Item
8.01 Other Events.
On
January 26, 2006, Delta issued a press release announcing that it had entered
into a letter of credit facility with Merrill Lynch. A copy of the press
release
is attached hereto as Exhibit 99.1.
Under
the
Letter of Credit Reimbursement Agreement that Delta entered into with Merrill
Lynch, Merrill Lynch issued a $300 million irrevocable standby letter of
credit
(the “Letter
of Credit”)
for
the benefit of Delta’s Visa/MasterCard credit card processor (the “processor”).
As
contemplated in Delta’s Visa/MasterCard credit card processing agreement (the
“processing
agreement”),
Delta
is providing the Letter of Credit as a substitution for a portion of the
cash
reserve that the processor maintains. Under the processing agreement, the
processor is permitted to maintain a reserve from Delta’s receivables that is
equal to the processor’s potential liability for tickets purchased with Visa or
MasterCard for flights not yet flown (the “unflown
ticket liability”).
The
reserve adjusts daily and is estimated to range between $450 million
and $850 million during the term of the processing agreement. The
processing agreement allows Delta to substitute the Letter of Credit for a
portion of the cash reserve equal to the lesser of $300 million and 45% of
the unflown ticket liability, which is also the amount available to be drawn
by
the processor.
The
Letter of Credit may only be drawn upon following certain events described
in
the processing agreement. In addition, the processor must first apply both
the
portion of the cash reserve that the processor will continue to hold and
any
offsets from collections by the processor before drawing on the Letter of
Credit
to cover fare refunds paid to passengers by the processor.
Delta’s
obligation to reimburse Merrill Lynch under the Letter of Credit for any
draws
made by the processor is not secured and will constitute a super-priority
administrative expense claim that is subject to certain other claims, including
Delta’s post-petition financing. The Letter of Credit will expire on January 21,
2008, but will renew automatically for one year periods thereafter unless
Merrill Lynch notifies the processor 420 days prior to the applicable expiration
date that it will not renew the Letter of Credit.
The
United States Bankruptcy Court for the Southern District of New York previously
authorized Delta to obtain the Letter of Credit, subject to the approval
of the
official committee of unsecured creditors, which was received on January
25,
2006.
Item
9.01 Financial Statements and Exhibits.
(c)
Exhibits.
|
Exhibit
99.1 |
Press
Release dated January 26, 2006, titled “Delta Air Lines Receives $300
Million Letter of Credit Facility from Merrill Lynch to Reduce
Credit Card
Reserve”
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
DELTA
AIR LINES, INC.
|
|
|
|
By:
/s/
Edward H.
Bastian
|
Date:
January 26, 2006
|
Edward
H. Bastian
Executive
Vice President and Chief Financial
Officer
|
EXHIBIT
INDEX
Exhibit
Number
|
Description
|
|
|
Exhibit
99.1
|
Press
Release dated January 26, 2006, titled “Delta Air Lines Receives $300
Million Letter of Credit Facility from Merrill Lynch to Reduce
Credit Card
Reserve”
|