Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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On March 12, 2020, Delta Air Lines, Inc. (“Delta”) and U.S. Bank Trust National Association, as subordination agent (the “Subordination Agent”) and each pass through trustee (the “Trustee”) under two pass through trusts newly formed by Delta, entered into 33 separate Participation Agreements, dated as of March 12, 2020 (each, a “Participation Agreement” and, collectively, the “Participation Agreements”). The Participation Agreements provide for the issuance by Delta of equipment notes (the “Equipment Notes”) in the aggregate principal amount of $1,000,000,000 secured by (i) five Airbus A321-211 aircraft, (ii) 22 Boeing 737-932ER aircraft, and (iii) six Airbus A330-302 aircraft, delivered new to Delta from August 2014 through April 2017 (each such aircraft, an “Aircraft” and, collectively, the “Aircraft”), and which are substantively identical with respect to each model of Aircraft. The Equipment Notes were issued under separate Indenture and Security Agreements (each, an “Indenture” and, collectively, the “Indentures”) entered into by Delta and U.S. Bank Trust National Association, as loan trustee (the “Loan Trustee”), on March 12, 2020, with respect to each Aircraft.
The Equipment Notes were issued in two series: Series AA, bearing interest at the rate of 2.000% per annum, and Series A, bearing interest at the rate of 2.500% per annum, in the aggregate principal amount equal to $795,894,000, in the case of Series AA, and $204,106,000, in the case of Series A. The Equipment Notes were purchased by the Trustee using the proceeds from the sale of a total of $1,000,000,000 of Delta Air Lines, Inc. Pass Through Certificates, Series 2020-1 (the “Certificates”) through the two newly formed pass through trusts. Pursuant to separate Revolving Credit Agreements, each dated March 12, 2020, between National Australia Bank Limited, acting through its New York Branch, as liquidity provider (the “Liquidity Provider”), and the Subordination Agent, the Liquidity Provider will provide a separate liquidity facility for each Class of 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 interest on the Equipment Notes is payable semiannually on each June 10 and December 10, beginning on June 10, 2020. The principal of the Equipment Notes is scheduled for payment on June 10 and December 10 of each year, commencing on December 10, 2020. Maturity of the Equipment Notes may be accelerated upon the occurrence of certain events of default, including failure by Delta (in some cases after notice or the expiration of a grace period, or both) to make payments under the applicable Indenture when due or to comply with certain covenants, as well as certain bankruptcy events involving Delta. The Equipment Notes issued with respect to each Aircraft will be secured by a lien on such Aircraft and will also be cross-collateralized by the other Aircraft.
This Current Report on Form 8-K is being filed, in part, for the purpose of filing as exhibits to the Registration Statement (as defined below) the documents listed in Item 9.01 below, some of which are described below and all of which are hereby incorporated by reference in the Registration Statement. The descriptions of the agreements described in this Current Report on Form 8-K are qualified in their entirety by reference to the respective agreements, copies of which are filed herewith or incorporated herein as exhibits.