
such Certificate Owners who are individuals, certain otherwise
allowable itemized deductions generally will be subject to
additional limitations on itemized deductions under the
applicable provisions of the Code.
Sale, Exchange
or Other Disposition of Certificates
A Certificate Owner that sells, exchanges or otherwise disposes
of a Certificate generally will recognize capital gain or loss
(in the aggregate) equal to the difference between the amount
realized on such sale, exchange or other disposition (except to
the extent attributable to accrued interest, which will be
taxable as interest income if not previously included in income,
or to the associated Escrow Receipt) and such Certificate
Owners adjusted tax basis in the Equipment Notes and any
other property held by the applicable Trust (not including the
tax basis attributable to the associated Escrow Receipt). Any
such gain or loss generally will be long-term capital gain or
loss if such Certificate was held for more than one year (except
to the extent attributable to any property held by the
applicable Trust for one year or less). Any long-term capital
gains with respect to the Certificates generally are taxable to
corporate taxpayers at the rates applicable to ordinary income
and to individual taxpayers at lower rates than the rates
applicable to ordinary income. There are limitations on
deducting capital losses.
Upon a sale, exchange or other disposition of a Certificate, the
Certificate Owner will also recognize gain or loss equal to the
difference between the amount realized allocable to the
associated Escrow Receipt (which evidences such Certificate
Owners interest in the associated Deposits) and the
Certificate Owners adjusted tax basis in such Escrow
Receipt. Under the U.S. Treasury regulations applicable to
debt with contingent payments, any such gain likely would be
treated as ordinary interest income (and any such loss likely
would, to the extent of cumulative net accruals on the
associated Deposit, be treated as an ordinary loss).
Trusts
Classified as Partnerships
If a Trust were classified as a partnership (and not as a
publicly traded partnership taxable as a corporation) for
U.S. federal income tax purposes, income or loss with
respect to the assets held by such Trust would be calculated at
the Trust level, but such Trust itself would not be subject to
U.S. federal income tax. A Certificate Owner of a
Certificate issued by such Trust would be required to report its
share of such Trusts items of income and deduction on its
tax return for its taxable year within which such Trusts
taxable year (which should be the calendar year) ends, as well
as such Certificate Owners income from the associated
Deposits. In the case of an original purchaser of a Certificate
that is a calendar year taxpayer, income and loss generally
should be the same as it would be if the related Trust were
classified as a grantor trust, except that income or loss would
be reported on an accrual basis even if the Certificate Owner
otherwise uses the cash method of accounting.
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Certain U.S.
Federal Income Tax Consequences to
Non-U.S.
Certificateholders
Subject to the discussion of backup withholding below, payments
of principal, Make-Whole Amount, if any, and interest on the
Equipment Notes or the associated Deposits to, or on behalf of,
any Certificate Owner that is neither a U.S. Person nor an
entity treated as a partnership or domestic corporation for
U.S. federal income tax purposes (a
Non-U.S. Certificateholder)
will not be subject to U.S. federal withholding tax,
provided that, in the case of any amount treated as
interest (including OID, if applicable):
(i) such amount is not effectively connected with the
conduct of a trade or business within the United States by the
Non-U.S. Certificateholder;
(ii) such
Non-U.S. Certificateholder
does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Delta or the
Depositary, as the case may be, entitled to vote;
(iii) such
Non-U.S. Certificateholder
is not a controlled foreign corporation within the meaning of
the Code that is related to Delta or the Depositary, as the case
may be;
(iv) such
Non-U.S. Certificateholder
is not a bank receiving interest pursuant to a loan agreement
entered into in the ordinary course of its trade or
business; and
(v) the certification requirements described below are
satisfied.
The certification requirements referred to in clause (v)
above generally will be satisfied if the
Non-U.S. Certificateholder
certifies, under penalties of perjury, that it is not a
U.S. Person and provides its name and address and certain
other information to the applicable withholding agent (generally
on IRS
Form W-8BEN
or a suitable substitute form). U.S. Treasury regulations
provide additional rules for satisfying these certification
requirements in the case of Certificates held through one or
more intermediaries or pass-through entities.
Subject to the discussion of backup withholding below, any gain
(not including any amount treated as interest or OID) realized
by a
Non-U.S. Certificateholder
upon the sale, exchange or other disposition of a Certificate or
the associated Escrow Receipt or with respect to any associated
Equipment Note or Deposit generally will not be subject to
U.S. federal income or withholding taxes if (i) such
gain is not effectively connected with the conduct of a trade or
business within the United States by the
Non-U.S. Certificateholder
and (ii) in the case of an individual
Non-U.S. Certificateholder,
such individual is not present in the United States for
183 days or more in the taxable year of the sale, exchange
or other disposition.
