By Fabio Alves and Sarah Rabil
Oct. 3 (Bloomberg) -- Delta Air Lines Inc., the third-
largest U.S. carrier, plans to sell $1.4 billion in debt backed
by its planes in the third offering of such bonds by an airline
in the past two weeks.
The sale of enhanced equipment trust certificates will
consist of $924 million of 14.8-year Class A bonds; $265 million
of 14.8-year Class B debt; and $220 million of 6.8-year Class C
securities, according to a person familiar with the offering,
who declined to be identified because terms aren't public.
The initial average life is 9.2 years for Class A debt, 7.9
years for Class B, and 5.1 years for Class C, said the person.
Proceeds from the offering will be used to refinance Boeing
Co. aircraft delivered to Delta between 1998 and 2002, according
to a report from Standard & Poor's today. The planes securing
the debt are 11 Boeing 737-800s, four 767-300ERs, 17 767-400ERs
and seven 777-200ERs, S&P airline credit analyst Philip Baggaley The 737-800 is ``arguably the best aircraft collateral
available,'' the New York-based analyst wrote, because more than
1,000 are already in service and many more are on order by
airlines worldwide. The other planes are used for Delta's
international operations, which are growing as part of the
company's changes initiated during bankruptcy, he wrote.

Out of Bankruptcy

Delta, based in Atlanta, is aiming to return to profit
after its April 30 exit from bankruptcy. The carrier hired
Credit Suisse Group and Merrill Lynch & Co. to handle the
offering, the person said.
The Class A securities are expected to be rated Baa1, the
third-lowest level of investment-grade, by Moody's Investors
Service, and are rated one step higher at A- by S&P. Moody's
rates the Class B notes Ba2, or two levels below investment-
grade, while S&P ranks them two steps higher at BBB-.
The Class C notes are expected to be rated B1, or four
levels below investment-grade, by Moody's and B by S&P, said the
person.
Delta's deal, which is expected to priced as early as this
week, follows similar sales by Eagan, Minnesota-based Northwest
Airlines Corp. and Dallas-based Southwest Airlines Co.
Northwest, the fifth-biggest U.S. carrier, raised $454.3
million in a two-part debt sale of enhanced equipment trust
certificates to finance the purchase of 27 Embraer 175 jets,
according to an Oct. 2 regulatory filing. Southwest, the largest
low-fare carrier, sold $500 million of securities on Sept. 19.

--Editor: Bostick (amg)

To contact the reporters on this story:
Fabio Alves in New York at +1-212-617-6548 or
[email protected];
Sarah Rabil in New York at +1-212-617-5992 or
[email protected]