Investors in several Delta Airlines Inc. EETC and ETC transactions were successful in securing an additional rating from Fitch Ratings on several classes in five separate transactions, the rating agency announced last week.

The rating agency had not supplied ratings on any of the recently rated classes at issuance, and all of the affected classes did carry a dual rating from Moody's Investors Service and Standard & Poor's at the outset. The ratings on these transactions have fallen quite a bit, both because of downgrades of Delta and separate downgrades as part of industry wide reviews of EETCs, said an analyst at S&P.

According to a spokesperson at Fitch, the rating agency rated the transactions in response to requests from investors stemming from the firm's experience in rating the airline's corporate debt.

The affected EETC classes, and their ratings, are as follows: Delta Airlines pass-through certificates, series 2000-1, classes A-1, A-2, B and C, rated B', B', CCC' and CC', respectively; Delta Airlines pass-through certificates, series 2001-1, classes A-1, A-2, B and C, rated B', B', CCC' and CC', respectively; Delta Airlines pass-through certificates, series 2002-1, class B2, rated CC'.

The affected ETC classes are as follows; Delta Airlines equipment trust certificates, series 1992, class B2, rated CC'; Delta Airlines equipment trust certificates, series 1993, class A2, rated CC'.

The aircraft collateral that originally supported the transactions was comprised of Boeing 737-800s, 767-300ERs, 757-200s, and MD-11s. Two MD-11 aircraft were included in each ETC and have subsequently been sold. "While it is likely that most of the remaining aircraft would continue to be essential flight assets for Delta, it is also possible that some of the leases associated with the aircraft might be renegotiated or rejected in the event that Delta files for Chapter 11," Fitch analysts stated in a release.

Fitch's action comes just weeks after Delta said in a federal filing that it might need to seek Chapter 11 bankruptcy protection if fuel costs remain at current levels. The filing came shortly after Delta won $1 billion in concessions from its pilots. The Atlanta-based airline is still seeking $85 million in additional cash by early 2006 to finance its business plan, according to published reports.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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