Any interest (including OID, if applicable) on the Equipment
Notes or the associated Deposits or gain from the sale, exchange
or other disposition of a Certificate or the associated Escrow
Receipt, the associated Equipment Notes or the associated
Deposits will be subject to regular U.S. federal income tax
at graduated rates (and in certain cases a branch profits tax)
if it is effectively connected with the conduct of a trade or
business within the United States by a
Non-U.S. Certificateholder,
unless an applicable treaty provides an exemption. In lieu of
providing an IRS
Form W-8BEN
as described above, such
Non-U.S. Certificateholder
generally is required to provide IRS
Form W-8ECI
in order to claim an exemption from U.S. federal
withholding tax with respect to amounts treated as interest.
President Obama and members of Congress recently have made
proposals that, if enacted in their current form, would
substantially revise the withholding rules, certification
requirements and information reporting rules applicable to
payments to
non-U.S. Persons,
including the certification requirements referred to in
clause (v) above. It cannot be predicted whether, or in
what form, these proposals will be enacted. Prospective
investors should consult their own tax advisers regarding these
proposals.
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Prospective investors that are not U.S. Persons should
consult their own tax advisors regarding the income, estate and
other tax consequences to them of the purchase, ownership and
disposition of the Certificates and the associated Escrow
Receipts under U.S. federal, state and local, and any other
relevant, law in light of their own particular circumstances. If
any U.S. federal or other tax is required to be withheld
with respect to a
Non-U.S. Certificateholder,
Delta will not be required to pay any additional amount to such
Non-U.S. Certificateholder.
Information
Reporting and Backup Withholding
In general, payments made on the Certificates or the associated
Escrow Receipts, and proceeds from the sale, exchange or other
disposition of such Certificates and Escrow Receipts to or
through certain brokers, will be subject to information
reporting requirements, unless the payee is a corporation,
tax-exempt organization or other person exempt from such
reporting (and when required, demonstrates that it is so
exempt). Such payments and proceeds may also be subject to a
backup withholding tax at a rate of 28% in 2009 (or
at the applicable rate in subsequent years) unless the
Certificate Owner complies with certain reporting requirements
or an exemption from such tax is otherwise applicable. Any such
withheld amounts will be allowed as a credit against the
Certificate Owners U.S. federal income tax, and may
entitle such Certificate Owner to a refund, if the required
information is furnished on a timely basis to the IRS. Penalties
may be imposed by the IRS on a Certificate Owner who is required
to supply information but does not do so in the proper manner.
In addition, the amount of interest (including OID, if
applicable) paid on the Equipment Notes or the associated
Deposits to or on behalf of a
Non-U.S. Certificateholder
and the amount of U.S. federal income tax, if any, withheld
from such payments generally must be reported annually to the
IRS and such
Non-U.S. Certificateholder.
CERTAIN DELAWARE
TAXES
The Trustee of each Trust is a national banking association
headquartered in Delaware that will act through its corporate
trust office in Delaware. Richards, Layton & Finger,
PA, special Delaware counsel to the Trustees, has advised Delta
that, in its opinion, under currently applicable law, assuming
that neither Trust will be taxable as a corporation for
U.S. federal income tax purposes, but, rather, that each
will be classified for such purposes as a grantor trust or as a
partnership, (i) the Trusts will not be subject to any tax
(including, without limitation, net or gross income, tangible or
intangible property, net worth, capital, franchise, or doing
business tax), fee or other governmental charge under the laws
of the State of Delaware or any political subdivision of such
state and (ii) Certificate Owners that are not residents of
or otherwise subject to tax in Delaware will not be subject to
any tax (including, without limitation, net or gross income,
tangible or intangible property, net worth, capital, franchise,
or doing business tax), fee or other governmental charge under
the laws of the State of Delaware or any political subdivision
of such state as a result of purchasing, owning (including
receiving payments with respect to) or selling a Certificate.
Neither the Trusts nor the Certificate Owners will be
indemnified for any state or local taxes imposed on them, and
the imposition of any such taxes on a Trust could result in a
reduction in the amounts available for distribution to the
Certificate Owners of such Trust. In general, should a
Certificate Owner or a Trust be subject to any state or local
tax that would not be imposed if such Trust were administered in
a different jurisdiction in the United States or if the Trustee
were located in a different jurisdiction in the United States,
the Trustee will either relocate the administration of such
Trust to such other jurisdiction or resign and, in the event of
such a resignation, a new Trustee in such other jurisdiction
will be appointed.
