Pass Through Certificate... Finance knowledge

Pass Through Certificates are corporate bonds widely issued by high risky business, such as Airline and Auto. They are different from traditional bonds. They are issued in a series by a company "pass through trusts", which use the proceeds of certificates series to buy equipment notes that are collaterialized with company equipments. The payments of equipment notes will be collected by Trusts and funnel to certificates holder. Ratings of series range from AAA to CCC, depending on the rank. Lower certificates with rank junior in right to distributions to the other certificates. Usually, these certificates are credit enhanced by insurance companies, dubbed liquidity facilities, who will make sure sufficient amount of distibutions to certificate holders. ---- example ---- Filed Pursuant to Rule 424(b)(2) Prospectus supplement Registration No. 333-65218 (To Prospectus dated July 23, 2001) $1,125,861,000 (DELTA AIR LINES LOGO) PASS THROUGH CERTIFICATES, SERIES 2002-1 Delta Air Lines, Inc. is issuing, through four separate pass through trusts, Class G-1, Class G-2, Class C and Class D Pass Through Certificates, Series 2002-1. Only the Class G-1, Class G-2 and Class C Certificates are being offered pursuant to this prospectus supplement. The Class D Certificates will be privately placed concurrently with the issuance of the Class G-1, Class G-2 and Class C Certificates. The Class D Certificates are not being offered pursuant to this prospectus supplement. Each Certificate will represent an interest in a pass through trust. The proceeds from the sale of Certificates will be used by the trusts to acquire equipment notes to be issued by Delta on a full recourse basis. Payments on the equipment notes held in each trust will be passed through to the holders of Certificates of such trust. The Certificates do not represent interests in or obligations of Delta or any of its affiliates. The Certificates will not be listed on any national securities exchange. The equipment notes to be held by the Class G-1, Class G-2 and Class C Trusts will be issued for each of thirty-two Boeing aircraft delivered new to Delta from May 1995 through April 2002 consisting of seventeen Boeing 737-832 aircraft, one Boeing 757-232 aircraft, eight Boeing 767-332ER aircraft and six Boeing 767-432ER aircraft. The equipment notes to be held for the Class D Trust will be issued for each of such aircraft except the seventeen Boeing 737-832 aircraft. 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 each January 2 and July 2, beginning January 2, 2003. The principal of the equipment notes to be held by the Class G-1 and Class C Trusts is scheduled for payment on January 2 and July 2 in certain years, beginning on January 2, 2003 and ending on January 2, 2023 and January 2, 2012, respectively. The entire principal amount of the equipment notes to be held by the Class G-2 Trust is scheduled for payment on July 2, 2012. The entire principal amount of the equipment notes to be held by the Class D Trust is scheduled for payment on July 2, 2007. Delta will have the ability to enter into sale/leaseback transactions involving any Boeing 737-832 aircraft which secures the equipment notes. If such a transaction is entered into, the related aircraft will be subject to a lease and a related amended and restated indenture and Delta's obligations on the Equipment Notes will be assumed by the related owner trustee on a non-recourse basis. The Class G-1 and Class G-2 Certificates will rank equally in right to distributions and rank senior in right to distributions to the other Certificates. The Class C Certificates will rank junior in right to distributions to the Class G-1 and Class G-2 Certificates and will rank senior in right to distributions to the Class D Certificates. The Class D Certificates will rank junior in right to distributions to the other Certificates. Westdeutsche Landesbank Girozentrale, New York branch will provide a separate liquidity facility for each of the Class G-1, Class G-2 and Class C Certificates. Each liquidity facility will be in an amount sufficient to make three semiannual interest distributions on the related class of Certificates. There will be no liquidity facility for the Class D Certificates. MBIA Insurance Corporation will issue financial guaranty insurance policies to support the payment of interest on the Class G-1 and Class G-2 Certificates when due and the payment of the outstanding balance on the Class G-1 and Class G-2 Certificates on the Final Legal Distribution Date for such certificates and under certain other circumstances as described herein.