104
CERTAIN ERISA
CONSIDERATIONS
General
A fiduciary of a retirement plan or other employee benefit plan
or arrangement, including for this purpose an individual
retirement account, annuity or Keogh plan, that is subject to
Title I of the Employee Retirement Income Security Act of
1974, as amended (ERISA), or
Section 4975 of the Code (an ERISA
Plan), or such a plan or arrangement which is a
foreign, church or governmental plan or arrangement exempt from
Title I of ERISA and Section 4975 of the Code but
subject to a foreign, federal, state, or local law which is
substantially similar to the provisions of Title I of ERISA
or Section 4975 of the Code (each, a Similar
Law) (in each case, including an ERISA Plan, a
Plan), should consider whether an investment
in the Certificates is appropriate for the Plan, taking into
account the provisions of the Plan documents, the overall
investment policy of the Plan and the composition of the
Plans investment portfolio, as there are imposed on Plan
fiduciaries certain fiduciary requirements, including those of
investment prudence and diversification and the requirement that
a Plans investments be made in accordance with the
documents governing the Plan. Further, a fiduciary should
consider the fact that in the future there may be no market in
which such fiduciary would be able to sell or otherwise dispose
of the Certificates.
Section 406 of ERISA and Section 4975 of the Code
prohibit certain transactions involving the assets of an ERISA
Plan and certain persons (referred to as parties in
interest or disqualified persons) having
certain relationships to such Plans, unless a statutory or
administrative exemption is applicable to the transaction. A
party in interest or disqualified person who engages in a
prohibited transaction may be subject to excise taxes and other
penalties and liabilities under ERISA and the Code.
Any Plan fiduciary which proposes to cause a Plan to purchase
Certificates should consult with its counsel regarding the
applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and the Code and Similar Law to
such an investment, and to confirm that such purchase and
holding will not constitute or result in a non-exempt prohibited
transaction or any other violation of an applicable requirement
of ERISA or Similar Law.
Plan Assets
Issues
The Department of Labor has promulgated a regulation,
29 CFR
Section 2510.3-101,
as modified by Section 3(42) of ERISA (the Plan
Asset Regulation), describing what constitutes the
assets of an ERISA Plan with respect to the ERISA Plans
investment in an entity for purposes of ERISA and
Section 4975 of the Code. Under the Plan Asset Regulation,
if an ERISA Plan invests (directly or indirectly) in a
Certificate, the ERISA Plans assets will include both the
Certificate and an undivided interest in each of the underlying
assets of the corresponding Trust, including the Equipment Notes
held by such Trust, unless it is established that equity
participation in the Trust by benefit plan investors (including
but not limited to ERISA Plans and entities whose underlying
assets include ERISA Plan assets by reason of an ERISA
Plans investment in the entity) is not
significant within the meaning of the Plan Asset
Regulation. In this regard, the extent to which there is equity
participation in a particular Trust by, or on behalf of, benefit
plan investors will not be monitored. If the assets of a Trust
are deemed to constitute the assets of an ERISA Plan,
transactions involving the assets of such Trust could be subject
to the prohibited transaction provisions of ERISA and
Section 4975 of the Code or materially similar provisions
of Similar Law unless a statutory or administrative exemption is
applicable to the transaction. In addition, an Escrow Receipt
will be affixed to each Certificate and will evidence an
interest in the Deposits held in escrow by the Escrow Agent for
the benefit of the related Certificateholders pending the
financing of the Aircraft. The Deposits will not constitute
property of the Trusts. Pending withdrawal of such Deposits in
accordance with the applicable Deposit Agreement and Escrow
Agreement and with the Note Purchase Agreement, the Deposits may
be deemed plan assets subject to the fiduciary responsibility
and prohibited transaction provisions of ERISA and
Section 4975 of the Code.
105
Prohibited
Transaction Exemptions
In addition, whether or not the assets of a Trust are deemed to
be ERISA Plan assets under the Plan Asset Regulation, the
fiduciary of a Plan that proposes to purchase and hold any
Certificates should consider, among other things, whether such
purchase and holding may involve (i) the direct or indirect
extension of credit to a party in interest or a disqualified
person, (ii) the sale or exchange of any property between
an ERISA Plan and a party in interest or a disqualified person,
or (iii) the transfer to, or use by or for the benefit of,
a party in interest or a disqualified person, of any ERISA Plan
assets. Such parties in interest or disqualified persons could
include, without limitation, Delta, the Underwriters, the
Trustees, the Liquidity Providers, the Loan Trustees, the
Subordination Agent, the Escrow Agent, the Depositary, the
Paying Agent and their respective affiliates. Moreover, if
Certificates are purchased by an ERISA Plan and the Certificates
of a subordinate class are held by a party in interest or a
disqualified person with respect to such ERISA Plan, the
exercise by the holder of the subordinate classes of
Certificates of its right to purchase the Certificates upon the
occurrence and during the continuation of certain events could
be considered to constitute a prohibited transaction unless a
statutory or administrative exemption were applicable. In
addition, if the subordinate classes of Certificates are
purchased by an ERISA Plan and the senior Certificates are held
by a party in interest or a disqualified person with respect to
such ERISA Plan, the exercise by the holder of the subordinate
class of Certificates of its right to purchase the Certificates
upon the occurrence and during the continuation of certain
events could be considered to constitute a prohibited
transaction unless a statutory or administrative exemption were
applicable. Depending on the satisfaction of certain conditions
which may include the identity of the ERISA Plan fiduciary
making the decision to acquire or hold the Certificates on
behalf of an ERISA Plan, Prohibited Transaction Class Exemption
(PTCE)
91-38
(relating to investments by bank collective investment funds),
PTCE 84-14
(relating to transactions effected by a qualified
professional asset manager),
PTCE 95-60
(relating to investments by an insurance company general
account),
PTCE 96-23
(relating to transactions directed by an in-house asset manager)
or
PTCE 90-1
(relating to investments by insurance company pooled separate
accounts) (collectively, the Class
Exemptions) could provide an exemption from the
prohibited transaction restrictions of ERISA and
Section 4975 of the Code. However, there can be no
assurance that any of these Class Exemptions or any other
exemption will be available with respect to any particular
transaction involving the Certificates.
Each person who acquires or accepts a Certificate or an
interest therein will be deemed by such acquisition or
acceptance to have represented and warranted that either:
(i) no assets of a Plan or any trust established with
respect to a Plan have been used to acquire such Certificate or
an interest therein or (ii) the purchase and holding of
such Certificate or an interest therein by such person are
exempt from the prohibited transaction restrictions of ERISA and
the Code or provisions of Similar Law pursuant to one or more
statutory or administrative exemptions.
Special
Considerations Applicable to Insurance Company General
Accounts
Any insurance company proposing to purchase Certificates should
consider the implications of the United States Supreme
Courts decision in John Hancock Mutual Life Insurance
Co. v. Harris Trust and Savings Bank, 510 U.S. 86,
114 S. Ct. 517 (1993), which in certain circumstances
treats such general account assets as assets of an ERISA Plan
that owns a policy or other contract with such insurance
company, as well as the effect of Section 401(c) of ERISA
as interpreted by regulations issued by the United States
Department of Labor in January, 2000 (the General
Account Regulations). The General Account Regulations
should not, however, adversely affect the applicability of
PTCE 95-60
to purchases of the Certificates by insurance company general
accounts.
EACH PLAN FIDUCIARY SHOULD CONSULT WITH ITS LEGAL ADVISOR
CONCERNING THE POTENTIAL CONSEQUENCES TO THE PLAN UNDER ERISA,
THE CODE OR SIMILAR LAW OF AN INVESTMENT IN ANY OF THE
CERTIFICATES.
106
UNDERWRITING
Under the terms and subject to the conditions contained in the
Underwriting Agreement, dated November 18, 2009 (the
Underwriting Agreement), the Underwriters
named below (the Underwriters) have severally
agreed with Delta to purchase the following aggregate face
amounts of the Class A and Class B Certificates:
|
|
|
|
|
|
|
|
|
|
|
Face Amount of
|
|
|
Face Amount of
|
|
|
|
Class A
|
|
|
Class B
|
|
Underwriter
|
|
Certificates
|
|
|
Certificates
|
|
|
Goldman, Sachs & Co.
|
|
$
|
284,398,000
|
|
|
$
|
59,972,000
|
|
Morgan Stanley & Co. Incorporated
|
|
|
284,398,000
|
|
|
|
59,972,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
568,796,000
|
|
|
$
|
119,944,000
|
|
|
|
|
|
|
|
|
|
|
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and
that the Underwriters will be obligated to purchase all of the
Certificates, if any are purchased. The Underwriting Agreement
provides that, if an Underwriter defaults on its purchase
commitments, the purchase commitments of non-defaulting
Underwriters may be increased or the offering of Certificates
may be terminated. The offering of the Certificates by the
Underwriters is subject to receipt and acceptance and subject to
the Underwriters right to reject any order in whole or in
part.
This offering of Certificates is the final transaction in a
series of secured debt financings we have recently undertaken,
including our recent offering of $750,000,000 aggregate
principal amount of senior secured notes and our entry into a
new $500,000,000 revolving credit facility and $250,000,000 term
loan facility (collectively, the Secured Credit
Financings), for which we have paid certain fees to
the banks participating in such financings, including the
Underwriters, on a pro rata basis according to their respective
commitments in the new revolving credit facility. These fees
include the fees paid or to be paid by us for this offering of
Certificates, which is 2.0 percent of $688,740,000. Delta
estimates that its out of pocket expenses for the offering will
be approximately $4,160,000 exclusive of the ongoing costs of
the Liquidity Facilities and certain other ongoing costs.
The Underwriters propose to offer the Certificates to the public
initially at the public offering price on the cover page of this
prospectus. After the initial public offering, the public
offering prices may be changed by the Underwriters.
The Certificates are a new issue of securities with no
established trading market. Neither Delta nor any Trust intends
to apply for listing of the Certificates on any securities
exchange. Delta has been advised by one or more of the
Underwriters that they presently intend to make a market in the
Certificates, as permitted by applicable laws and regulations.
No Underwriter is obligated, however, to make a market in the
Certificates, and any such market-making may be discontinued at
any time without notice, at the sole discretion of such
Underwriter. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Certificates. See
Risk Factors Risk Factors Relating to the
Certificates and the Offering Because there is no
current market for the Certificates, you may have a limited
ability to resell Certificates.
Delta has agreed to reimburse the several Underwriters for
certain expenses and has agreed to indemnify the several
Underwriters against certain liabilities, including liabilities
under the Securities Act, or contribute to payments which the
Underwriters may be required to make in respect thereof.
From time to time in the ordinary course of their respective
business, the Underwriters and certain of their affiliates have
engaged, and in the future may engage in, investment and
commercial banking or other transactions of a financial nature
with Delta and its affiliates, including the provision of
certain advisory services, making loans to Delta and its
affiliates and serving as counterparties to certain fuel hedging
arrangements. The Underwriters and their affiliate have received
and in the future may receive customary fees and expenses and
commissions for these transactions. Goldman, Sachs
107
& Co. and Morgan Stanley & Co. Incorporated and
certain of their affiliates agreed to provide certain financing
or effect certain financing transactions under the Secured
Credit Financings for Delta and its affiliates, including this
offering of the Certificates. For all of these services,
Goldman, Sachs & Co., Morgan Stanley & Co.
Incorporated and their affiliates received customary fees.
It is expected that delivery of the Certificates will be made
against payment therefor on or about the date specified on the
cover page of this prospectus, which will be the fourth business
day following the date of pricing of the Certificates (such
settlement cycle being referred to as T+4).
Under
Rule 15c6-1
of the SEC under the Exchange Act, trades in the secondary
market generally are required to settle in three business days,
unless the parties to any such trade expressly agree otherwise.
Accordingly, purchasers who wish to trade Certificates on any
day prior to the third business day before the date of initial
delivery of the Certificates will be required, by virtue of the
fact that the Certificates initially will settle on a delayed
basis, to specify an alternate settlement cycle at the time of
any such trade to prevent a failed settlement and should consult
their own advisor.
The Underwriters may engage in over-allotment, stabilizing
transactions, syndicate covering transactions, and penalty bids
in accordance with Regulation M under the Exchange Act.
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Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position.
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|
Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum.
|
|
|
|
Syndicate covering transactions involve purchases of the
Certificates in the open market after the distribution has been
completed in order to cover syndicate short positions.
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|
|
|
Penalty bids permit the Underwriters to reclaim a selling
concession from a syndicate member when the Certificates
originally sold by such syndicate member are purchased in a
stabilizing transaction or a syndicate covering transaction to
cover syndicate short positions.
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Such over-allotment, stabilizing transactions, syndicate
covering transactions, and penalty bids may cause the price of
the Certificates to be higher than it would otherwise be in the
absence of such transactions. Neither Delta nor any Underwriter
makes any representation or prediction as to the direction or
magnitude of any effect that such transactions may have on the
price of the Certificates. These transactions, if commenced, may
be discontinued at any time. These transaction may be effected
in the
over-the-counter
market or otherwise.
Selling
Restrictions
This prospectus does not constitute an offer of, or an
invitation by or on behalf of, us or the Underwriters to
subscribe for or purchase any of the Certificates in any
jurisdiction to any person to whom it is unlawful to make such
an offer or solicitation in that jurisdiction. The distribution
of this prospectus and the offering of the Certificates in
certain jurisdictions may be restricted by law. We and the
Underwriters require persons into whose possession this
prospectus comes to observe the following restrictions.
European
Economic Area
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), each Underwriter has
represented and agreed that with effect from and including the
date on which the Prospectus Directive is implemented in that
Relevant Member State (the Relevant Implementation
Date) it has not made and will not make an offer of
Certificates to the public in that Relevant Member State prior
to the publication of a prospectus in relation to the
Certificates which has been approved by the competent authority
in that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with
the
108
Prospectus Directive, except that it may, with effect from and
including the Relevant Implementation Date, make an offer of
Certificates to the public in that Relevant Member State at any
time:
(a) to legal entities which are authorised or regulated to
operate in the financial markets or, if not so authorised or
regulated, whose corporate purpose is solely to invest in
securities;
(b) to any legal entity which has two or more of
(1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts;
(c) to fewer than 100 natural or legal persons (other than
qualified investors as defined in the Prospectus Directive)
subject to obtaining the prior consent of the representatives
for any such offer; or
(d) in any other circumstances which do not require the
publication by Delta of a prospectus pursuant to Article 3
of the Prospectus Directive.
For the purposes of this provision, the expression an
offer of Certificates to the public in relation to
any Certificates in any Relevant Member State means the
communication in any form and by any means of sufficient
information on the terms of the offer and the Certificates to be
offered so as to enable an investor to decide to purchase or
subscribe the Certificates, as the same may be varied in that
Relevant Member State by any measure implementing the Prospectus
Directive in that Relevant Member State and the expression
Prospectus Directive means Directive 2003/71/EC and includes any
relevant implementing measure in each Relevant Member State.
United
Kingdom
Each Underwriter has represented and agreed that:
(a) it has only communicated or caused to be communicated
and will only communicate or cause to be communicated an
invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the Financial Services
Market Act 2000 (FSMA)) received by it in
connection with the issue or sale of the Class A
Certificates in circumstances in which Section 21(1) of the
FSMA does not apply to Delta; and
(b) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the Certificates in, from or otherwise involving the
United Kingdom.
Hong
Kong
The Certificates may not be offered or sold by means of any
document other than (i) in circumstances which do not
constitute an offer to the public within the meaning of the
Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap.571, Laws of Hong Kong)
and any rules made thereunder, or (iii) in other
circumstances which do not result in the document being a
prospectus within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), and no advertisement,
invitation or document relating to the Class A Certificates
may be issued or may be in the possession of any person for the
purpose of issue (in each case whether in Hong Kong or
elsewhere), which is directed at, or the contents of which are
likely to be accessed or read by, the public in Hong Kong
(except if permitted to do so under the laws of Hong Kong) other
than with respect to Certificates which are or are intended to
be disposed of only to persons outside Hong Kong or only to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong)
and any rules made thereunder.
109
Singapore
This prospectus has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, neither this
prospectus nor any other document or material in connection with
the offer or sale, or invitation for subscription or purchase,
of the Certificates may be circulated or distributed, or may the
Certificates be offered or sold, or be made the subject of an
invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than (i) to an
institutional investor under Section 274 of the Securities
and Futures Act, Chapter 289 of Singapore (the
SFA), (ii) to a relevant person, or any
person pursuant to Section 275(1A), and in accordance with
the conditions, specified in Section 275 of the SFA or
(iii) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA.
Where the Certificates are subscribed or purchased under
Section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b) a trust (where the
trustee is not an accredited investor) whose sole purpose is to
hold investments and each beneficiary is an accredited investor,
Certificates, debentures and units of Certificates and
debentures of that corporation or the beneficiaries rights
and interest in that trust shall not be transferable for
6 months after that corporation or that trust has acquired
the Certificates under Section 275 except: (1) to an
institutional investor under Section 274 of the SFA or to a
relevant person, or any person pursuant to Section 275(1A),
and in accordance with the conditions, specified in
Section 275 of the SFA; (2) where no consideration is
given for the transfer; or (3) by operation of law.
Japan
The securities have not been and will not be registered under
the Financial Instruments and Exchange Law of Japan (the
Financial Instruments and Exchange Law) and
each underwriter has agreed that it will not offer or sell any
securities, directly or indirectly, in Japan or to, or for the
benefit of, any resident of Japan (which term as used herein
means any person resident in Japan, including any corporation or
other entity organized under the laws of Japan), or to others
for re-offering or resale, directly or indirectly, in Japan or
to a resident of Japan, except pursuant to an exemption from the
registration requirements of, and otherwise in compliance with,
the Financial Instruments and Exchange Law and any other
applicable laws, regulations and ministerial guidelines of Japan.
110
VALIDITY OF THE
CERTIFICATES
The validity of the Certificates is being passed upon for Delta
by Debevoise & Plimpton LLP, New York, New York, and
for the Underwriters by Shearman & Sterling LLP, New
York, New York. The respective counsel for Delta and the
Underwriters will rely upon Shipman & Goodwin LLP,
Hartford, Connecticut, counsel to U.S. Bank
Trust National Association, as to certain matters relating
to the authorization, execution, and delivery of the Basic
Agreement, each Trust Supplement and the Certificates, and
the valid and binding effect thereof, and on the opinion of
Leslie P. Klemperer, Vice President Deputy General
Counsel of Delta, as to certain matters relating to the
authorization, execution, and delivery of the Basic Agreement
and each Trust Supplement by Delta.
EXPERTS
Ernst & Young LLP, independent registered public
accounting firm, has audited our consolidated financial
statements included in the Delta Air Lines, Inc. Annual Report
on
Form 10-K
for the year ended December 31, 2008 and the effectiveness
of our internal control over financial reporting as of
December 31, 2008, as set forth in their reports, which are
incorporated by reference in this prospectus. Our consolidated
financial statements are incorporated by reference in reliance
on Ernst & Young LLPs reports, given on their
authority as experts in accounting and auditing.
Ernst & Young LLP, independent registered public
accounting firm, has audited consolidated financial statements
included in the Northwest Airlines Corporation Annual Report on
Form 10-K
for the year ended December 31, 2007, which financial
statements have been included in our Form 8-K/A dated
November 7, 2008, as set forth in their report, which is
incorporated by reference in this prospectus. Northwests
consolidated financial statements are incorporated by reference
in reliance on Ernst & Young LLPs reports, given
on their authority as experts in accounting and auditing.
The references to AISI, BK and MBA, and to their respective
appraisal reports, are included herein in reliance upon the
authority of each such firm as an expert with respect to the
matters contained in its appraisal report.
111
APPENDIX I
INDEX OF DEFINED
TERMS
The following is an index showing the page in this prospectus
where certain defined terms appear.
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|
|
|
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2000-1
Aircraft
|
|
|
3
|
|
2000-1 EETC
|
|
|
32
|
|
2000-1
Indentures
|
|
|
32
|
|
2009 Aircraft
|
|
|
3
|
|
60-Day Period
|
|
|
46
|
|
Actual Disposition Event
|
|
|
77
|
|
Additional Certificates
|
|
|
98
|
|
Additional Equipment Notes
|
|
|
98
|
|
Additional Holder Buyout Right
|
|
|
45
|
|
Additional Trust
|
|
|
98
|
|
Adjusted Interest
|
|
|
98
|
|
Administration Expenses
|
|
|
75
|
|
Aircraft
|
|
|
3
|
|
Airframe
|
|
|
80
|
|
AISI
|
|
|
80
|
|
Applicable Fraction
|
|
|
76
|
|
Appraisal
|
|
|
74
|
|
Appraised Current Market Value
|
|
|
74
|
|
Appraisers
|
|
|
80
|
|
Assumed Aircraft Value
|
|
|
87
|
|
Assumed Amortization Schedule
|
|
|
41
|
|
Average Life Date
|
|
|
86
|
|
Bank
|
|
|
60
|
|
Bankruptcy Code
|
|
|
14
|
|
Base Rate
|
|
|
68
|
|
Basic Agreement
|
|
|
36
|
|
BK
|
|
|
80
|
|
BNMC
|
|
|
60
|
|
Business Day
|
|
|
40
|
|
Cape Town Treaty
|
|
|
93
|
|
Cash Collateral Account
|
|
|
65
|
|
Cede
|
|
|
43
|
|
Certificate Account
|
|
|
40
|
|
Certificate Buyout Event
|
|
|
46
|
|
Certificate Owner
|
|
|
55
|
|
Certificate Owners
|
|
|
55
|
|
Certificateholders
|
|
|
36
|
|
Certificates
|
|
|
36
|
|
citizen of the United States
|
|
|
47
|
|
Class A Certificateholders
|
|
|
36
|
|
Class A Certificates
|
|
|
36
|
|
Class A Trust
|
|
|
36
|
|
Class A Trustee
|
|
|
36
|
|
Class B Adjusted Interest
|
|
|
77
|
|
Class B Buyout Right
|
|
|
45
|
|
Class B Certificateholders
|
|
|
36
|
|
Class B Certificates
|
|
|
36
|
|
Class B Trust
|
|
|
36
|
|
Class B Trustee
|
|
|
36
|
|
Class Exemptions
|
|
|
106
|
|
Code
|
|
|
101
|
|
Collateral
|
|
|
39
|
|
Company
|
|
|
iii
|
|
company free writing prospectus
|
|
|
i
|
|
Controlling Party
|
|
|
71
|
|
Current Distribution Date
|
|
|
76
|
|
Deemed Disposition Event
|
|
|
77
|
|
Defaulted Operative Indenture
|
|
|
85
|
|
Definitive Certificates
|
|
|
56
|
|
Delivery Period Termination Date
|
|
|
82
|
|
Delta
|
|
|
iii
|
|
Delta Bankruptcy Event
|
|
|
73
|
|
Deposit
|
|
|
58
|
|
Deposit Agreement
|
|
|
58
|
|
Depositary
|
|
|
60
|
|
Depositary Threshold Rating
|
|
|
59
|
|
Depreciation Assumption
|
|
|
88
|
|
Distribution Date
|
|
|
37
|
|
Downgrade Drawing
|
|
|
65
|
|
Drawing
|
|
|
68
|
|
DTC
|
|
|
43
|
|
DTC Participants
|
|
|
54
|
|
DTC Rules
|
|
|
54
|
|
Eligible B Pool Balance
|
|
|
77
|
|
Engine
|
|
|
80
|
|
Equipment Note Special Payment
|
|
|
75
|
|
Equipment Notes
|
|
|
83
|
|
ERISA
|
|
|
105
|
|
ERISA Plan
|
|
|
105
|
|
Escrow Agent
|
|
|
61
|
|
Escrow Agreements
|
|
|
61
|
|
Escrow Receipts
|
|
|
61
|
|
Event of Loss
|
|
|
97
|
|
Excess Liquidity Obligations
|
|
|
72
|
|
Exchange Act
|
|
|
iv
|
|
Existing Financing Event of Loss
|
|
|
59
|
|
Existing Financings
|
|
|
32
|
|
Expected Distributions
|
|
|
76
|
|
FAA
|
|
|
25
|
|
Final Distributions
|
|
|
72
|
|
Final Drawing
|
|
|
67
|
|
Final Legal Distribution Date
|
|
|
38
|
|
Final Maturity Date
|
|
|
15
|
|
Final Termination Notice
|
|
|
69
|
|
Financial Instruments and Exchange Law
|
|
|
110
|
|
Fitch
|
|
|
60
|
|
FSMA
|
|
|
109
|
|
GAAP
|
|
|
17
|
|
General Account Regulations
|
|
|
106
|
|
Global Certificate
|
|
|
54
|
|
I-1
|
|
|
|
|
H.15(519)
|
|
|
86
|
|
Indenture
|
|
|
83
|
|
Indenture Events of Default
|
|
|
88
|
|
Indenture Form
|
|
|
52
|
|
Indirect Participants
|
|
|
54
|
|
Intercreditor Agreement
|
|
|
71
|
|
Interest Drawings
|
|
|
64
|
|
Interim Restructuring Arrangement
|
|
|
74
|
|
IRS
|
|
|
100
|
|
Issuance Date
|
|
|
41
|
|
LIBOR
|
|
|
68
|
|
Liquidity Event of Default
|
|
|
69
|
|
Liquidity Expenses
|
|
|
76
|
|
Liquidity Facility
|
|
|
64
|
|
Liquidity Obligations
|
|
|
76
|
|
Liquidity Provider
|
|
|
64
|
|
Liquidity Threshold Rating
|
|
|
66
|
|
Loan Amount
|
|
|
93
|
|
Loan Trustee
|
|
|
83
|
|
Long-Term Rating
|
|
|
66
|
|
LTVs
|
|
|
4,87
|
|
Make-Whole Amount
|
|
|
86
|
|
Make-Whole Spread
|
|
|
86
|
|
Maximum Available Commitment
|
|
|
64
|
|
Maximum Commitment
|
|
|
64
|
|
MBA
|
|
|
80
|
|
Minimum Sale Price
|
|
|
72
|
|
Moodys
|
|
|
29
|
|
Mortgage Convention
|
|
|
93
|
|
Mortgage Financings
|
|
|
32
|
|
most recent H.15(519)
|
|
|
86
|
|
NOLs
|
|
|
24
|
|
Non-Extension Drawing
|
|
|
67
|
|
Non-U.S.
Certificateholder
|
|
|
103
|
|
Northwest
|
|
|
iii
|
|
Note Purchase Agreement
|
|
|
51
|
|
Note Target Price
|
|
|
73
|
|
Noteholder
|
|
|
84
|
|
OID
|
|
|
101
|
|
Outside Termination Date
|
|
|
59
|
|
Participation Agreement
|
|
|
83
|
|
Participation Agreement Form
|
|
|
52
|
|
Pass Through Trust Agreements
|
|
|
36
|
|
Paying Agent
|
|
|
|